Banks start offering single digit lending rate

Bangla Tribune Desk
Published : 19:49, Aug 09, 2018 | Updated : 19:49, Aug 09, 2018

Banks say the decision was taken under the direction of Prime Minister Sheikh Hasina to create an industry-friendly environment, new entrepreneurs, generate employment, and to accelerate trade.Banks have started offering single digit interest rate for all products, except consumer loans and credit cards, from Thursday as agreed in a recent meeting between Finance Minister AMA Muhith and the bank authorities.
“As per the decision, each bank is bringing down their interest rates to a single digit. Banks are implementing this decision,” state news agency BSS quoted Secretary General of the Association of Bankers Bangladesh (ABB) M Arfan Ali.
Muhith told the media recently that rates will come down to single digit from Aug 9 since top bank officials agreed to implement the new rate as per the directive of Prime Minister Sheikh Hasina.
He said the interest rate for consumer loans and credit cards will be flexible as per the banks’ obligations.
ABB leader Ali, also the managing director of Bank Asia, said his bank is working on lowering the lending rate. “The new rate is likely to decrease our bank’s income, but we can adjust it by reducing other expenses,” he added.
He said the single digit interest rate against bank lending will increase the private sector investment that will help take the country’s economic growth to a sustainable level.
Mercantile Bank Chairman AKM Shaheed Reza said the board took initiatives from July this year when Bangladesh Association of Banks (BAB) took the decision of the single digit interest rate.
“MBL is disbursing the industrial and corporate loans in a single digit from July. For single digit interest rate, our income has decreased but we adjust the income by reducing other expenses,” he told BSS.
He said the single digit interest rate will boost further the country’s economy, which will help achieve the country’s development goals, including ‘Vision-2021’ and ‘Vision-2041’.
NCC Bank Chairman M Nurun Newaz said the board of directors of the bank has already instructed the senior officials to lower the interest rate as per the decision.
“Banking sector should bring down the interest rate to a single digit to expedite the country’s economy,” he added.
Bangladesh Bank spokesperson M Serajul Islam said this is the own decision of the chairmen and managing directors of banks. BB is only providing its ethical pressure on banks to bring down the lending rate to single digit as per their commitment, he added.
Earlier, BAB, an association of private commercial banks, at a meeting decided to bring down the lending rate to a single digit and deposit rate for the three months tenure to 6 percent from July 1, the first day of fiscal 2018-19.
But, all banks could not implement the decision properly. On the other hand, the government has given incentives, including 5.5 percent CRR, to mitigate their liquidity crisis and bring the interest rate to single digit.
The government has also taken a decision to allow the state agencies to deposit 50 percent of their funds instead of 25 percent in private banks.