'We were waiting for the central bank’s circular that would issue to the banks on the single digit lending rate implementation'
The bankers on Tuesday demanded that the central bank should first ensure that banks got deposit at 6% rate before implementing the 9% lending rate.
They also demanded that the government funds should be made available to private commercial banks at 6% rate to expedite the implementation of single digit lending.
“We have informed the central bank about the challenges which banks might face when the lending at 9% interest would be implemented. First we need to ensure 6% deposit in the banks,” Association of Bankers, Bangladesh (ABB) Chairman and Eastern Bank managing director Ali Reza Iftekhar told reporters on Tuesday.
The ABB statement came after a meeting with the Bangladesh Bank Governor Fazle Kabir.
“As soon as deposits, especially the government agencies’ funds, are available, the banks would be able to implement the lending rate," Iftekhar said.
"We have urged the central bank to keep lending rate of small and retail loans out of the single digit lending rate purview," the ABB chairman said.
"We were waiting for the central bank’s circular that would issue to the banks on the single digit lending rate implementation," he said.
The bankers at the meeting also reiterated the revision of loan write-off policy as it would help improving the condition of banks’ balance sheet, he said.
The Bangladesh Bank (BB), meanwhile, rejected the bankers’ proposal to keep the small and medium enterprises (SMEs) loans outside single digit lending rate.
BB spokesman and executive director Md Serajul Islam said: “But the central bank has rejected the recommendation because the decision would affect small industry development. A portion of banks' loans go to the SMEs sector,” he said.
Md Serajul Islam said that BB instructed banks that not to withdraw a big portion of their deposits from the non-banking financial institutions (NBFIs) at a time as the sector was passing a critical moment due to liquidity crisis.
Banks should be strict about mortgage or security against their disbursement of credit to prevent loan scams, he added.