Bank interest rates on downturn and to fall further: BB governor

Bank interest rates are already on the downturn and will fall further, said Bangladesh Bank Governor Dr Atiur Rahman as business leaders at a meet Saturday pleaded for immediate narrowing of rates spread.       
Sylhet Chamber of Commerce and Industry (SCCI) urged the central bank to take effective measures to bring down the interest rates spread to 3.0 per cent from the existing level to spur country's overall business activities.
SCCI President Salah Uddin Ali Ahmed made the appeal at an exchange-of-views meeting with the BB Governor at the chamber office in Sylhet on Friday evening.
"The gap between lending and deposit rates ought to be brought down to 3.0 per cent from the existing level immediately," the SCCI chief said while speaking at the meeting.
The overall interest rates spread in the country's banking sector fell below 5.0 per cent in March last after more than one year due to strict monitoring and supervision by the central bank.
Mr Ahmed also sought interest waiver on loans for the first quarter of the current calendar year because of the political unrest that hit hard trade, business and the economy at large.
Governor Dr Rahman said the central bank is providing policy supports continuously to facilitate overall business activities across the country.
"We're facilitating business activities across the country through providing policy supports," he noted.
He also said the interest rates had already started declining and it would decrease further.
The overall interest-rate spread in the country's banking sector came down to 4.87 per cent in March 2015 from 5.04 per cent in the previous month, the BB data showed.
A number of business leaders, including former Chairman of Chittagong Stock Exchange Fakhruddin Ali Ahmed, requested the governor to take measures to extend the timeframe to bring down capital market investment by the commercial banks to facilitate stock-market operations.
Regarding capital-market exposure by the banks, the central bank chef said the investment limit and timeframe have been set in the existing Banking Companies Act considering the risk of the commercial banks.
The BB earlier had asked the banks to bring down their overall capital market investment within 25 per cent of total capital by July 21, 2016 in line with the Banking Companies (Amendment) Act 2013.
According to the Banking Companies Act 1991 (Amended 2013), total capital comprises four components: paid-up capital, balance in share-premium account, statutory reserve and retained earnings as stated in the latest audited financial statements.
In calculating total investment in the capital market different components, including all types of shares, debentures, corporate bonds, mutual-fund units and other capital market securities, have to be considered.
The meeting discussed different issues related to trade and investment, particularly in the north-eastern parts of Bangladesh.
Among others, Deputy Governor of the BB Abul Quasem, former Vice President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) MA Momen and Chief Executive Officer and Managing Director of Pubali Bank Limited MA Halim Chowdhury also spoke on the occasion.
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