Bangladesh Bank Governor Dr Salehuddin Ahmed on April 16 said he continues to persuade commercial banks to cut interest rates reasonably. Ahmed made the comment following Metropolitan Chamber of Commerce and Industry’s (MCCI) dissatisfaction over the commercial banks’ recent rate cut by one percent from the highest ceiling of 16 percent. MCCI President Latifur Rahman termed the banks’ move ‘somewhat misleading’.

“Interest rates and commission fees charged by the commercial banks should be reasonable and competitive one,” Salehuddin told a discussion focusing on the present economic situation and future outlook. MCCI organised the discussion in Dhaka. “Still, we are persuading the banks. Let’s see what happens,” the governor assured the MCCI leaders.

MCCI President Latifur Rahman said the recent agreement between the central bank and the bank owners and banks’ chief executive officers on reduction of highest interest rate by one percent is ‘somewhat misleading’. Latifur asked the central bank to take necessary moves to reduce the bank interest rate by one percent for different categories of loans instead of the highest ceiling only.

After a series of meetings with the BB, commercial banks last month agreed to reduce the highest ceiling of interest rate by one percent from existing 16 percent. Earlier, BGMEA President Anwar-Ul-Alam Chowdhury Parvez told The Daily Star that the banks have made a ‘mockery’ of the interest rate cut by one percent from the highest ceiling.

Responding to the businesses BB governor Dr Salehuddin Ahmed said the BB is continuing its efforts to reduce the lending rate and service charges of commercial banks. But Salehuddin told the business community that the banks are now free to fix interest rates on deposit and lending, except the rate on export credit, which is 7 percent. Latifur chaired the meeting, which was addressed among others by International Chamber of Commerce-Bangladesh President Mahbubur Rahman.

The MCCI president also focused on the country’s overall economic scenario, including monetary and fiscal policy, rising inflation and food production, interest rates, government’s borrowing, credit to private sector, credit ratings and exchange control guidelines. The MCCI president also made some suggestions on the issues.

“We ask the central bank to take up short and long term strategies to tackle the price hike of essentials in the domestic market,” Latifur said. “Our chamber firmly believes that policy support to agriculture is of high priority.” He also advised the government to ensure a buffer stock of food grains and supply chains. But the farmers must get the fair price of their produces.

Latifur said the MCCI supports the BB on its current accommodative monetary policy stance. He also urged the central bank governor to set a benchmark rate for bank loans instead of bi-lateral pricing. He also asked the BB to review the foreign exchange control guidelines for facilitating overseas investments, as the move would increase the value addition. Mahbubur Rahman said he observed a mismatch between the fiscal and monetary policies of the government.