Credit with a single digit interest rate is a must to promote the country’s private sector, said DCCI leaders. They said the country’s private sector’s contribution to GDP has got stuck between 22 percent and 23 percent due to the slow-down in the private sector credit growth which was 9.87 percent in November 2019.
The DCCI leaders made the observations in a meeting with Bangladesh Bank Governor Fazle Kabir on Tuesday. The newly elected Board of Directors of DCCI led by its President Shams Mahmud took part in the meeting. At the meeting, DCCI President Shams Mahmud said, “If the government wants to encourage the businessmen to invest, there is no alternative but to increase private sector credit growth to ensure more investment and economic growth.”
“Although Bangladesh has achieved a new height crossing 8 percent GDP growth, but private investment has not increased,” he said adding that the government needs to improve the ‘ease of doing business index’ to encourage businessmen for more investment in the country.
He said, “Higher interest rate on bank loan is one of the reasons for slow-down of private investment. DCCI President requested to cut down lending rate to single digit. To reduce non-performing loan (NPL) he suggested to establish a mechanism in order to identify willful and unintentional defaulter.”
The executive directors of different departments and high official of Bangladesh Bank were also present at that time. Terming SME as the lifeline of the industry, Shams Mahmud sought access to export market, required infrastructure facility and access to finance for the SMEs.
In order to reduce the dependence on public finance and banking system finance, government should develop alternative sources of long-term financing for infrastructure and industrial projects like bond market in the local capital market, he mentioned.
Devaluation of Taka against US Dollar may have negative impact to the economy therefore, without devaluing Taka, additional cash incentives may be given to major export sectors since our export dependent business rely on import of raw and intermediary goods, he suggested.
Governor of Bangladesh Bank Fazle Kabir said the economy of Bangladesh mostly depends on banking financial system. “Government is trying to bring down the lending interest rate to single digit for the betterment of economy, businessmen and mass people which may be implemented from April next,” he said.
The government has also taken various infrastructure development projects where private sector's intervention would be much appreciated, he mentioned. Regarding non-performing loan, he said there is a clear definition of willful and unintentional loan defaulter in the law but if any entrepreneur failed to repay the loan due to delayed connection of power, energy, gas or delayed loan approval process or some other reasons which have valid ground might get special consideration.
Recently National Board of Revenue (NBR) withdrew stamp duty which will help flourish bond market system in the country, he said. Kabir also urged that Bangladesh should have a strong secondary Bond Market for long term financing mechanism. He also sought cooperation of the business community for effective and proper utilization of Export Development Fund (EDF).
Banking Reform Adviser of Bangladesh Bank S K Sur Chowdhury said, “For the sake of overall banking eco-system, healthy money market and to achieve targeted economic growth Bangladesh Bank will amend its rules and regulations if necessary and this effort will also be continued.”
Senior Vice President of DCCI NKA Mobin, FCA, FCS, Directors Andaleeb Hasan, Arman Haque, Alhaj Deen Mohammed, Enamul Haque Patwary, Engr Md Al Amin, Monowar Hossain, Nuher L Khan, Engr Shamsuzzoha Chowdhury, SM Zillur Rahman and Waqar Ahmad Choudhury also spoke during the meeting.