Sylhet, Bangladesh (BBN)- Bangladesh Bank (BB) Governor Dr. Atiur Rahman has assured business leaders at a meeting on Friday that bank interest rates are already on the downturn and will fall further gradually.
Sylhet Chamber of Commerce and Industry (SCCI) urged the BB Governor to take effective measures to bring down the interest rates spread to 3.0 per cent from the existing level to spur country's overall business activities.
SCCI President Salah Uddin Ali Ahmed made the appeal at an exchange-of-views meeting with the BB Governor at the chamber office in the country’s south-eastern city on Friday evening.
The overall interest-rate spread in the country's banking sector came down to 4.87 per cent in March 2015 from 5.04 per cent in the previous month, the BB data showed.
The overall interest rate spread in the country’s banking sector fell below 5.0 per cent further in March last after more than one year due to strict monitoring and supervision of the central bank.
The weighted average spread between lending and deposit rates offered by the commercial banks came down to 4.87 per cent in March, 2015 from 5.04 per cent in the previous month as the interest rates on lending decreased more than that of deposits. The spread was 4.99 per cent in January, 2014.
On the other hand, the weighted average rates on deposits came down to 7.06 per cent in the same month from 7.19 per cent in the previous month while interest rates on lending dropped to 11.93 per cent from 12.23 per cent.
The central bank chief also said the BB is providing policy supports continuously to facilitate the country’s overall business activities.
He also said the banks are allowed to reschedule loans in line with the existing rules and regulations to facilitate businesses, which were affected badly due to recent political unrest.
The SCCI chief also sought interest waiver on loans for the first quarter of the current calendar year because of the political unrest that hit hard trade, business and the economy at large.
A number of business leaders, including former Chairman of Chittagong Stock Exchange Fakhruddin Ali Ahmed, requested the governor to take measures to extend the timeframe to bring down capital market investment by the commercial banks to facilitate stock-market operations.
Regarding capital-market exposure by the banks, BB Governor Dr. Rahman said the investment limit and timeframe have been set in the existing Banking Companies Act considering the risk of the commercial banks.
The BB earlier had asked the banks to bring down their overall capital market investment within 25 per cent of total capital by July 21, 2016 in line with the Banking Companies (Amendment) Act 2013.
According to the Banking Companies Act 1991 (Amended 2013), total capital comprises four components: paid-up capital, balance in share-premium account, statutory reserve and retained earnings as stated in the latest audited financial statements.
In calculating total investment in the capital market different components, including all types of shares, debentures, corporate bonds, mutual-fund units and other capital market securities, have to be considered.
Among others, Deputy Governor of the BB Abul Quasem, former Vice President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) MA Momen and Chief Executive Officer and Managing Director of Pubali Bank Limited MA Halim Chowdhury, Mamun Kibria Sumon, senior vice-president of the SCCI and Masud Ahmed Chowdhury, vice-president of the trade body spoken on the occasion.