Experts find it difficult to reduce single-digit loan rates

Experts argue against huge banking sector liquidity crisis due to high number of late loans, growing demand for dollars to deal with import payments and bank loans governments.

In this situation, economists and bankers have pointed out that it would be more difficult to reduce lending rates to a figure.

S addressing Dhaka Tribune, Dr. Zahid Hussain, Senior Economist at the World Bank, said, "The banking sector is facing a liquidity crisis for a variety of reasons. The high number of nonperforming loans in the sector is one of them. These loans in default can not increase. In addition, the recovery of outstanding debts should also increase. "

Nonperforming loans from banks increased by 16.962 billion Czech crowns from January to March this year, bringing the amount of stress loans in the banking sector to 1 10 873.54 billion crowns, according to data from the Bangladesh Bank.

The government has increased the borrowing target of the banks in the next fiscal year 2019-2020 in order to cope with the liquidity crisis. Today, most private banks are not able to lend because of the pressure of liquidity, he added.

Anis A Khan, managing director of Mutual Trust Bank and former chairman of the Bankers Association, Bangladesh Limited (ABB), said he wanted to lower lending rates, but because of the current pressure on liquidity, it is impossible to do so.

Khondoker Rashed Maqsood, managing director and chief executive officer of NRB Commercial Bank, said that interest rates depended on market forces and should not be fixed. "To collect deposits, we have to pay more interest, so the loan interest rate can not be reduced.It is possible to reduce the loan rate if we get deposits from # 39; government organizations at a rate of 6%. "

"In an open economy, we can not set interest rates on loans and deposits. This could affect the profits of the banks, "Dhaka Tribune told Bangladesh's former governor, Salahuddin Ahmed.

He called the decision to reduce loan and deposit rates policy. "That's why it's hard to implement," he said.

In the budget speech for the fiscal year 2019-2020, the Minister of Finance, AHM, Mustafa Kamal, presented a number of reforms aimed at restoring discipline in the troubled banking sector.

In his speech, he said: "The reduction in single digit loan rates has been taken in order to make industries and businesses more competitive."

In the budget of the post-budget press, Prime Minister Sheikh Hasina said: "Our intention has always been to reduce borrowing rates to one figure, but many private banks have not complied. against those who did not do it. " This concerns. "

Two-thirds of commercial banks have yet to reduce the single-digit loan rate, although they have promised to apply the 9% rate as of July 1, 2018, according to the data. from Bangladesh Bank.