Foreign banking company Standard Chartered Bank (SCB) is charging the highest rate of interest for lending to consumers and small industries and against credit cards, defying the regulatory directives. 

The July 2013 data of Bangladesh Bank (BB) show the bank is not complying with a regulatory directive for bringing down the lending rates though the central bank is pursuing for the last couple of years.

The bank’s spread (the weighted average gap between lending and deposit rates) is still the highest in the banking sector. As per the BB directives, banks must bring down the spread within 5 percent at the soonest. 

But, this bank is deliberately defying the regulatory directives with regard to maintaining spread. The BB authority has been pursuing the banks to strictly maintain the spread within 5 percent for the last one year so that the interest rate for industrial growth could be conducive. 

As per July 2013 data, this bank’s spread is still 10.03 percent, the highest among all the banks operating in Bangladesh. 

According to BB statistics, SCB’s lending rate for term-loan to small industries is 18.50-21.50 percent, which is the record highest in the country’s banking sector. For credit card, it charges 30-33 percent interest while the same for consumer credit at 19.50-22.50 percent.

On the other hand, the interest rate for deposit this bank offers starts from 2.50 percent. For term deposit up to three years and above, it offers an interest rate between 6.50 and 11.00 percent only.

Meanwhile, the central bank on September 24 published a yearly report on customers’ complaints, in which the SCB was put on the list of top five banks that often humiliate clients. Majority of the complaints against this bank are related to credit cards as it charges illogical interests from the consumers. 

Comments from the bank management over these issues could not be obtained immediately.

In a recent development, it has been disclosed that the SCB defies a BB request to take necessary actions with regard to a High Court (HC) directive to make payment to a private firm amounting to Tk 32, 07, 025 against six cheques for executing a public work. 

Bangladesh Bank governor and another BB official had to face a High Court (HC) rule due to BB’s failure in compelling the SCB to clear the payments as per a court directive. 

The HC had directed the central bank on February 11 this year to enforce its authority to realise the payments from Standard Chartered Bank (SCB), former American Exchange Bank (AEB), in favour of the complainant. But, the central bank authority didn’t follow up with the court about the consequent developments on the matters.

The complainant, managing director of International Designer and Contractor (IDC) MA Mazid, in the complaint stated that the AEB did not pay him against six cheques he received from the Power Development Board against a construction work. 

The complainant’s record shows the AEB drew the cheques amounting to Tk 32, 07, 025 from the state-owned Agrani Bank’s Chatteshawri Road branch between October 1986 and February 1987. But, the IDC deceived of the payments as that money had not been not disbursed to Mazid even in the last 28 years. 

An aggrieved Mazid appealed on November 29’ 2012 before the BB authority seeking its intervention to get the payments from SCB. Failing to receive any cooperation, Mazid then filed a writ petition with the HC.

The HC issued the rule on September 24 following non-response of the central bank authority. 

However, governor Dr Atiur Rahman and his colleague KM Abdul Wadud are likely to submit clarification to the court claiming that the central bank has acted in response to the court directive and served a letter to the SCB management on April 11’ 2013. 

Dr Rahman discussed the issue with the central bank board members in its meeting held yesterday (Wednesday), meeting sources said.

The SCB acquired the commercial banking business of AEB in Bangladesh in 2006 with assets and liabilities.

Meanwhile, the SCB grew its business tremendously in this country though its interest rates for term and SME lending are the highest among state-owned, local and foreign banks operating here.

SCB’s profit after tax was Tk 741.59 crore in 2012 and Tk 620.13 crore in 2010.