The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has said investment and domestic economic activities are largely affected due to prevailing high interest rates of bank loan. The cost of importing capital machinery and raw materials are also being affected due to higher interest rates of bank loan, the country’s apex trade body made the observations in its quarterly (July to September) published magazine “FBCCI Business News.”
Along with the limitation of infrastructure and ongoing political stalemate, high interest rates of bank loan are hampering the industrialisation and investment of the country, it said. “It is very difficult for any businessman to ensure profitability with high interest rate where lack of infrastructure limitation exists,” it added.
Currently, the interest rates varies from 16 to 19 per cent where additional service charges are taken without proper justification, it pointed out.
“Though different steps have been taken to overcome the problems of infrastructures, no serious attention is being given to lower the interest rate,” it said adding that it was the long-wanted demand of the business community in Bangladesh to reduce the current lending rates for the greater interest of economic development of the country. The prevailing high interest rates of bank loan are leading the local businessmen and entrepreneurs to lose their business competitiveness in the international market compared with the neighbouring countries, the editorial said.
The rates prevailing in the neighbouring countries are apparently much lower, it said and added that thus, it provides a cutting edge in supplying their products to Bangladesh.
It would be very difficult to lower the interest rate until policy decisions were take adequately to overcome the crux of the problems, the FBCCI said.
At present, the banks are holding excess funds and could not lend the excess funds as businesses were reluctant to take loans at high rates, it said.
Besides, the current political situation merged with rising violence in the name of hartal was also creating bottlenecks for the business to shy away from further borrowing and investment in the country, the FBCCI said and opined that the government should come up with a solution to make the interest rates affordable.

News:Daily Independent/25-Nov-2013