The Federation of Bangladesh Chambers of Commerce and Industry has demanded that the Bangladesh Bank should discuss the ongoing review of calculation method of the bank interest rate spread with the stakeholders for making a proper and realistic decision about it.
FBCCI president Kazi Akram Uddin Ahmed last week sent a letter to Bangladesh Bank governor Atiur Rahman in this connection.
‘The review of the calculation method of interest rate spread will be acceptable to all if the central bank consult with the stakeholders including FBCCI, Bangladesh Association of Banks, Bangladesh Institute of Bank Management and Centre for Policy Dialogue,’ the letter stated.
The Bangladesh Bank has taken an initiative to review the existing calculation method of bank interest rate spread aiming to find out factors responsible for the current high level of the spread in the banking sector in the country.
A committee formed by the central bank is conducting a study in this regard. The committee was asked to submit its preliminary report by April 30.
‘Business community, bankers and researchers can make contributions to the review process and that will help the Bangladesh Bank to prepare a realistic report,’ the letter stated.
According to the BB rules, banks have to maintain a spread, the gap between the interest rates on credit and deposit rates, up to five percentage point for all types of loans, except high-risk consumer loans, including credit card and SME loans.
But many banks do not maintain the interest rate spread due to an unhealthy competition in the banking sector after the central bank withdrew cap on interest rates on all types of loans except agriculture and pre-shipment export loans.
Even in February, 26 banks did not maintain the interest rate spread for lending and deposit set by the Bangladesh Bank.
The overall interest spread rate in the banking sector stood at 5.05 percentage point in February from 5.13 percentage point in January.
The central bank has taken the latest move to bring down the spread below 5 per cent from the existing level.
Bankers of commercial banks, however, disagree with the BB on its bank interest rate spread calculating method.
They said that actual spread would be lower than the central bank’s calculation if it considers some other issues such as interest rate on borrowings from the inter-bank market and Bangladesh Bank through REPO and special REPO.
-With New Age input
