Banks asked to fix lending rate to NBFIs at maximum 13pc
Wednesday, 3 June 2009
FE Report
The central bank has asked the commercial banks to fix the rate of interest on lending to the non-banking financial institutions (NBFIs) at maximum 13 per cent to facilitate the sector.
"If the NBFIs are given loans at lower interest rate they will be able to provide their clients loans at reasonable interest rates," a senior official of the Bangladesh Bank (BB) told the FE Tuesday.
He also said the cost of funds of NBFIs will consequently decline if the interest rate ceiling is maximum 13 per cent.
"The interest rate ceiling will be effective immediately and continue until further instruction," the central bank said in its circular, issued Tuesday.
Bangladesh Leasing & Finance Companies Association (BLFCA) welcomed the BB's latest move, saying that the interest rate ceiling will bring a positive impact on the sector.
"The NBFIs will able to provide loans to their clients at lower interest rate following the BB's instruction," BLFCA Chairman Mafizuddin Sarker told the FE.
He also said the BLFCA requested the BB governor at a meeting held in the central bank on May 27 last for taking necessary measures to ensure loans from the banks with the interest rate ceiling on lending in five specific areas at maximum 13 per cent.
On April 19 last, the central bank asked the commercial banks to fix the interest ceiling on lending in five specific areas at maximum 13 per cent to help mitigate the impact of the ongoing global economic meltdown.
The five areas for which a ceiling of interest rate on lending has been fixed are agriculture, term loan to large and medium-scale industries, working capital to large and medium-scale industries, housing, and trade financing.
The central bank has asked the commercial banks to fix the rate of interest on lending to the non-banking financial institutions (NBFIs) at maximum 13 per cent to facilitate the sector.
"If the NBFIs are given loans at lower interest rate they will be able to provide their clients loans at reasonable interest rates," a senior official of the Bangladesh Bank (BB) told the FE Tuesday.
He also said the cost of funds of NBFIs will consequently decline if the interest rate ceiling is maximum 13 per cent.
"The interest rate ceiling will be effective immediately and continue until further instruction," the central bank said in its circular, issued Tuesday.
Bangladesh Leasing & Finance Companies Association (BLFCA) welcomed the BB's latest move, saying that the interest rate ceiling will bring a positive impact on the sector.
"The NBFIs will able to provide loans to their clients at lower interest rate following the BB's instruction," BLFCA Chairman Mafizuddin Sarker told the FE.
He also said the BLFCA requested the BB governor at a meeting held in the central bank on May 27 last for taking necessary measures to ensure loans from the banks with the interest rate ceiling on lending in five specific areas at maximum 13 per cent.
On April 19 last, the central bank asked the commercial banks to fix the interest ceiling on lending in five specific areas at maximum 13 per cent to help mitigate the impact of the ongoing global economic meltdown.
The five areas for which a ceiling of interest rate on lending has been fixed are agriculture, term loan to large and medium-scale industries, working capital to large and medium-scale industries, housing, and trade financing.