Hasina pushes for single-digit rates on bank loans to encourage investment

Prime Minister Sheikh Hasina has pitched for lowering the interest rates on bank loans to single-digit to prop up domestic investment.

Around a month after speaking about the issue at a party programme, the Awami League chief raised it again at a meeting with private bank owners at the Ganabhaban on Friday.

“You must cut interest rates a bit. Otherwise, investments will be impossible to come by. So you must make the rates single-digit,” she said.

Leaders of the Bangladesh Association of Banks called on Hasina to hand Tk 1.63 billion in aid to the Prime Minister’s Relief and Welfare Fund.

Despite repeated calls by the government and the central bank to cut the interest rates, the commercial banks have reportedly raised the rates.

The banks say they have received no instructions from the Bangladesh Bank.

The association representatives agreed they should cut the rates in recent meetings with Finance Minister AMA Muhith, Bangladesh Bank Governor Fazle Kabir and other policymakers, but have not done so.

Hasina said her government has resolved ‘all problems raised by the bank owners’.

“Now you must keep your words,” she told them.

The banks stand to gain as well if they cut interest rates to single-digit, the prime minister said. “People will be eager to work with the banks,” she said.

Muhith announced relaxing cash reserve requirement or CRR along with a cut in repo interest rate in a meeting with the BAB.

Kabir’s presence at the meeting between Muhith and the bank owners drew criticism from a section of financial experts as former deputy governor of Bangladesh Bank Khondkar Ibrahim Khaled suggested the incumbent governor should not have been there with the finance minister.

Reacting to the criticism, BAB President Nazrul Islam Majumder said in the Ganabhaban meeting, “Why shouldn’t the governor be there? He is our leader."

Majumder also identified Khaled as "a person continuously speaking against us (private bankers).”

Hasina, however, asked the bank owners to work for the socio-economic development without paying heed to criticism.

She thanked them for their contribution to the relief fund and distributed money among the families of the victims of the Aug 21 grenade attack of 2004.

But, the troubled Farmers Bank could not contribute to the PM's relief fund on Friday.

BAB chief Majumder introduced new Farmers Bank Chairman Chowdhury Nafeez Sarafat to Hasina.

Majumder said the bank was doing well and had recovered Tk 2.67 billion loans after Sharafat took charge.