Private commercial banks on Saturday decided that the ceiling of the interest rate on deposits would be 12 per cent and they would not charge more than 12 per cent interest for loans for importing essential commodities.
The decision was announced after a meeting of the Bangladesh Association of Banks and the Association of Bankers Bangladesh at BAB's office on Saturday after a heated debate over certain issues.
'The banks will pay 12 per cent interest for deposits and won't charge more than 12 per cent interest for opening letters of credit to import essential commodities,' said Nazrul Islam Majumdar, chairman of the BAB which is an association of bank owners. 'The decision will be effective from tomorrow [Sunday], and if any bank fails to abide by our decision it will be punished for indiscipline.'
Due to the liquidity and credit crisis, many banks are now offering up to 18 per cent interest for deposits and asking as much as 20 per cent for loans.
The continuous demand from the business leaders to reduce the interest rate on industrial loans was not discussed in the meeting, which was presided over by Majumdar. The chairmen, managing directors and chief executive officers of various commercial banks were present on the occasion.
The CEOs of some banks said that they had already collected deposits by offering 14 per cent interest so their clients would get angry and move to another bank if they lowered the interest rate to 12 per cent.
It will be very tough to maintain the lower rate of interest on deposits if it is imposed, they cautioned.
Some bankers denied the allegation that they charge more than 12 per cent interest on loans for import of essential commodities.
In response BAB's chairman said that there are some allegations against some banks of charging additional interest rate, which must be stopped.
'We have made a commitment to the prime minister to fix the interest rate on deposits at 12 per cent, and it will be better us to keep the commitment to get benefits from the government, especially reduction of corporate tax,' he said.
'We welcome the Bangladesh Bank's decision to increase the credit-deposit (CDR) ratio to 90 per cent for commercial banks and 95 per cent for the Islamic banks,' added Majumdar.
K Mahmood Sattar, chairman of ABB which represents the MDs and CEOs of the banks, said that the central bank had announced that it would evaluate the banks' loan-deposit ratio on a case-to-case basis, and if any bank exceeded the existing ratio of 85-90 per cent it would face punitive action.
Majumdar, however, assured them that the central bank would not
take any action if their banks' CDR remained at 90-95 per cent.
Source : New Age
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