Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has asked 19 commercial banks to comply with its instruction relating to fixation of the interest ceiling on lending in five areas by June to help mitigate the impact of global meltdown on the economy.
“We’ve sent letters to the banks concerned asking them to reduce lending rates to a maximum 13 per cent for five key growth areas by the next month,” a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN in Dhaka on Tuesday.
The central bank took the measure after receiving report on interest rates on both lending and deposit for May, submitted by the banks to the BB earlier.
“We’ll take next course of action after receiving report on interest rates for June from the banks concerned,” the official said, adding that most of the commercial banks have re-fixed their interest rates on both lending and deposit in compliance with the BB’s instruction.
On April 19 last, the central bank asked the commercial banks to fix the interest ceiling on lending in five specific areas at maximum 13 per cent to help mitigate the impact of the ongoing global economic meltdown.
The BB official also said the banks must not charge more than the fixed interest rate for agriculture, term loan to large and medium-scale industries, working capital to large and medium-scale industries, housing, and trade financing.
“We expect all 48 commercial banks will comply with the order properly,” another BB official said, adding that the central bank is also monitoring the lending rate on import financing for nine essential food items to maximum 12 per cent.
The central bank earlier asked the commercial banks to bring down the lending rate on import financing for nine essential food items to a maximum of 12 per cent from the existing 13 per cent.
The essentials are edible oil, sugar, gram, pulses, peas, onion, spices, date and fruits.
At least 37 commercial banks re-fixed their interest rates on lending in different sectors in line with the BB’s instruction, the central bank official said, adding that some banks increased the interest rates on consumer loans and credit card this month.
On the other hand, most of the banks slashed interest rates on deposit in May to minimize their cost of funds that would make them easier to comply with the BB’s directive on interest rates on lending for key sectors, bankers said.
“Most of the banks re-fixed the higher interest rate on deposit at 9.50 per cent, which came into effect from Sunday last, in line with the Association of Bankers, Bangladesh (ABB) decision,” a chief executive of a leading private commercial bank (PCB) told BBN,
The country’s commercial banks now offer interest rates ranging from 5.25 to 12.77 per cent on fixed deposit schemes, while the rates for saving accounts varies between 2.50 per cent and 8.00 per cent, according to the central bank statistics.