Several times, chairmen and managing directors of the state owned and private banks broke promises on lowering the lending and deposit rates
Bangladesh Bank has asked commercial banks to bring down their lending and deposit rates as most banks failed to keep their promises they had made one year ago.
On July 8, the central bank issued separate letters to the Managing Directors of commercial banks in this regard, asking them to lower their rates.
The letter says BB advised all banks to bring down lending and deposit rates to 9% and 6% respectively to implement the decision of Bangladesh Association of Banks (BAB) in this regard.
Several times, chairmen and managing directors of the state owned and private banks broke promises on lowering the lending and deposit rates, the letter says further.
In the 2019-2020 fiscal year budget speech, Finance Minister AHM Mustafa Kamal said, “The move to reduce lending rates to single digit has been made with a view to make industries and businesses more competitive."
In the post-budget press briefing, Prime Minister Sheikh Hasina said: "It was always our intention to bring down the lending rate to a single digit, but many private banks did not comply. Strict action will be taken against those who did not comply with the directives."
The letter of Bangladesh Bank also has said on June 20 last year the Bangladesh Association of Banks (BAB) fixed the interest rate of loans to 9% and deposit rate to 6% from the existing levels.
After that, on December 4 last year, Bangladesh Bank advised banks to bring down lending and deposit rates to 9% and 6%, according to the announcement of the BAB, the letter said.
But in June this year, BB found that most banks did not implement the 9% and 6% policy.
Economists and bankers remarked bringing down lending rates to single digits is going to be more challenging, as the banking sector is facing a huge liquidity crisis.
Anis A Khan, managing director of Mutual Trust Bank and former chairman of the Association of Bankers, Bangladesh Limited (ABB) said they want to bring lending rates down, but owing to the current liquidity pressure, they are unable to do so.
Two-thirds of the commercial banks are yet to bring down the lending rate to a single digit, although they promised to effect the 9% rate from July 1, 2018, according to Bangladesh Bank data.