No pressure from BB to lower interest rates: ABB chief

Chairman of the Association of Bankers, Bangladesh (ABB) Syed Mahbubur Rahman has claimed that there is no pressure from the central bank to lower the interest rates in the banking sector to in between 6 and 9 percent. 

He made the claim after a meeting of the chief executives of different commercial banks with Bangladesh Bank Governor Fazle Kabir and other top officials on Sunday. 

Although the meeting was a regular one convened by the central bank after every three months, there were media reports that Bangladesh Bank called the meeting this time to mainly discuss the issue of lowering the interest rates between 6-9 percent. 

          Chairman of the Association of Bankers, Bangladesh (ABB) Syed Mahbubur                  Rahman. Photo: Courtesy

Last year, the central bank instructed all the banks to bring down their interest rate on lending to 9 percent and that on deposit to 6 percent following the government’s announcement on reducing the corporate tax in the banking sector. 

However, allegations are rife that most of the banks failed to comply with such instructions of the central bank and still they are charging interest on loans at over 9 percent and that on deposits at over 6 percent. 

About the outcome of the meeting, the ABB chairman said Bangladesh Bank will monitor what steps the banks are taking to lower the interest rates. “But there’s no pressure from Bangladesh Bank in this regard as it’s not possible to cut down the rates by setting a timeframe,” he said, adding that it needs cooperation from all stakeholders, including the government and depositors, to make it a success.

He said all the banks will work together to decrease the volume of default loans. “We hope the volume of default loans will decline soon.”

Briefing reporters about the meeting outcome, Bangladesh Bank Executive Director and Spokesman Sirajul Islam said the meeting mainly focused on reducing the default loans in the banking sector as it is the major reason behind growing high interest rates. 

“The meeting laid highest emphasis on reducing the default loans,” he said, adding that the central bank is now monitoring the measures taken by the banks to lower the interest rates.   

As per the latest statistics of Bangladesh Bank, the total amount of default loans in the country now stands at 11.87 percent or Tk 110,174 crore.