The central bank is set to issue a circular on single-digit interest rate on industrial loans after getting approval from its board of directors, officials said. A draft of the circular is expected to be placed in a meeting of the Bangladesh Bank (BB) board of directors, scheduled to be held at the BB headquarters in Dhaka today (Tuesday). “We’ll issue the circular after approval by our board of directors,” a senior executive of the BB told the FE on Monday without elaborating. Draft on Payment and Settlement Act 2019 along with other issues are set to be placed before the board for approval, according to the official. On December 12, the BB-formed committee submitted its report to the governor with recommendation that only industrial manufacturing sectors will be eligible for availing single-digit lending rate. The seven-member committee, headed by the BB Deputy Governor S M Moniruzzaman, was formed on December 01 to find out ways for bringing down the industrial lending rate to single-digit. The interest rates of large industrial (manufacturing) loans along with cottage, micro, small and medium industrial (manufacturing) credits will be lowered to single-digit from the existing level, according to its recommendations. Besides, large industrial (manufacturing) loans will include credit provided to the ready-made garment (RMG), textile, ship-building and ship-breaking, agro-based industry, and similar other sectors. The committee also recommended the government to ensure depositing its funds with private commercial banks (PCBs) along with public sector ones through current and SND (special notice deposit) accounts. The government decided to allow the state entities to deposit 50 per cent of their funds with the PCBs, up from the earlier ceiling of 25 per cent, to minimise the cost of funds in banking sector. “We’ve suggested the government to ensure mandatory deposit of the state entities’ funds with the PCBs as per rules,” a member of the committee told the FE earlier. He also said the recommendations will help the banks, particularly the PCBs, to implement single-digit interest rate on industrial loans. Other members of the committee were – Kazi Akram Uddin Ahmed, chairman of Standard Bank Limited, Zaid Bakht, chairman of Agrani Bank Limited, Syed Mahbubur Rahman, managing director (MD) and chief executive officer (CEO) of Mutual Trust Bank Limited, Md Obayed Ullah Al Masud, MD and CEO of Rupali Bank Limited, Shah A Sarwar, MD and CEO of IFIC Bank Limited, and Mehmood Husain, MD and CEO of NRB Bank Limited. After a meeting with the chairmen and MDs of public and private sector banks on December 01, Finance Minister A H M Mustafa Kamal told the reporters that the single-digit interest rate on industrial lending will come into effect from January 01, 2020.
Source – The Daily Star.
