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'Single-digit interest rate to enhance pvt sector growth'.

The country's scheduled banks are gradually offering lower interest rate for all products to their clients that helps increase private sector investment as well as take the country's economic growth to a sustainable level, experts say. According to Bangladesh Bank (BB) data, average lending rate of all banks stood at 9.55 percent in 2017 against 9.93 percent in 2016 while weighted average deposit rate of all banks came down to 4.94 percent in 2017 from 5.22 percent in 2016, reports BSS. Bangladesh Bank chief spokesmen Serajul Islam said the central bank is continuing its ethical pressure on banks to bring down the lending rate to a single digit for accelerating the country's economy. 'This is the own decision of individual banks.

BB monitors the interest rate only as per the rules and regulations for bringing the interest rate in a single digit as per the decision of the Bangladesh Association of Banks (BAB),' he added. As per BB data, the private credit growth, a major pulse of economic activities, grew by 16.94 percent in fiscal 2017-18, which was 15.66 percent in fiscal 2016-17. Deputy Managing Director of the Islami Bank Bangladesh Limited (IBBL) Abu Reza M Yeahia said single digit lending rate is an urgent to expedite the private sector credit growth further. 'Single digit interest rate will play a vital role in creating business-friendly environment across the country. That's why investment will be increased,' he said. Executive Director of Centre for Policy Dialogue (CPD) Mustafizur Rahman said single digit lending rate will further speed up investment as interest rate is one of the major expenses of investment. 'The lending rate of banks should come down to a single digit to boost the country's economy as a low interest rate helps accelerate the economy of a country,' he said.

Dhaka Chamber of Commerce and Industry (DCCI) President Abul Kasem Khan said banks should bring down their lending rate to a single digit as per the decision. 'Single digit lending rate will reduce the cost of business. It will encourage entrepreneurs to invest,' he added. Earlier, the Bangladesh Association of Banks (BAB), an association of private commercial banks, decided to bring down the lending rate to a single digit and deposit rate for three months tenure to 6 percent. But, all banks could not implement the decision properly. On the other hand, the government has given incentives, including 5.5 percent CRR, to mitigate their liquidity crisis and bring the interest rate to a single digit. According to the BB data, the weighted average lending rate was 9.74 percent in the first seven months in 2018.

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Publication:The News Today (Dhaka, Bangladesh)
Date:Sep 25, 2018
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