Lending rate at 9pc max from July: BAB

The country’s private commercial banks will charge a maximum of 9 per cent interest rate on lending from next July.

This was decided at a meeting of the Bangladesh Association of Banks (BAB) in the city’s Jabbar Tower on Wednesday, reports UNB.

BAB chairman Nazrul Islam Mazumder who chaired the meeting, informed the media that the organisation took the decision as per directives of prime minister Sheikh Hasina to lower the bank interest to single digit.

BAB is the organisation representing sponsor directors of the private commercial banks licenced and operating in the country.

The private banks will offer a maximum of 6 per cent interest on deposits for a 3-month term, the BAB chief said. They will charge highest 9 per cent interest on any lending from 1 July.

"No bank will charge beyond this limit", added Nazrul Islam.

Also sponsor chairman of Exim Bank, he said if any bank goes against the BAB decision, it will take punitive actions against those banks.

He mentioned that already 5 private banks including Islami Bank Bangladesh Limited (IBBL), Union Bank, Fast Security Islami Bank and Al-Arafa Islami Bank announced their decision to charge single digit interest on bank loans from 1 July.

These banks have about 50 per cent share in the total banking business in Bangladesh, he said.

"If they can go for such a bold decision to bring down the interest rate to a single digit why can’t others do the same," he said.

The BAB president said if any top management or any managing director fails to comply with the decision, the board of sponsor directors of the respective banks will take punitive actions against them.

If necessary, the BAB will extend its hand to ensure the implementation of the decision on single interest rate, he added.

The country has 57 banks of which 6 are state-owned banks while remaining are private and foreign banks.