Bangladesh Bank on Sunday asked scheduled banks to take necessary measures to lower their rate of interest on lending in a bid to decrease the interest spread rate below five percentage points.
The direction came from a meeting between the central bank and the scheduled banks at the BB headquarters in the capital. Managing directors and chief executive officers of all banks attended the meeting with BB governor Atiur Rahman in the chair.
Atiur said the interest spread rate (the gap between interest rate on deposit and lending) in the banking sector had increased recently due to a downtrend tendency in the interest rate on deposit against the upward trend in the interest rate on lending.
It is logical that the rate of interest on lending should decrease if the interest rate on deposit declines, he said.
According to the BB data, the interest spread rate in the banking sector stood at 5.13 percentage point in June although the spread decreased below 5 percentage point in May.
The weighted average interest rate of deposit and lending stood at 8.54 percentage point and 13.67 percentage point in June.
The BB governor said, ‘A number of allegations have been placed to the central bank’s customers’ interest protection centre that some banks imposed higher charge against their clients. Besides, the banks are trying to take more profit from the clients when they deal the foreign exchanges with the clients.’
Atiur asked the banks’ MDs and CEOs to take steps in this regard.
BB deputy governor SK Sur Chowdhury after the meeting told reporters that the central bank had already sent a letter to 26 banks asking them to decline their spread rate below five percentage point.
He said that the BB asked the banks to take measures to increase their loan disbursement in line with the central bank’s monetary policy programme for the July–December of 2013.
The credit growth in the private sector declined in the last few months due to the ongoing volatile situation in the country’s socio-economic sector and inadequacy in the infrastructure, Sur said.
Besides, the banks had recently adopted a cautious policy due to the financial scams in the banking sector which hit their credit disbursement, he said.
The BB advised the banks to sanction the loans by scrutinising the clients’ credit information bureau report so that their loan disbursement would get tempo, Sur said.
He said that some banks had earlier disbursed loans without KYC (know your client) report which created financial scams in the banking sector, he said.
The BB asked the banks to maintain the KYC reports of their clients accurately, Sur said.
The BB will conduct an inspection whether the banks are maintaining the KYC report of their clients, he added.
The BB deputy governor said the central bank had asked the banks to settle their unsettled inland bills of import.
Sonali Bank has been asked to settle their acceptance bills against its counterpart banks, he said.
Association of Bankers, Bangladesh chairman Mohammed Nurul Amin told reporters that the MDs and CEOs of the banks had discussed in the meeting their course of action in the next six months as the political scenario would change much in the period.
He said, ‘We will prefer the small and medium enterprise and agriculture sector to disburse the loans in the months to come as the demand for large loans have decreased in the last few months.’
The BB also asked the banks to decline the defaulted loans in the scheduled banks, he said.