Disputes on interest rates...

During the last couple of months, debates among the central bank, bank association and business communities have been growing on the interest rate hikes in the banking sector and, no wonder, the International Monetary Fund (IMF) joined in the race. So, what are the positions of these market agents on this particular issue?


Bankers: The Association of Bankers Bangladesh (ABB) decided to offer an interest rate of 12.5% on deposits and charge 15.5% for industrial term loans and working capital to check unhealthy competition in the market. However, loans for consumers, home loans and credit cards will be out of purview. 


Businessmen:  Businessmen want banks to bring down interest rates further on term loan and working capital.


Bangladesh Bank: On January 4, the central bank withdrew the 13.0% interest rate limit on bank loans, prompting the private banks to increase their lending rates. After the limit was withdrawn, many banks increased the interest on industrial loans and working capital.


The International Monetary Fund: IMF has expressed dissatisfaction as the country’s private commercial banks self-imposed a cap on lending and deposit rates to prevent unhealthy competition in the banking system.


Here are the news links related to recent debate:


1. BB to take actions against banks violating declared interest rates.
2. BB for rational behaviour about fixing lending and deposit rates.
3. BB show-cause notices on three banks.
4. Businesses want further cut in lending rate.
5. Banks cut deposit rate but charge high interest on loans.
6. IMF unhappy over self-imposed cap on interest rates.