Finance Minister A M A Muhith on Wednesday admitted that lowering of the lending rate to single-digit by all banks would take time.
"The target is difficult. Probably (while setting the target) I told them to do it as fast as possible. But, it is not possible for all the banks to do it (reduce the rate) so quickly," he said after a meeting of a cabinet committee at the Bangladesh Secretariat.
Mr Muhith was replying to newsmen's queries regarding the failure of many banks to reduce their lending rates within 9.0 per cent range by July 01, as announced by the Bangladesh Association of Banks (BAB).
On June 20, the BAB, the organisation of owners of the country's private commercial banks (PCBs), announced that they will bring down their loan interest rate to single-digit from July 01.
However, only a few of the banks could lower the interest rate as of July 11.
Asked whether or not the non-implementation of the decision by some banks will create disorder in banking sector, the minister answered in the negative.
"No chaos will occur. The central bank will take care of it," said Mr Muhith.
When his attention was drawn to the withdrawal of deposits by the state-owned commercial banks (SoCBs) from the PCBs, the minister said it is a matter of their own business.
Recently the government has decided that the SoCBs and the state-own enterprises (SoEs) will deposit funds with the PCBs at 6.0 per cent interest rate to help the latter cut the loan interest rate to single-digit.
However, on Wednesday, replying to a query, the minister said none will deposit funds with the PCBs at lower rates of interest.
According to the officials concerned, the decision to lower the lending rate to single-digit was taken following a directive coming from Prime Minister Sheikh Hasina.
The interest rate is being lowered to facilitate industrial expansion, create new entrepreneurs, generate more employment, and boost export-import activities in the country.
© 2017 - All Rights with The Financial Express