SCBs to implement 13pc interest ceiling without deposit rate cut
Friday, 10 April 2009
Siddique Islam
The state-owned commercial banks (SCBs) have decided to implement the 13 per cent interest ceiling on lending in five specific areas without slashing the interest rate on deposits.
The four SCBs - Sonali, Janata, Agrani and Rupali - also have formed a four-member committee, headed by Deputy Managing Director of Sonali Bank Limited Kazi Faqurul Islam, to formulate a guideline on rescheduling of loans to four export-oriented sectors, affected by the global economic crisis, without any down-payment.
The decisions were taken at a meeting of the chief executives of the four SCBs, held at the Sonali Bank Limited Thursday with its Managing Director and Chief Executive Officer SA Chowdhury in the chair.
The five specific areas are agriculture, term loans, working capital, housing and trade financing while the four affected sectors are textile, frozen food, jute and leather, which the central bank has identified for allowing relaxation of rules on loan rescheduling on the basis of bank-client relationship.
Talking to the FE, Managing Director and Chief Executive Officer of Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed said, "We'll start implementation of the 13 per cent maximum interest rate on lending in the specific areas immediately."
He also said the SCBs will reschedule loans to the four affected export-oriented sectors in line with the central bank's advice.
On April 7 last, the Bangladesh Bank (BB) decided to allow rescheduling of loans to the four affected sectors without any down-payment until September 30 next this year.
"We're going to issue a circular in this connection within a coupe of days," a BB senior official told the FE, adding that the central bank relaxed the existing loan rescheduling rules as a policy support for the four sectors.
On the other hand, the Association of Bankers, Bangladesh (ABB) has decided to hold a meeting of all managing directors of the private commercial banks (PCBs) on April 15 next to discuss how to implement the 13 per cent maximum interest rate on lending in the five specific areas.
The decision was taken at a meeting of the ABB held at its office in the city Thursday with its Chairman K Mahmood Sattar in the chair.
"We'll sit together in the next week to discuss how to implement the latest maximum interest rate on lending for specific areas," the ABB chairman told the FE without elaborating.
A chief executive officer of a PCB, who is also close to the ABB, said most of the PCBs' top executives were discussing among themselves the impact of slashing interest rates on lending along with the future interest rate on deposits.
"We're waiting for the circular of the central bank relating to the maximum interest rate on lending," the executive told the FE, adding that most of the top executives have agreed to cut their interest rate on deposits to minimise the interest rate spread.
In March last, the commercial banks offered interests in the range between 5.25 per cent and 13.50 per cent on fixed deposit schemes, while the rates for saving accounts varies between 2.50 per cent and 8.00 per cent, the BB data show.
In the latest bankers' meeting, the commercial banks agreed to a central bank proposal not to charge more than 13 per cent interest on lending in five specific areas to help mitigate the impact of the ongoing global economic meltdown.
Meanwhile, the apex trade body of the country Thursday hailed the government's latest decision to cut the lending rate of the banks.
"The lending rate should be reduced to a single digit," Annisul Huq, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said at the meeting with representatives from the parliamentary standing committee on finance ministry at the FBCCI Conference Room in the city.
The FBCCI is working extensively on the proposed budget for the fiscal year 2009-2010, Mr Huq, who presided over the meeting, said.
He also emphasised on reforming the bureaucracy as, he said, it was an impediment to progress.
AHM Mostafa Kamal MP, chairman of parliamentary standing committee on finance ministry, said the parliamentary committee would sit with FBCCI at least in every three months.
The meeting also discussed the formulation of a time-befitting energy policy, finalization of coal policy, steps to protect the local industries, increase revenue collection, subsidising on import, providing package to face financial crisis, cut government spending, reducing the number of unnecessary programmes, cash incentive and captive power plant.
Golam Dastagir Gazi (Bir Pratik) MP, AKM Maidul Islam MP, First Vice President of FBCCI Abul Kashem Ahmed and Vice President Abu Alam Chowdhury, among others, attended the meeting.
