Country's commercial banks started implementation of 9.0 per cent interest rate on all loans except credit cards as part of the government initiative of brining down the rate to single digit from Wednesday.
The banks particularly private commercial ones have already issued their internal circulars for implementation of the single-digit interest rate from April 01, according to senior bankers.
They said most of the private commercial banks (PCBs) will face tough challenges to bring down the lending rate to nine per cent following the coronavirus outbreak in Bangladesh.
"Profitability of the PCBs may fall significantly by the end of this calendar year following implementation of maximum 9.0 per cent interest rate in line with the Bangladesh Bank (BB)'s directives," a senior executive of a leading PCB told the FE.
Earlier on February 24, the central bank instructed banks to fix a maximum 9.0 per cent interest rate on all loans except credit cards as part of the government initiative of bringing down the rate to single digit from April 01.
"We've acted in line with the BB's directives," Syed Mahbubur Rahman, Managing Director and Chief Executive Officer of Mutual Trust Bank Limited, told the FE while replying to a query.
Mr. Rahman, also former chairman of the Association of Bankers, Bangladesh (ABB), said the bank's profitability will deteriorate because of implementation of single-digit interest rate along with possible impact on the coronavirus outbreak.
On December 30 last, Finance Minister AHM Mustafa Kamal told reporters that the single-digit interest rate on all loans, excepting credit cards, would take effect from April 01.
UNB adds: State-owned banks began implementing the rate much earlier.
"We've started executing the Bangladesh Bank's order from today (Wednesday) on single digit bank rate," Syed Mahbubur Rahman told the news agency.
He, however, said it may take this month to fully implement the new rate for all kinds of lending designated under the BB order.
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