Banks asked not to add service charge to interest on lending

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Siddique Islam
The central bank has directed the commercial banks not to add any service charge to the interest on lending, officials said Thursday.
"We've taken the latest move aiming to facilitate business activities across the country," a senior official of the Bangladesh Bank (BB) told the FE, adding that the central bank is monitoring charges of different banks closely.
The central bank issued a circular in this connection Thursday and asked the chief executives and managing directors of all scheduled banks to follow the instruction on realising service charge.
The fresh move came against the backdrop of non-compliance of the existing guideline on interest rate on lending properly by some of the banks.
Businessmen welcomed the BB's new move, saying that it would help reduce the cost of doing businesses in Bangladesh.
"The central bank has taken the right step by stopping banks' imposition of any service charge to the interest rate. It should be monitored strictly," former President of the Bangladesh Knitwear Manufactures and Exporters Association (BKMEA) Fazlul Hoque told the FE.
The BB has asked the banks not to impose any additional charge as it is included in the interest rate on lending for all credit including export.
"Other charges, fees and commissions will remain unchanged, which have been mentioned in the master circular on schedule of changes for both lending and deposits, issued on December 22 last," the central bank official said.
In case of any change in charges and fees, banks have to inform the department concerned of the BB about it and post information on banks' websites, the central bank said.
The BB official also said the central bank would rationalise the charges in consultation with stakeholders time to time to facilitate the country's business activities.
Different trade bodies, including the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI), Bangladesh Garment Manufactures and Exporters Association (BGMEA) and BKMEA earlier requested the central bank governor for taking necessary measures to bring down the banks' commissions and service charges to a reasonable level.