BB pledges 14pc loan rate cap, dollar stable around Tk 117

Just days after implementing market-based bank interest rates, the Bangladesh Bank met with the country's leading businesses on Thursday and assured them that loan interest rates would not exceed 14 per cent.
"We have discussed the interest rate issue with the governor, and he said the cost of deposits of banks is not higher than 8 per cent, thus the loan interest rate should not go over 14 per cent in any way," President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Mahbubul Alam told reporters after a meeting with the central bank governor.
He said businesses undertake a project considering the interest rate, exchange rate and many other factors.
But if these change frequently, businesses face consequences, he said.
"Thus, we have requested the central bank not to change the policies repeatedly," said Mr Alam, and the governor assured the businesses that he would follow the suggestion.
The FBCCI president said he also requested the governor to take steps to keep the dollar price within the set price of Tk 117.
"The governor assured us that the price of USD would not go above Tk 1.0 or below Tk 1.0 from the set price," he said.
The same rates will be applicable in all banks for opening letters of credit (LCs), he said, referring to the governor.
He said dollar scarcity remains in some cases but "the governor assured us that the dollar shortage will be resolved by next December".
Asked about money laundering by businesses and not bringing in export proceeds, he said, "No honest businessman does so. We are no longer with any dishonest businessmen."
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President S M Mannan said recently they received a circular that no investment is allowed other than in economic zones and industrial zones.
"We requested the governor to suspend the circular that was issued without consultation with us," he said.
Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said businesses are failing to open LCs due to a dollar shortage.
On the other hand, the central bank has reduced the size of the Export Development Fund (EDF) to $3.0 billion, which is causing harm to businesses, he said.
"We have requested the central bank to form a separate fund to resolve the LC opening problem," he said.

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