Reintroduce CAP on lending rates
Photo: Keith Brofsky
Bangladesh Bank recently liberalised the deposit and lending rates by removing the CAP (restriction). Generally the central banks of most of the developed and developing countries prudently control the deposit rates and lending rates of the commercial and other financial organisations. Many commercial and loan giving agencies have started to enhance the lending rates and issued memos to the borrowers in the respect. As a result of enhancement of lending rates, the industrialists and business communities, especially the export-oriented industries facing tough and stiff competition in the international market, are having serious problems to market their products with high financial costs. The enhancement of the lending rates will severely affect our economy. Thousands of people will be unemployed and under-employed and economic misery will aggravate. Bangladesh Bank's whimsical decision will not bring good to the ailing economy, rather it will deteriorate the investment environment. The central bank prescribed the 'medicine' without consulting others. It should have discussed and consulted the trade bodies like FBCCI, MCCI, DCCI, CCCI, BGMEA, BTMC, and BTMA who are the real users and play the most significant role in the national economy by earning foreign exchange, providing employment to millions of people, and paying taxes to the government. The deposit and lending rates in Bangladesh are exorbitantly high in comparison with the developed and developing countries like USA, UK, EU countries, Japan, China, Singapore, Malaysia and India. The enhancement of lending rates due to removal of CAP by Bangladesh Bank will severely affect the export earning of the country and will have a direct negative impact on the investment environment. Finally, we urge the Bangladesh Bank authority consisting of economists, experts, professionals and bankers to review the decision and reintroduce the CAP on both deposit rates and lending rates congenial to Bangladesh economy.
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