The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) sought on Sunday a cut in lending rates to help make trade and businesses more competitive on the global market, reports BSS.
Commenting on the Monetary Policy Statement (MPS) of Bangladesh Bank (BB) announced Thursday, the country's apex chamber-body said that the central bank maintained its previous policy stance to contain inflation.
In a statement, the FBCCI said the BB should address some major issues including lowering interest rate on loans, increasing credit flow to the private sector and disbursing adequate loans to productive sectors to implement the MPS towards attaining inclusive growth.
The FBCCI said the interest rates should be the bank's cost of fund plus 2.5 per cent, meaning banks would require slashing the spread further (gap between deposit and lending rate).
The spread was 4.87 per cent in March, when the average lending rate was 11.93 per cent, the lowest in two years. The rate on deposits was also down to 7.06 per cent in March from 8.67 per cent two years ago.
The chamber, however, suggested a further cut in the lending rates saying that the banks in Bangladesh were charging more interest rates than in the neighbouring countries, raising the cost of business here.
"The higher interest rates discourage investment and resultantly hinder the initiatives of creating jobs and reducing poverty", the FBCCI said, advising that the investment ratio to GDP (gross domestic product) should be 34.0 per cent to earn the country the middle-income status.
It also reiterated the demand for bringing down the lending rate to single digit, especially for small and medium enterprises (SMEs) and women entrepreneurs.
The other major demands of FBCCI included steps for ensuring a sustainable exchange rate, increasing credit flow to the productive sector with cautious monitoring on loan disbursement and arranging supply of funds from local and foreign sources for projects under Public Private Partnership (PPP).
The Dhaka Chamber of Commerce and Industry (DCCI) also in a separate statement sought a cut in the lending rates to help expedite local and foreign investments.
The trade-body, while making observation on the new MPS, said that the BB's policy statement should have more room for expanding credit flow to the private sector, which was set at 15.0 per cent for the next six months.
