Dhaka, Bangladesh (BBN) – Bangladesh’s commercial banks have been requested to act rationally while fixing interest rates on deposit and lending to ensure stability in country’s money market.
They have also been urged to re-fix the exchange rate of US dollar against the local currency to bring back stability in the country’s foreign exchange market, bankers said.
The requests were made at separate meetings of two professional bodies –the Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) and the Association of Bankers, Bangladesh (ABB) –held in Dhaka in the last two days.
The BAFEDA has asked its member banks to bring down the exchange rate of the US currency for bills for collection (BC) selling for opening letters of credit (LCs) against imports at BDT 84.50 from the existing level of BDT 85.00 by February 6 this year.
The banks have also been urged to re-fix the exchange rate of the US currency, offering for overseas exchange houses, at BDT 84.00 from the existing BDT 84.10 by Monday next.
A senior BAFEDA member said the inter-bank exchange rate will be fixed in between the BC selling rate and the rate for overseas exchange houses for receiving of inward remittance from the non-resident Bangladeshis (NRBs).
On the other hand, the ABB has asked its member banks to slash the interest rates on deposits ranging between 13 percent and 14 percent from the current level of 15-16 per cent.
The commercial banks have also been requested to charge interest rates on food items at maximum 15.50 percent instead of the existing maximum 18 percent while the lending rates on working capital should be re-fixed at maximum 17 percent from the current maximum level of 18 percent.
Besides, the banks have been urged to keep their interest rate spread below 5.0 per cent in line with the central bank’s latest directive.
The Bangladesh Bank (BB), the country’s central bank, asked the commercial banks on January 23 last to keep interest rate spread at less than 5.0 percent for credits to all areas of the economy barring credit card and small and medium enterprise (SME).
“We’ve urged our member banks to work unitedly for coming out of the stalemate by behaving rationally in respect of fixing interest rates on both lending and deposit,” a ABB senior member told BBN in Dhaka on Wednesday.
The ABB has taken the latest moves against the backdrop of jumping of lending rates after withdrawal of cap by the central bank recently.
On January 04 this year, the BB withdrew the cap on lending rate for all sectors and items, barring only two — agriculture and export — to facilitate the country’s overall economic growth through boosting investment in different fields.
Besides, the lending rate ceiling on import financing for eight essential food items was earlier withdrawn from the same day (January 4, 2012) through the latest circular relating to fixation of lending rates.
The essentials are edible oil, gram, pulses, peas, onions, date, fruits and sugar.
The central bank earlier asked the commercial banks to keep the lending rate on import financing for eight essential food items at a maximum of 12 per cent to help ensure smooth supply of the items to the local market.
BBN/SSR/AD-01Feb12-11:58 pm (BST)
