Zarif Mahmud: International Monetary Fund (IMF) has imposed a new system of interest rates effective from July 1. As a result, the average interest rate in banks and non-banking financial institutions has increased by 1.70 percent. The average interest rate in banks is 10.10 percent and in financial institutions is 12.60 percent. Earlier, the average interest rate for bank loans was 8.33 percent and 11 percent for financial institutions. These data were obtained from a review report prepared by the central bank last week after the new interest rates came into effect.
The overall movement of interest rates is regularly reviewed by the central bank. For this purpose, it has been asked to send the overall picture of the interest rate of that month to the central bank by the 7th of every month. The central bank is preparing a report after reviewing the reports sent by the banks. Banks and financial institutions will be alerted if any discrepancy is detected. After the new interest rates came into effect from July 1, the central bank received reports of increased interest rates from commercial banks and financial institutions last week.
Meanwhile, customers of commercial banks and financial institutions are also being informed about the increase in loan interest rates. Due to increase in interest rates, banks are negotiating with customers to decide new installments to change the amount of previous loan installments. In this context, the former governor of the central bank Salehuddin Ahmed said, even if the method of charging interest is changed, the customers will not benefit in general. Because the interest rate on treasury bills will not decrease, but will increase. Because the government will take more loans from the banks. Besides, there is liquidity crisis in banks. Altogether, under the pressure of government debt, the interest rate of private sector loans will increase. Banks are charging various fees, commissions and charges in addition to loan interest. Due to which real interest is higher.
He also said that instead of simply calculating the interest on the loan, it is necessary to calculate how much interest is falling against the loan by taking all types of fees, commissions, charges etc. Then the real picture will be understood. Apart from this, there are undisclosed or invisible expenses. Together, the actual interest on the loan will be 3 to 4 percent higher than the declared interest rate.
According to sources, the loan interest rate has been market-based under the terms of the IMF. The interest on the loan will be determined by adjusting the average interest rate on Treasury Bills for six months from now. The average monthly interest rate on Treasury Bills is published by the central bank on its web page. Last June, this rate stood at 7.10 percent. Banks have fixed the interest rate on most loans by adding 3 percent to this. Accordingly, the new interest rate has been set at 10.10 percent in July. The interest rate for term, call, industrial and commercial loans is 10.10 percent. Earlier interest in this sector was 8 to 9 percent.
In case of agricultural and rural loans, the new interest rate has been fixed by adding a maximum of 2 per cent to the average interest on Treasury Bills. Earlier interest in this sector was 8 percent. Now it has increased to 9.10 percent.
In case of cottage, small and medium industries, micro loans, consumer loans, car loans and personal loans, the banks have fixed the interest at 11.10 percent by adding a maximum of 4 percent to the interest on treasury bills. Earlier the loan interest in these sectors was 9 percent.
While banks have given a specific guideline on interest rates on loans, nothing has been said about deposits. It has already been directed to keep the spread between loan and deposit interest rates below a maximum of 4 percent. In July last year, the interest rate gap between loans and deposits was 3.12 percent. Last May it decreased to 2.90 percent. Due to increase in loan interest rate, deposit interest rate will also increase slightly. The interest rate on deposits has increased from 7 percent to 7.30 percent. Banks are already announcing various savings schemes by increasing interest rates on deposits. Some banks are taking deposits at 9 percent interest.
Meanwhile, interest on loans or investments of non-banking financial institutions as well as interest rates on deposits have been fixed. Of this, the average interest rate on Treasury Bills plus 2 percent in case of deposits can be added. As a result, the deposit interest rate will be 9.10 percent. But some institutions are charging more interest than this. The highest interest rate on deposits was 7 percent till last June.
5 percent may be added to the average interest rate on treasury bills in case of interest on investment or loan. Accordingly, the interest will be 12.10 percent. Earlier, the highest interest rate in this sector was 11 percent. The same rate of interest is applicable for agricultural and rural loans.
Besides, against cottage, micro, small, medium, personal loans, car loans and consumer loans, financial institutions are adding an additional 6 percent interest to meet the additional cost. As a result, the interest rate in this sector has increased to 13.10 percent.
The interest rate on loans taken by customers against credit cards and purchases made using the card has been kept unchanged at 20 percent as before.
According to sources, the interest rate on treasury bills may increase due to liquidity crisis in the banking sector and additional lending by the government. Although the interest rate has increased in the last six months, it has decreased slightly in June compared to last May. The interest rate on Treasury bills averaged 6.69 percent last January. It increased to 7.04 percent in February. In March, it increased slightly to 7.07 percent. It increased further to 7.10 percent in April and increased to 7.13 percent in May. Last June, this rate decreased slightly to 7.10 percent. On July 10, the six-month treasury bill auction interest rate increased to a maximum of 7.35 percent. If the government borrows more, its interest rate will increase. As a result, the loan interest rate will also increase.
Banks and financial institutions can change the interest rates on loans every six months, according to the central bank’s directives. In this case, customers should be informed about the change. The interest rate will be determined by adjusting the average interest rate of Treasury bills of the previous month in which the loan is taken.
Meanwhile, the banks are collecting different types of money, including interest, loan processing fee, agency commission, guarantee fee, etc. against the loan. Along with these, the real interest is getting higher. While the Central Bank has banned charging any fees other than interest on some loans, not all loans have been banned. As a result, almost all banks are charging fees or commissions under various names.
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