Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has decided to ask the commercial banks to keep the lending rate on onion import financing at maximum 11 per cent to ensure smooth supply of the items to the local market.
“We’ve decided to ask the banks to keep the lending rate on import financing for onion at maximum 11 per cent aiming to ease the price of essentials in the market,” a senior official of the Bangladesh Bank (BB) told the BBN in Dhaka on Wednesday.
He also said the central bank is expected to issue a directive in this connection tomorrow (Thursday).
The central bank has taken the decision against the backdrop of sudden rise of onion price in the market after India raised the minimum export price of the key cooking ingredient by $275 per ton.
Currently, imported onion is being sold at BDT 75-85 a kg, up from BDT 55-60 a week ago, local traders told the BBN.
The local variety of onion was sold at BDT 85-90 a kg from BDT 55-60 last week.
In the last one month, the price of imported onion went up 113 per cent and the local variety 94 per cent, the state-run Trading Corporation of Bangladesh (TCB) said.
The central bank earlier 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.
“The banks are now free to fix their lending rates with few exceptions only,” the central banker explained.
In 1989, the BB introduced a flexible interest rate regime through issuance of a circular in line with the Financial Sector Reforms Programme (FSRP).
Under the FSRP, the banks are free to charge or fix their deposit and lending rates excepting the rate of interest on export credits.