Investment climate and cost of funds

BUSINESSES face great difficulty in borrowing funds at relatively high rates of interest from the banks and, thus, in sustaining successfully in business. Honest and spirited sections of the private sector are burdened by such high interest charges on their banks loans. Some such businesses do furthermore fail to get loans or when they get the same, they are discouraged by the terms and conditions of such loans. But reportedly, the banks have huge idle funds as there are no takers of these funds -- and more so at high rates of interest. This is no state for a bank to be in because the banks are expected to keep the greatest part of their resources invested to get returns from their investments. The more a bank can invest its resources or extend them in the form of good loans among its clients, the more it is considered as successful in the operational sense. Idle resources do not earn any income for the banks. Thus, the building up of such resources are highly undesirable for the banks. One must also consider here the overall business environment that has not been conducive to promotion of investment.
This caretaker government will have to take some decisive steps in order to invigorate the economy. The improvement in the overall business environment and the lowering of the costs of funds or reducing the charges on loans by the banks and financial institutions merit here a priority attention. We would expect the government to act positively and early in relation to this demand so that investment activities in the economy can be increased.
Kazim Reza
Aminabad Colony, Dhaka