Economy Desk: The bank loan interest rate is increasing every month. The rate has recently increased to over 13 percent. This interest rate will be applicable today. And it will remain in force for the month of April. This is the highest interest rate on loans since last July. And the interest rate on loans in non-bank financial institutions has exceeded 15 percent. Private investors and consumers are falling into trouble due to rising interest rates. Investors are unable to keep up with their business expenses. It increases the production cost of the product. And as the production cost of the product increases, the price of the product also increases in the market. As a result, consumers are falling into trouble.
Bangladesh Bank is now following a new method of determining interest rates. As a result, the loan interest is now increasing every month. Last February, the highest interest rate on bank loans was 12.43 percent. It increased to 13.11 percent in March. Earlier, the maximum interest rate on loans was fixed at 9 percent. Bangladesh Bank withdrew from the method of fixing the interest rate last July. At present, the base rate of loan interest is determined on the basis of in the six-month average rate of Treasury bills, or smart system. An additional 3.50 percent interest is added to this base rate. The banks determine the final interest rate of the loan. At the end of March, the smart rate was 10.55 percent. If 3 percent interest is added to this, the loan interest is 13.55 percent.
Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon told Ittefaq that the cost of business is increasing due to the increase in loan interest rates. A jump in interest from 9 percent to 14 percent is a big blow. Gas prices have increased, electricity prices have increased, and labor costs have increased by 70 percent. Traders are finding it difficult to survive in a market full of everything.
In April 2020, Bangladesh Bank fixed the maximum interest rate on bank loans at 9 percent. However, when the crisis started in the economy, the central bank introduced a new smart method to determine the interest rate of bank loans in June last year. The interest rate of the bank is determined on the basis of the six-month average interest rate of government Treasury bills. Bangladesh Bank publishes a smart interest rate at the beginning of every month.
Bankers said that after the removal of the much-discussed and criticized ‘9-6 interest rate’, the loan interest rate has now reached its highest level. The maximum interest rate on bank loans was fixed at 9 percent, and the maximum interest rate on deposits was 6 percent. In addition to the increase in loan interest rates, the interest rates on deposits in banks and financial institutions have also increased.
The central bank said the impact of the increase in policy rates has already been reflected on SMART in view of the decision taken by the Monetary Policy Committee to reduce inflation. In this context, new guidelines have to be followed in determining the loan interest rate to make the loan interest rate compatible with monetary policy and to maintain economic dynamics.
But economists think that people have reduced their savings due to high inflation. Due to Corona, the debt collection of the banks has also decreased due to two years of loan repayment exemption. As a result, the funds available for lending to banks have decreased. Again, some Sharia-based banks are unable to deposit money as required by the central bank due to a liquidity crisis. Some banks are now offering more than 10 percent interest on deposits. However, some banks in a liquidity crunch are taking deposits at 12 percent interest.
In such a situation, the bankers fear that the liquidity crisis will increase if the interest rate increases. This is because many borrowers may become irregular due to the rising cost of loan repayments. Bankers also say that if the interest rate is tolerable, it is good for businessmen. Because if the interest rate increases, the customer’s installment amount increases. Many customers delay the repayment of loans. Debt collection has already decreased. Now, due to the interest rate, it may decrease further. On the other hand, industrial entrepreneurs said that they are going through a tough time in the current situation. Many people are closing down their businesses because they cannot bear the loss.
