Owners of private commercial banks have sought assistance from the Bangladesh Bank governor to implement their plan to lower interest rates on lending and deposit within July 1.
A 13-member Bangladesh Association of Banks (BAB) delegation, led by its chairman Nazrul Islam Mazumder, met Governor Fazle Kabir at the Bangladesh Bank headquarters on Thursday.
“It was a courtesy meet. We informed the governor of our decision formally and sought the support of the central bank officials to lower the interest rates,” Nazrul said.
On Wednesday, BAB decided to bring down the interest rate on lending to 9% and that on deposits to 6% from the existing levels.
The new interest rates will come into effect from July, the first day of fiscal year 2018-19.
Currently, private banks are lending at between 14 and 15%. The average interest rate for deposits is between 9 and 10%.
BAB took the decision under direction of Prime Minister Sheikh Hasina in order to create an industry-friendly environment, create new entrepreneurs, generate employment, and to accelerate trade, the release added.
Nazrul Islam Mazumder said: “Interest rate for the three-month term deposit from July 1 will be 6%, and the lending interest rate will be 9%. No bank will charge an interest higher than this. Banks will have to accept this decision.”
The BAB leaders also had a meeting with the prime minister later in the day.
“After taking the decision, we met Prime Minister Sheikh Hasina and informed her about it. There is no scope for apprehension about its implementation. The bank owners took this decision for the country’s development,” Nazrul said.
According to the Bangladesh Bureau of Statistics, the contribution of investment to GDP was 30.51% in the outgoing fiscal, of which 23.10% came from private investment and 7.41% from public investment.
In April, the government slashed the cash reserve requirement (CRR) for banks by one percentage point to 5.5% for the benefit of private commercial banks. Finance Minister AMA Muhith has also proposed that the tax rate for banks and financial institutions be reduced by 2.5% in the national budget for the 2018-19 fiscal year (FY19).
Under the present corporate tax policy, publicly listed banks, insurance, and non-bank financial institutions pay 40% corporate tax, while non-listed companies pay 42.5%.
