Kazi Zahidul Hasan :
Business leaders on Tuesday expressed anxiety at the sudden rise in borrowing rates asking the central bank to use its regulatory supervision properly to bring down it to rational level.
They said the lending rates have hit double digit again in contrast to the prevailing macroeconomic situation, which may dampen the credit growth to private sector as outlined in the Bangladesh Bank’s new monetary policy.
“The private sector credit growth target fixed at 16.8 percent in the new monetary policy is well enough to stimulate growth and economic activities. But high cost of funding poses a potential challenge for the central bank to achieve the credit target. The central bank should remain watchful on the banks’ lending practices so that credit flow to private sector does not hamper,” FBCCI President M Shafiul Islam Mohiuddin told The New Nation yesterday.
Terming the monetary policy statement as ‘rhetoric,’ he said, “The monetary target fixed in the policy will be attainable provided presence of a conducive investment climate. An improvement is evident in the electricity generation and infrastructure development. But the current lending regime is not favourable to boost private sector credit to expected line.”
“The situation makes credit inaccessible to SMEs badly impacting economic activities and job creation,” he noted.
Mohiuddin said the central bank, being the banking sector regulator, should take the sole responsibility in this regard. It should closely monitor the activities of the commercial banks and peruse them to make low cost credit available for the private sector.
“Banks have already hiked lending rates and it reached double digit on ling-term loans leading to a fresh uncertainty over the country’s investment front. It may contribute to a fresh investment crunch in an election year,” Exporters Association of Bangladesh (EAB) President Abdus Salam Murshedy told The New Nation.
He said export-oriented industries are facing various challenges owing to high gas and power tariffs, factory remediation and global headwinds associated with intense competition from the regional competitors and falling demands. The situation has already reflected on the country’s export growth that advanced moderately by 7.0 percent during the first half of this fiscal.
“In this context, a fresh rate hike will push up the production cost of the export-oriented industries further worsening their condition,” said Murshedy, adding, “BB’s monetary policy will not work if the lending rates remain high. BB should look into the matter to boost credit to private sector in line with monetary goal.”
More than 40 banks have increased interest rates by the end of December last year. Of them 30 are charging double digit rates ranging from 10 to 12 percent, according to a Bangladesh Bank report.
“The rate of interest has gone up again causing fresh worry to us,” BGMEA President Siddiqur Rahman told The New Nation.
He said lending rates came down to single digit (8-9 percent) few months ago, but now it is going up again. It has incresed cost of doing business putting additional burden on the entrepreneurs.
“The fresh spike in interest rates will negatively affect the private sector investment and create a road block to BB’s credit growth target to private sector,” said Siddiqur Rahman.
The BGMEA President urged the central bank to take necessary steps to keep interest rate at a reasonable level.
