Lending rates by banks are expected to come down by June-July once the import of capital goods and food grains cools down, said Bangladesh Bank Governor Atiur Rahman in New Delhi yesterday.

Talking to a group of journalists, Dr Rahman made it clear that the banking regulator would not allow a hike in lending rates to affect economic growth adversely.

Replying to a question, he said after a lull, the import of capital goods and food grains has gone up but they should cool down in another two months.

Rahman, who is in the Indian capital to attend an international seminar on fiscal deficit, was responding to questions on worries among Bangladesh industries and business about the rising lending rate.

He said taming the inflation is a priority of the Bangladesh Bank and pointed out that while food inflation is 10 per cent, the non-food inflation is 3 and half per cent. The Bangladesh Bank is "morally asking the banks not to raise the lending rate beyond 14 per cent" because the rate in Bangladesh is market-driven, he added.

"I have requested the banks to lower the interest rates to make it comfortable for the industry,” the governor said. Rahman ruled out considering removing the cap on lending rates for sectors other than the existing two introduced by his predecessor governor.

Replying to a query on microfinance and the Grameen Bank headed by Dr Muhammad Yunus, Rahman said the Bangladesh Bank "does not have any bad feelings about the microfinance sector".

"We want microfinance to be humane and not an exploitative machinery as it is in several other countries.”

Rahman said the microfinance sector in Bangladesh is being regulated in a transparent and well-laid out manner and "the flat rate of interest is coming down, giving a lot of relief to the poorest of the poor people".

Asked if the Bangladesh government is willing to reach a compromise with Grameen Bank founder Yunus, Rahman said the question should be directed to the Bangladesh government.

Rahman said Bangladesh plans to float infrastructure bonds to rope in investment to develop the currently laggard infrastructure which, along with energy shortage, has been among the major challenges for the government to fuel the economic growth.

"If we can solve the infrastructure and energy problems, we can get a lot of foreign direct investments which are going to China and India because Bangladesh has cheaper labour and has more cost-competitive advantage compared to India and China," he said, adding, labour cost in Bangladesh, especially in apparel, ceramic and shipbuilding sectors, is one-third of that in China and half of that in India.

"I don't think anybody can beat us in this in a decade," said Rahman. As he said, Bangladesh Bank wanted an "inclusive monetary policy as financial inclusion is our top priority".

News: The Daily Star/ Bangladesh/ 19-Apr-2011