 | FBCCI urges govt to lower interest rates
03 April, 2011
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) yesterday expressed deep concerns over the looming stagnation of the country's overall investment climate due to liquidity crisis, high interest rates and shortage of foreign currency reserve.
In a statement, the apex trade body said the interest rates have gone up suddenly after the 13 percent cap on bank's lending rates was withdrawn.
“The country's trade and business activities are facing three-prong crisis due to high margins in opening letters of credits, imposed by liquidity crisis, high interest rates and shortage of foreign currency reserve,” the chamber said.
The government had capped bank interest rates at 13 percent to increase investments in the productive and labor-intensive sectors such as agriculture, small and medium enterprises and energy, in efforts to create jobs through faster industrialisation.
On March 9, the government withdrew the lending cap, and since then, the commercial banks have sent letters to different business organisations, stating the interest rates have been fixed at 16 percent to 20 percent, said FBCCI.
“As a result, the business activities will be affected financially. The investments will not be sustainable and profitable due to additional interest rates,” it said.
The chamber said the government's goals on investment and additional employment stated in the planned sixth five-year plan would not be achieved if crises regarding high interest rates, liquidity supply and foreign currency reserve are not solved on urgent basis.
“Besides, the imports and exports costs will go up and the prices of essentials will increase, which will ultimately upset the country's economy,” the chamber said.
The FBCCI proposed the government to lower interest rates to the previous level as soon as possible. It also demanded the authorities bring down the lending rates to single digit for the loans going to the productive sector in line with the practices in the neighbouring countries.
The chamber urged Bangladesh Bank to issue a circular asking the commercial banks to realise services charges in line with the central bank's policies.
Release link:http://www.thedailystar.net/newDesign/news-details.php?nid=180224
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