The state-owned commercial banks (SCBs) have decided to implement the 13 per cent interest ceiling on lending in five specific areas without slashing the interest rate on deposits.
The four SCBs - Sonali, Janata, Agrani and Rupali - also have formed a four-member committee, headed by Deputy Managing Director of Sonali Bank Limited Kazi Faqurul Islam, to formulate a guideline on rescheduling of loans to four export-oriented sectors, affected by the global economic crisis, without any down-payment.
The decisions were taken at a meeting of the chief executives of the four SCBs, held at the Sonali Bank Limited Thursday with its Managing Director and Chief Executive Officer SA Chowdhury in the chair.
The five specific areas are agriculture, term loans, working capital, housing and trade financing while the four affected sectors are textile, frozen food, jute and leather, which the central bank has identified for allowing relaxation of rules on loan rescheduling on the basis of bank-client relationship.
Talking to the FE, Managing Director and Chief Executive Officer of Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed said, "We'll start implementation of the 13 per cent maximum interest rate on lending in the specific areas immediately."
He also said the SCBs will reschedule loans to the four affected export-oriented sectors in line with the central bank's advice.
On April 7 last, the Bangladesh Bank (BB) decided to allow rescheduling of loans to the four affected sectors without any down-payment until September 30 next this year.
"We're going to issue a circular in this connection within a coupe of days," a BB senior official told the FE, adding that the central bank relaxed the existing loan rescheduling rules as a policy support for the four sectors.
On the other hand, the Association of Bankers, Bangladesh (ABB) has decided to hold a meeting of all managing directors of the private commercial banks (PCBs) on April 15 next to discuss how to implement the 13 per cent maximum interest rate on lending in the five specific areas.
The decision was taken at a meeting of the ABB held at its office in the city Thursday with its Chairman K Mahmood Sattar in the chair.
"We'll sit together in the next week to discuss how to implement the latest maximum interest rate on lending for specific areas," the ABB chairman told the FE without elaborating.
A chief executive officer of a PCB, who is also close to the ABB, said most of the PCBs' top executives were discussing among themselves the impact of slashing interest rates on lending along with the future interest rate on deposits.
"We're waiting for the circular of the central bank relating to the maximum interest rate on lending," the executive told the FE, adding that most of the top executives have agreed to cut their interest rate on deposits to minimise the interest rate spread.
In March last, the commercial banks offered interests in the range between 5.25 per cent and 13.50 per cent on fixed deposit schemes, while the rates for saving accounts varies between 2.50 per cent and 8.00 per cent, the BB data show.
In the latest bankers' meeting, the commercial banks agreed to a central bank proposal not to charge more than 13 per cent interest on lending in five specific areas to help mitigate the impact of the ongoing global economic meltdown.
Meanwhile, the apex trade body of the country Thursday hailed the government's latest decision to cut the lending rate of the banks.
"The lending rate should be reduced to a single digit," Annisul Huq, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said at the meeting with representatives from the parliamentary standing committee on finance ministry at the FBCCI Conference Room in the city.
The FBCCI is working extensively on the proposed budget for the fiscal year 2009-2010, Mr Huq, who presided over the meeting, said.
He also emphasised on reforming the bureaucracy as, he said, it was an impediment to progress.
AHM Mostafa Kamal MP, chairman of parliamentary standing committee on finance ministry, said the parliamentary committee would sit with FBCCI at least in every three months.
The meeting also discussed the formulation of a time-befitting energy policy, finalization of coal policy, steps to protect the local industries, increase revenue collection, subsidising on import, providing package to face financial crisis, cut government spending, reducing the number of unnecessary programmes, cash incentive and captive power plant.
Golam Dastagir Gazi (Bir Pratik) MP, AKM Maidul Islam MP, First Vice President of FBCCI Abul Kashem Ahmed and Vice President Abu Alam Chowdhury, among others, attended the meeting.