BB asks nine banks to cut lending rates for NBFIs to maximum 13pc

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Siddique Islam
The central bank has asked nine commercial banks to comply with its instruction relating to fixation of interest rates on lending to the non-banking financial institutions (NBFIs), officials said.
"We've sent letters to the banks concerned, asking them to bring down the lending rates to a maximum 13 per cent for the NBFIs by the next month," a senior official of the Bangladesh Bank (BB) told the FE Thursday.
The central bank took the measure after receiving report on interest rates on both lending and deposit for July, submitted by the banks to the BB earlier.
On June 2, the BB instructed the commercial banks to fix the rate of interest on lending to the NBFIs at maximum 13 per cent to facilitate the sector.
"The NBFIs will be able to provide loans to their clients at reasonable interest rates after complying with the instruction," another BB official said, adding that most of the banks have re-fixed their interest rates on both lending and deposit in compliance with the BB's instructions.
The Bangladesh Leasing and Finance Companies Association (BLFCA) is now planning to bring down their interest rates on lending after the banks fully comply with the BB's instruction.
"We're planning to slash the interest rates on lending, following the reduction of lending rates by the commercial banks," BLFCA chairman Mafizuddin Sarker told the FE.
The BLFCA requested the central bank governor on May 27 for taking necessary measures to ensure loans from the banks with the interest rate ceiling on lending at maximum 13 per cent in five specific areas.
On April 19, the BB asked the commercial banks to fix the interest ceiling on lending at maximum 13 per cent in five specific areas to help mitigate the impact of the global economic meltdown.
The five areas are - agriculture, term loan to large and medium-scale industries, working capital to large and medium-scale industries, housing, and trade financing.
Meanwhile, at least 15 commercial banks slashed interest rates on deposits this month with a view to reducing their cost of funds, bankers said.
The country's commercial banks now offer interest rates ranging from 3.00 to 11.25 per cent on fixed deposit schemes, while the rates for saving accounts vary between 1.00 per cent and 8.00 per cent, according to the central bank statistics.
"There is no alternative way to minimise the cost of funds without slashing the interest rates on deposits," Mohammad Nurul Amin, Association of Bankers Bangladesh (ABB) vice-chairman and National Credit and Commerce Bank Limited managing director, told the FE.