On high interest rate

High interest rate is hurting our industrial sector and other economic activities. When we keep our money as FDR in a Bank, we get 9 to 10 per cent as interest. But when we borrow from commercial banks, we have to pay interest at a rate of 15 to 17 per cent. The difference between borrowing and lending rates is 5 to 7 per cent which is quite high. In all fairness, the difference should not be more than 2 per cent. The investors are generally discouraged by such a high rate of interest charges against project loans, as cost of business goes high. If we compare the interest rate prevailing in our neighbouring countries, we shall see how exorbitant our bank rates are. In this way we are deprived of any competitive advantage. The world has become a global village and we face competition at every step. The central bank must take appropriate move to reduce the gap between lending and borrowing rates of bank interests, so that some kind of parity is maintained and we see a surge in economic activities. Lot of idle money is lying with the banks. If the interest rate is reduced, more people will be encouraged to invest in trade and industrial sectors which will be beneficial for the country in the long run. I hope the central bank will rise to the occasion and remove the existing discrepancy between lending and borrowing interest rates.
Sajjad Hossain
Gulshan,  Dhaka