Stimulus Funds: BB methods in as banks fee higher interest
The central bank yesterday asked banks never to impose more than 4.5 per cent interest rate on the funds disbursed from the stimulus bundle for the large borrowers in the professional and service sectors.
Some banking institutions had imposed 9 per cent interest rate on the borrowers just after they gave out the loans beneath the package worth Tk 40,000 crore in violation of a central lender instruction, the Bangladesh Bank said in a notice.
The central bank introduced a Tk 30,000 crore stimulus package on April 12 this past year within its proceed to shield the industrial and service sectors from the business slowdown brought on by the coronavirus pandemic.
The quantity of the stimulus package was extended to Tk 40,000 crore in phases.
The end-users are likely to get the loans at 4.5 %. Banks are permitted to receive mortgage loan subsidy of 4.5 per cent from the central bank on the loans.
However, many lenders are charging 9 %, creating a fiscal loss for the businesses.
Against the background, the central bank asked the errant banks to make clear why that they had charged the bigger interest than the amount set by the BB.
In response, the lenders stated they would adjust the rate after receiving the subsidy from the federal government, a BB official stated.
But the central bank rejected the reason, asking them to check out the interest ceiling of 4.5 %.
"The most recent initiative of the central lender is without a doubt a good move since it will help businesses get over the ongoing crisis," explained Rizwan Rahman, president of the Dhaka Chamber of Commerce and Sector.
Banks should maintain independent literature to calculate the interest according to the central bank's instruction, he said.
In some cases, a great number of banks are charging 1-1.50 per cent more than the rate set by the central bank, the entrepreneur stated.
"The central bank should strongly monitor the issue."
Banking institutions should follow the central bank instruction constantly, said Syed Mahbubur Rahman, managing director of Mutual Trust Lender.
Lenders should keep up with the interest price ceiling to greatly help the economy make a good turnaround from the pandemic found in a speedy fashion, said Rahman, also a good ex - chairman of the Association of Bankers, Bangladesh, a forum of managing directors of banking institutions.
"The central lender will take punitive measures against the errant banks if indeed they continue charging an increased charge," said a central banker.
The pandemic-hit influenced clients who have already borrowed from banking institutions can take no more than 30 per cent loans from their existing credit limit.
The most damaged borrowers will be given priority while disbursing the loans from the fund, and banks provides the loans from their coffer.
Banks have up to now disbursed Tk 31,000 crore of the stimulus package deal.
