Muhith sets Aug 9 new deadline for 9pc rate implementation

Govt to review savings certificates’ interest rates on Aug 8

Staff Correspondent | Published: 00:05, Aug 03,2018 | Updated: 00:41, Aug 03,2018

 
 

Finance minister AMA Muhith on Thursday said that decision of lending at nine per cent interest rate would be implemented from August 9 as most of the banks did not execute the decision by the July 1 deadline.
He also said savings at six per cent interest rate would also be implemented from the same date after a meeting with the bankers of private banks and state-owned banks at the Planning Commission.
But the consumers’ loans and credit cards would not come under the purview of the proposed new interest regime, he added while talking to reporters.
Muhith said the prime minister had already given the announcement in this regard.
The fresh deadline has been announced after most of the banks failed to bring down the interest rates to single digit by the July 1 deadline, set on the basis of a meeting on June 20 between the finance minister and the banks’ owners association Bangladesh Association of Banks.
Muhith said that some banks implemented the decision.
Earlier, bank operators noted that ballooning classified loan, which has already hit the profit of the banks, could be a major impediment to successful implementation of the longstanding demand by the country’s investors to bring down the interest rate below the double digit.
The government would review the interest rate of the state-run savings certificate, a longstanding demand by the banks owners, despite meeting almost all the pervious demands including cut in corporate tax by 2.5 per cent, reducing cash reserve requirement to 5.5 per cent and extension of tenure of directorship for nine consecutive years from the previous six years by the banks owners.
Muhith said a meeting was scheduled to be held on August 8 to review the interest rate of the savings certificates — a usual practice when the gap between the interest rates of savings certificates and other savings instruments became wide.
A present, the gap is wide, Muhith said indicating the interest rates of the savings certificates.
The net sales of savings certificates stood at Tk 46,758 crore against the annual upward revised target of Tk 44,000 crore in the just concluded fiscal year (2017-18) as buying spree of savings certificates continued for the last several years amid shrinking benefits in others savings instruments.
Muhith noted that there was no liquidity crisis in the banking sector.
He also noted that the decision of allowing 50 per cent investment of the state-owned entities in the private banks paid dividends in solving the liquidity crisis. 

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