The control of inflation will be a big challenge if the lending rate is brought down to a single digit, said Bangladesh Bank Governor Atiur Rahman.
He made the remark at a meeting with the business leaders of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) held at the central bank headquarters yesterday.
The inflation remained downward over the last few years due to lower food inflation and fall in commodity price in global market, the governor said, adding that as a result the overall economy remained balanced.
“We should not impose anything on the economy forcefully.”
Atiur added that the lending rate will come down if inflation is controlled properly.
In his address, Abdul Matlub Ahmad, president of FBCCI, recommended bringing down the lending rate of all kinds of loans to a single digit as well as limit the highest lending rate for productive sector to 3% plus cost of fund.
He also urged the governor to set sector-wise loan target for women entrepreneurs and take necessary measures to reduce non-performing loans.
Mohammed Bazlur Rahman, director of FBCCI, called for more measures to promote SME sector.
Business leasers also demanded a hike in cash incentive for housing sector, saying that the sector still feels the pinch of a prolonged business stagnation.
Meanwhile, the lending rate in the banking sector continued to fall at 11.05% in January this year, dropping by 1.27% from 12.32% in the same period of the last year.
The deposit rate fell last year, but not faster than the lending rate. The interest rate on deposit dipped by 1.05% last year, reaching 6.21% in this January from 7.26% in the same period of 2015.
Spread, the gap between lending and deposit rate, came down to the expected level of 4.84% in January this year from 5.05% in the same period last year, according to Bangladesh Bank data released recently.
