Kazi Zahidul Hasan :
Entrepreneurs and business leaders on Friday urged the central bank to take necessary steps to cut bank interest rates to give a fresh boost in the private sector credit which showing a sluggish trend in the recent times.
High interest rates reduced the investment demand, hampering the economic growth. So, this should be changed soon, they added.
They said, Bangladesh Bank (BB) will announce the monetary policy statement (MPS) for next six months on July 27 where there should have the directives on reduction of bank interest rate
“High interest rate was leaving adverse impact on
investment. So, time has come to cut in lending rates,” Kazi Akram Uddin Ahmed, President of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) told The New Nation yesterday.
He said, once interest rate is reduced, investors and entrepreneurs would feel encouraged in investment. A higher credit demand would help infuse dynamism into the country’s economic activities through providing increased loans to real sectors.
He also said BB had set private sector credit growth at 16.6 in its previous monetary policy. But it has failed to achieve the target due mainly to higher interest rate coupled with political uncertainty. “If the next monetary policy has the directive of rate cut, it will help much to accelerate the private sector credit capitalizing the present stability in the country’s political arena,” he added.
“An investment crunch is prevailing on the economy with private sector credit remained low and this only happened due to high borrowing cost,” said Abdus Salam Murshedy, President, Exporters Association of Bangladesh (EAB).
He said, rising interest rates had been a cause for concern for the many investors who were less interested to borrow money under the present interest regime. “So, the central bank should take the issue seriously and give a direction in this regard in the next monetary policy,” he added.
“Lending rates should be cut down to single digit. At the same time, it should take measure to abolish the unforeseen cost for getting the loan sanctioned,” said Murshedy, who is one of the leading entrepreneurs of the country’s garments sector.
A significant cut in bank interest rate could also help bringing banks’ idle money into the investment, he added.
According to him, entrepreneurs now have to borrow funds from the banks at the rates of 15-18 per cent.
Apart from the rate cut, he also urged the central bank to take initiative to improve client services by the commercial banks. “The bank clients were not getting the services at the standard they deserve to,” he added.
He, however, said that credit flow to private sector was not satisfactory despite 16.5 per cent growth target in last MPS amid higher bank interest rate, higher charges in processing loans and lack of business-friendly environment.
“The rising interest rates although benefited the depositors, borrowers had to suffer most as it had accelerated their cost of doing business,” said Mohammad Hatem, Vice-President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
He said the local investors and entrepreneurs are bearing the brunt of the high lending rates which are highest among the SAARC countries. “We are apparently loosing our competitiveness over our competitors in the global trade and business due to high lending rates. So, it is necessary to bring immediate change in the current interest rate regime to stay competitive in the global trade,” he said.
He further said, with the rate cut, we can see increase in consumption spending and demand for loans. It would also add momentum to the private sector credit growth.
Entrepreneurs and business leaders on Friday urged the central bank to take necessary steps to cut bank interest rates to give a fresh boost in the private sector credit which showing a sluggish trend in the recent times.
High interest rates reduced the investment demand, hampering the economic growth. So, this should be changed soon, they added.
They said, Bangladesh Bank (BB) will announce the monetary policy statement (MPS) for next six months on July 27 where there should have the directives on reduction of bank interest rate
“High interest rate was leaving adverse impact on
investment. So, time has come to cut in lending rates,” Kazi Akram Uddin Ahmed, President of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) told The New Nation yesterday.
He said, once interest rate is reduced, investors and entrepreneurs would feel encouraged in investment. A higher credit demand would help infuse dynamism into the country’s economic activities through providing increased loans to real sectors.
He also said BB had set private sector credit growth at 16.6 in its previous monetary policy. But it has failed to achieve the target due mainly to higher interest rate coupled with political uncertainty. “If the next monetary policy has the directive of rate cut, it will help much to accelerate the private sector credit capitalizing the present stability in the country’s political arena,” he added.
“An investment crunch is prevailing on the economy with private sector credit remained low and this only happened due to high borrowing cost,” said Abdus Salam Murshedy, President, Exporters Association of Bangladesh (EAB).
He said, rising interest rates had been a cause for concern for the many investors who were less interested to borrow money under the present interest regime. “So, the central bank should take the issue seriously and give a direction in this regard in the next monetary policy,” he added.
“Lending rates should be cut down to single digit. At the same time, it should take measure to abolish the unforeseen cost for getting the loan sanctioned,” said Murshedy, who is one of the leading entrepreneurs of the country’s garments sector.
A significant cut in bank interest rate could also help bringing banks’ idle money into the investment, he added.
According to him, entrepreneurs now have to borrow funds from the banks at the rates of 15-18 per cent.
Apart from the rate cut, he also urged the central bank to take initiative to improve client services by the commercial banks. “The bank clients were not getting the services at the standard they deserve to,” he added.
He, however, said that credit flow to private sector was not satisfactory despite 16.5 per cent growth target in last MPS amid higher bank interest rate, higher charges in processing loans and lack of business-friendly environment.
“The rising interest rates although benefited the depositors, borrowers had to suffer most as it had accelerated their cost of doing business,” said Mohammad Hatem, Vice-President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
He said the local investors and entrepreneurs are bearing the brunt of the high lending rates which are highest among the SAARC countries. “We are apparently loosing our competitiveness over our competitors in the global trade and business due to high lending rates. So, it is necessary to bring immediate change in the current interest rate regime to stay competitive in the global trade,” he said.
He further said, with the rate cut, we can see increase in consumption spending and demand for loans. It would also add momentum to the private sector credit growth.
