Interest rate on export loans crossed double digits

Staff Correspondent: A day after raising the policy rate to control the rise in inflation, the central bank issued instructions to further increase the lending rates of commercial banks.
In this phase, the interest rate will increase by 10.25 percent in case of new loan disbursement. As a result, the maximum interest rate of the loan will be 11.18 percent. The maximum interest rate on export loans will be 10.18 percent. As a result, interest rates on export loans crossed double digits after a long time.
At the same time, the interest rate on deposits will also increase. However, the interest rate on earlier disbursed loans will remain unchanged. Banks can increase their interest rates six months after disbursement of loans.
In this regard, Bangladesh Bank issued a circular on Monday and sent it to the chief executives of commercial banks. This provision will be effective from Tuesday.
In this context, the former governor of the central bank Salehuddin Ahmed said that the central bank is following contractionary monetary policy to control the inflation rate. This means that the loan interest rate will increase.
The flow of money in the market will decrease. Increasing the interest rate on loans will increase the cost of production. Investment will be less.
According to sources, the loan interest rate has been market-based under International Monetary Fund conditions. Due to this, currently the interest rate of the loan is determined on the basis of the average interest rate of six months treasury bills of the government. Currently, the average interest rate on treasury bills is 7.43 percent.
With this, the banks used to fix the loan interest by adding a maximum of 3.5 percent. As a result, the maximum loan interest was 10.93 percent earlier. From yesterday Tuesday, this interest will increase to a maximum of 11.18 percent.
At the same time, the interest rate on export loans has also been increased. In case of disbursement of this loan, 2.75 percent should be added to the average interest rate of treasury bills. As a result, the interest rate of this loan will increase to a maximum of 10.18 percent from Tuesday. Earlier its interest rate was the highest 9.93 percent. As a result, interest rates on export loans crossed double digits.
Earlier, export credit interest rates were in single digits for a long time. Its interest rates were kept low to support the export sector. In recent times, the interest rate on export loans has also been increased to reduce IMF pressure and inflation. It has increased its interest rates in several rounds and crossed double digits.
In this context, the executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Mohammad Hatem said, the export sector is already under great pressure due to the global recession.
Meanwhile, increasing the interest rate of export loans will increase the pressure on this sector. Earlier, the interest rate on export loans was 5 percent. Later it increased step by step and now crossed double digits. This will increase the cost of the export sector.
Meanwhile, if the loan interest rate is increased, the deposit interest rate will also increase. The central bank has not said anything about raising interest rates on commercial banks’ deposits. However, the flow of deposits in banks is relatively less than before. Banks will also increase their interest rates to collect additional deposits.