Bank loan
Sitting away from home, we hear about many changes that are taking place in my native country. We also feel great hearing about expanding facilities for business openings and bank loan opportunities. Easy bank loans for business, house constructions, car loans, loans for buying household appliances and personal loans, which, only a few years back were unknown, are now at doorsteps of many. More than dozens of foreign and local public and private banks are functioning in Bangladesh. There is no such Ward in Dhaka where there are no bank branches. These banks offer easy credit facilities without collateral security. Some banks appointed special marketing officers to hunt the homes of the prospective customers, allure them with many unseen lucrative packages to extend loans. It is of course, encouraging news for expatriate Bangladeshis who want to return home and invest their savings in their home country. Whenever there is a gathering of Bangladeshis on special occasions, many enquire and want to know about the real investment situation, some even request the seniors to help collect such information. On request I contacted over phone a close friend, a businessman who gave me an account of his own experience of bank loan, interest and services. According to him, he took Take 10 lakh as personal loan from a bank two years back for 3 years' credit. The loan's interest rate was initially fixed @20.50 per cent. He paid instalments on regular basis without any single instalment missing. After two years of payment he decided to foreclose the account by paying up one years balance principal at one go and get rid of his loan. He went to the bank to find out his outstanding amount to settle the account one year before of closing date. On check he found to his utter surprise that his outstanding loan is still more than half of what he took. While he insisted to give him detailed explanation, the bank officer disclosed the criterion they followed in the recovery process. What the bank did, it calculated the total interest to be payable in 3 years and adjusted the total in 2 years keeping the principal amount unpaid. Now, even if he forecloses the account he will have to pay the same amount which he could pay in next one year in equal instalments. He also found that in practical termsthe interest rate charges came to more than 25-30% inclusive of services charges, closing charges. He surprisingly found that even a postage charge of a letter was debited from the customer's account. The bank interest in Bangladesh is highest in the world. In the USA car loan interest is only 0.95%, house loans and other loans is within 4%. In India no financial institution is allowed to charge more than 8% interest, in Pakistan the highest interest rate is 9%, whereas, Bangladeshi banks charges 14 to 20% interest even on long-term industrial loans. The banks' interests double and triple in five years. There is no such business in the world, which can make such profits, as do the banks in Bangladesh. Despite highest numbers of loan defaulters the banks in Bangladesh growing faster than any business house. There is no regulator to regulate the activities the banks there. In the above situation, if an expatriate invests his hard earned savings in Bangladesh in cooperation with a bank there, I am sure, in 4/5 years he will lose all his savings and return to US to join his odd job again. In these circumstances, should I advise my friends to go back and invest?
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