Logo
10th-Jul-2018

Clients deprived of single digit interest rate: Banks must stop illegal practice

By

THE government's decision to cut the interest rate on lending to 9% and that on deposits to 6% from the existing levels has not yet properly followed by the commercial banks. The decision on new interest rates was scheduled to go into effect from July 1. The banks are now allegedly applying different techniques to skip it. Earlier, the private banks were lending at between 14% and 15%, while the average interest rate for deposits was between 9% and 10%.
Newspaper reports said the private commercial banks those have taken step to reduce the lending rate to 9%, they are applying different charges, including 1-1.5% processing fee, 1% deposit registration fee, 1% servicing fee, 1-2% supervising agency fee and 1% closing fee for advance payment. That means, the clients have to pay 12% -13% interest and they are not getting the benefit of reduced single digit interest rate as per directed by the government.
What is disagreeable that, these banks in their official papers to the central bank and controlling authority are showing 9% interest rate. To make the statement justified, they are showing 4-9% average interest rate referring some earlier privileged sectors, including agriculture, spice, export and women entrepreneurs. This practice is undoubtedly worrying.   
At present, the situation at banking sector is not well. The deposit has been declining fast. The central bank data showed that depositors have withdrawn about a thousand crore taka between December last year and March, 2018. The total deposit in December last year was Tk 9,26,179 crore. At the end of March this year, the amount stood at Tk 9,25,279 crore.
Bangladesh Bank data showed that more than 100 million account holders deposit money in 57 banks while the bank directors are mainly conducting their business with the money of these depositors. The bank directors had invested only Tk 46,124 crore in the sector until September last year, while they withdrew Tk1,43,707 crore as loan from the banks during the same period.
We think, for the betterment of investment in the industrial sector, increasing employment opportunity and for total development - the banks should stop doing any unethical practice. They must take step to reduce the lending rate to 9% without wasting any time.