The Federation of Bangladesh Chambers of Commerce and Industry yesterday welcomed the new monetary policy of the central bank, terming it a balanced one.
The apex trade body, however, said the monetary policy statement for the second half of the current fiscal did not give any instruction about cutting down banks' lending rates, which are higher in Bangladesh compared to those of its competitors.
"As a result, by obtaining loans at comparatively lower rates, businesspeople of those countries are moving ahead in terms of competitiveness," the FBCCI said in a statement yesterday.
It said the higher lending rates would slow down investment, which in turn would stifle job creation and anti-poverty efforts and hinder economic growth.
The trade body said banks are also imposing various charges arbitrarily, which are increasing the cost of doing business. "As a result, it will be tough for Bangladeshi businesses to compete in the international market."
The interest rate spread, which is the difference between banks' borrowing and lending rates, should be brought down to 3 percent for the sake of investment, the FBCCI said. "Besides, the exchange rates should be kept stable."
On Monday, Bangladesh Bank announced its monetary policy for January-June, which targets bringing down inflation to 7 percent, maintaining macroeconomic stability and spurring economic growth.
The FBCCI also praised the central bank's emphasis on raising investment, reducing inflation and increasing the private sector credit growth.
"Besides, the central bank has taken cautionary measures to keep the government's borrowing from the banking system in check, which will help bring down the public sector borrowing."
The trade body thanked the central bank for adopting a monetary policy which ensures balances among money supply, exchange rates and inflation rates, for the sake of investment and jobs.
The FBCCI said although the central bank had targeted private sector credit growth at 15.5 percent in July-December, the flow of credits to the private sector did not match the target due to deadly political activities, wobbly infrastructure and higher bank interest rates.
"As a result, there has been additional liquidity in the banking system. If this money is not invested, it may flow to the unproductive sector, which will harm the banking system."
The 16.5 percent growth target in the private sector credit in the new policy would boost the credit flow and encourage entrepreneurs and investors, the FBCCI said.