Banks have been puzzled by a central bank directive that asked them to incentivise good borrowers with a 10 percent rebate on the interest against their loan accounts.

Bankers said good borrowers are already getting low interest rates amid growing competition among the banks. High-quality customers also enjoy privileges while paying letter of credit commission, foreign currency buying charges and other fees, they said.

“Now we will have to give the good borrowers further benefits as per the Bangladesh Bank instruction,” said Shafiqul Alam, managing director of Jamuna Bank, terming the order 'illogical'.

MA Halim Chowdhury, managing director of Pubali Bank, also echoed the same. “When the lending rate was 15 percent, a good borrower used to get loans at 13 percent, and now at 11 percent or less depending on the clients,” Chowdhury said.

In a notice on March 19, the BB offered good borrowers a rebate of 10 percent on interest accrued against their loan accounts in the face of allegations that the central bank always stands by defaulters. The central bank faced criticism particularly after giving large borrowers, who had Tk 500 crore or above in loans, a special rescheduling facility.

Clients who fulfilled the loan conditions and whose loan accounts have remained unclassified for three consecutive years were termed good borrowers in the BB notice.

But bankers said some issues remain unclear as they do not know whether house building, SME and credit card loans will come under the purview.

Bankers also raised questions how the rebates will be refunded to their customers. Banks that do consumer banking and have a large number of loan accounts will face problems in refunding the rebates.

As a result, banks are yet to offer their borrowers the rebate though three months have passed since the notice was issued.

Association of Bankers, Bangladesh, a platform of banks' chief executives, has recently written a letter to the central bank, expressing their concern about the move, according to Ali Reza Iftekhar, chairman of the association and managing director of Eastern Bank.

Many good borrowers are not aware of the BB decision. “I do not know about the rebate,” said Nasiruddin Biswas, chairman and managing director of Nasir Group of Industries.

The industrialist admitted he is already benefitting from the low interest rates. “I am getting short-term loans for up to one year at single digit interest rates and long-term loans for three to five years at 12 percent,” Biswas said.

However, the central bank sees no reasons to be puzzled by its move.

SK Sur Chowdhury, deputy governor of the BB, said: “It is not always true that good borrowers are getting money at lower than the market rates.”

He said banks' cost of funds has gone down and they can lend at single digit rates.

“Banks are earning a lot of money and they should offer incentives to good customers to promote a good credit culture,” Chowdhury said. “The notice doesn't go against the interests of the banks,” he added.