|
|
Change Your Life! |
Central
Bank proposes lower interest rates |
|
News |
June 25, 2000
Dhaka, (UNB)- Bangladesh Bank yesterday advised the private commercial banks to examine the possibility of lowering the interest rate in line with the nationalized commercial banks (NCBs). Earlier this month NCBs decided to bring down the interest rates to 10 percent on an average from around 14 percent for some selected high-priority thrust sectors. The central bank’s suggestion came at a meeting of the managing directors of commercial banks, which was chaired by Khondaker Ibrahim Khaled, deputy governor of Bangladesh Bank. The central bank official noted with satisfaction that the situation of classified loans has marked an improvement. “But it is not yet pleasant,” he said. The percentage of classified loans has declined to a great extent as far as loans sanctioned by commercial banks in recent years are concerned, the central bank noted. It attributed the improvement to the tight monitoring of the central bank that put the new generation banks into a better state. The deputy governor of the central bank advised the managing directors to constantly monitor the top defaulters and ensure regular follow-up of loan cases pending with various courts to further strengthen recovery. As of December 1999, classified loans in NCBs amounted to Tk 23,879 crore, nearly 41 per cent of the total loans sanctioned. In case of private commercial banks, classified loans stood at Tk 4,525 crore or 27 per cent of their total outstanding loans. The central bank official urged the private commercial banks to assess their respective positions and examine whether it is possible for them to lower the interest rates and make those competitive. Private bank MDs acknowledged the pressures from various quarters to lower the interest rates, but did not agree with the contention that higher interest rates impede industrialization. They argued that interest rates are much higher in two other countries in the subcontinent but they have better industrial investments. Interest rate in India is around 18 percent and in Pakistan 20 percent while it averages 16 per cent in Bangladesh. Development Financing Institutions (DFIs) lend money at further lower rate and Sonali Bank offers 14.5 to 15 percent rate, the private bankers argued. They said like in other countries, prime clients who are regular in repayments get some special incentives in interest rates also in Bangladesh and all banks consider their loan demands sympathetically.
|