The finance ministry and Bangladesh Bank are set to form a joint monitoring cell to bring down the interest rate of bank loans to single digit. According to sources with the central bank, the cell will monitor the interest rate reduction activities, collecting reports from different banks. Banks which will implement single-digit interest rate would be rewarded with deposition of funds from annual development programme, the sources added.
Notably, as per the instruction of Financial Institutions Division (FID) of Finance Ministry, if any bank does not implement single-digit interest rate, it will not get funds as savings from the annual development programme (ADP). A senior official of finance ministry told the Bangladesh Post that before depositing the ADP fund a project director can suggest names of three banks for getting ADP fund to the FID.
The FID would approve the suggestions after investigating whether the banks have decreased interest rate of loan to 9pc and interest rate of deposit to 6pc.
Sources said FID organised a meeting on August 1 last to discuss the overall banking scenario of the country. The meeting attended by central bank governor, finance ministry secretary, governing body chairmen of different banks and other stakeholders, unanimously decided to implement 9pc interest rate within August 9.
“After the meeting, the state-owned banks decreased t5heir interest rates a little, but the private banks deliberately violated their promises,” said the FID official. He said due to uneven competition in loan distribution targeting more and more profit, a chaotic situation is prevailing in the banking sector at present.
In cases, some private banks are taking 20-50 pc interest on loans, directly hampering the country’s business and investment. A senior central bank official said in September last year, the country’s private and public banks declared to reduce interest rates of loans and deposits. But after nine months, a thorough scrutiny reveals the 39 private banks have not abided by the instruction. Although some seven banks are claiming that they are providing loans on single digit interest rate. But most of the traders say they are not getting such loans.