Changing policy frequently not good for banking sector

Bank chairmen opined

Staff Correspondent: Bangladesh Bank is forced to change policy repeatedly due to wrong decisions, which is good at all for the banking sector and the overall economy. This has opined by the chairmen of different commercial banks.
They said, no country in the world has a precedent for maintaining interest rates. It has been proved wrong in our country too. So, Bangladesh Bank has withdrawn from the previous decision. Bangladesh Bank has to change policy repeatedly due to wrong decisions.
The chairmen of the banks came to the meeting on the invitation of the governor of Bangladesh Bank. But he was not present in the meeting, quoting an emergency meeting at the Ministry of Finance. It is known that the meeting was supposed to discuss various issues of the country’s economy including bank merger, dollar exchange rate, loan interest rate, good governance, but only the construction of a hospital under the initiative of Bangladesh Bank was discussed.

Bangladesh Association of Banks (BAB) chairman of private bank entrepreneurs Nazrul Islam Majumdar told reporters that the loan interest rate depends on demand and supply. As a result, no one has any power to stop it. There is no precedent for fixed interest rates in any country in the world. Interest will run at its own pace. It will stop at one place while moving. Will fall again, rise again. This is the rule of economics. As a result, it is not the job of Bangladesh Bank to determine the interest rate. That should be left to the market. Finally, Bangladesh Bank also withdrew from the previous decision. We applaud it. He also said that there is no alternative to market-based dollar prices. Dollar is very expensive in other countries too. We have been forced here for so long. Which is now close to the market.
Pubali Bank Chairman Manjurur Rahman said that the previous policies of Bangladesh Bank have failed regarding increasing the dollar price and leaving the interest rate to the market. Bangladesh Bank is forced to change policy repeatedly due to wrong decisions.
Earlier, in April 2020, Bangladesh Bank had fixed the maximum loan interest rate at 9 percent in view of the demands of traders. Along with this, Bangladesh Bank also instructed the banks that the deposit interest should not fall below 6 percent. Then, on the advice of the International Monetary Fund (IMF), Bangladesh Bank introduced ‘SMART’ (Six Months Moving Average Rate of Treasury Bills) by lifting this limit on loan interest rates during the announcement of monetary policy in July last year. And last Wednesday, Bangladesh Bank left the market completely by withdrawing from the smart system. At the same time the policy has also increased interest rates. In addition, the dollar rate is largely market-based, though not fully market-based.