Discrepancy in lending and borrowing interest rates

We have recently observed a significant cut in the interest rate for fixed deposits. But the banks have not brought about any reduction in the interest rate for industrial loans. This is not only contradictory but also a disincentive for industrial growth. In other words, it is going to leave a negative impact on the national economy and slow down the rate of economic growth. In case of fixed deposits, banks are now paying interest at the rate of 9-10.0 per cent, whereas they are charging 16 to 18.0 per cent interests from industrial borrowers, which is inappropriate.

I hope the central bank will step in and put a cap on the interest rate. The difference between the lending and borrowing rates is from 6.0 to 8.0 per cent which is not appropriate. Investment during the last one year has been stagnant. But every year thousands of young men and women enter the job market but they do not find jobs and thus become frustrated with life. The government needs to encourage investors so that they come forward, but now high interest rate is a deterrent for the new investment and even the old investors do not feel encouraged to come forward. I hope Bangladesh Bank will take note of it and will initiate urgent steps to reduce the gap between the said interest rates and bring vibrancy in our industrial sector.

Saiful Islam

Baridhara DOHS