Staff Correspondent: The board of Bangladesh Bank has decided to implement single-digit lending rates only for the manufacturing sector.
The decision came at the central bank’s board meeting held today at its headquarters.
Only working capital in the industrial sector will be given at single-digit interest rates, said Md Serajul Islam, executive director of Bangladesh Bank. He said a circular will be issued soon in this regard.
The central bank of Bangladesh was set to issue a circular on single-digit interest rate on industrial loans after getting approval from its board of directors, officials said.
A draft of the circular is expected to be placed in a meeting of the Bangladesh Bank (BB) board of directors, scheduled to be held at the BB headquarters in the capital Dhaka yesterday afternoon. BB senior executive said the central bank will issue the circular after approval by its board of directors.
The draft of notification has prepared in line with the BB-formed committee’s recommendations, he added.
On December 12, the high-powered committee submitted its report to the governor with recommendation that only industrial manufacturing sectors will be eligible for availing single-digit lending rate.
The seven-member committee, headed by the BB Deputy Governor S M Moniruzzaman, was formed on December 01 to find out ways for bringing down the industrial lending rate to single-digit.
The interest rates of large industrial (manufacturing) loans along with cottage, micro, small and medium industrial (manufacturing) credits will be lowered to single-digit from the existing level, according to its recommendations.
Besides, large industrial (manufacturing) loans will include credit provided to the ready-made garment (RMG), textile, ship-building and ship-breaking, agro-based industry, and similar other sectors.
The committee also recommended the government to ensure depositing its funds with private commercial banks (PCBs) along with public sector ones through current and SND (special notice deposit) accounts.
The government decided to allow the state entities to deposit 50 per cent of their funds with the PCBs, up from the earlier ceiling of 25 per cent, to minimise the cost of funds in banking sector.
The committee has advised the government to ensure mandatory deposit of the state entities’ funds with the PCBs as per rules,” according to a member of the committee.
He also said the recommendations will help the banks, particularly the PCBs, to implement single-digit interest rate on industrial loans.
After a meeting with the chairmen and MDs of public and private sector banks on December 01, Finance Minister A H M Mustafa Kamal told the reporters that the single-digit interest rate on industrial lending will come into effect from January 01, 2020.
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