Bankers again request Bangladesh Bank to keep small firms out

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Bankers on Sunday again urged the Bangladesh Bank to keep small enterprises outside the purview of single-digit lending rate implementation.

The Association of Bankers, Bangladesh made the request at a meeting with BB governor Fazle Kabir, held at the central bank head office in the capital.

BB executive director Abu Farah Md Naser also was present.

ABB chairman and Eastern Bank managing director and chief executive officer Ali Reza Iftekhar said that bringing interest rates on small loans down to single digit would be difficult, as the cost of lending in this sector was very high.

He said that most of the banks that lent money to the small enterprises would find the single digit interest rate difficult to apply, as they lent money mostly to the non-government organisations.

Earlier on January 14, the association had demanded that the central bank keep the lending rate on small and retail loans outside the purview of single-digit implementation and the BB differed with the bankers’ request saying that it would contradict with the spirit of the move.

Dhaka Chamber of Commerce and Industry president Shams Mahmud at a press conference on January 20 requested the government to include the SME sector in the single-digit lending rate facility.

According to the Bangladesh Bank instruction, small loan is part of small and medium enterprise loans.

There are two types of small enterprises, productive industry and service industry. The total asset of a productive industry (except land and building) would be from Tk 75 lakh to Tk 15 crore.

On the other hand, the total asset of a service industry (except land and building) would be Tk 10 lakh to below Tk 2 crore.

Abu Farah Md Naser said that the ABB wanted to keep interest on small loans higher than 9 per cent, but the BB governor asked them to submit a written proposal in this regard.

Iftekhar said that banks would gradually bring down the deposit rate to 6 per cent from Sunday as part of their preparations for implementing 9 per cent lending rate from April.

But banks will not follow the 6 per cent interest rate for deposit pension schemes.

On December 30 last year, finance minister AHM Mustafa Kamal asked the bankers to implement single digit lending rate for all sectors with effect from April 1.

On January 20 this year, the government asked state-owned enterprises to deposit up to 50 per cent of their surplus fund in private banks and non-bank financial institutions.

The finance ministry’s Financial Institutions Division issued a notice in this regard, saying the decision would help commercial banks lower lending rates to a single digit.

State-owned companies will receive the maximum interest rate of 6 per cent on deposits while the companies will receive 5.5 per cent interest rate in state-owned banks.

The government made the decision as it aimed to boost private investment and keep up the pace of economic growth.
Source: https://www.newagebd.net

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