Nine Percent Interest Rate: Writ petition filed against BB decision

A writ petition was filed with the High Court yesterday challenging the legality of Bangladesh Bank's (BB) decision that instructed the scheduled banks to set a maximum nine percent interest rate on all loans except credit cards.

Md Mahfuzur Rahman, an apprentice lawyer, submitted the petition praying to the HC to issue a rule upon the respondents to explain why the direction issued by BB on February 24 should not be declared illegal.

The finance secretary, BB governor and its general manager (Banking Regulation and Policy Department) Rezaul Islam have been made respondents to the prayed rule.

The petitioner also requested the HC to stay all operation of the direction till disposal of the rule.

In the writ petition, Mahfuzur Rahman said the central bank's February 24 decision may severely affect the already suffering banking sector and such restriction about reducing the interest rate is unlawful against establishment of financial policies and international practices of free market economy.

The BB's notification has not mentioned any reason behind its direction, he said in the petition, adding that such restriction will further stifle the availability of loans necessary for setting up and expansion of small, medium and large business and commercial entities and industries.

Consequence of significant reduction in the interest or profit charged by the bank would also sharply fall impacting upon income of the depositors via fixed deposit schemes etc. resulting in serious prejudice to middle income group of the country, the petition said.

Therefore, the BB decision is a violation of the fundamental right of "equality before law" guaranteed under article 27 of the constitution, it added.

Petitioner's lawyer Barrister Syed Sayedqul Haque Suman told The Daily Star that the HC may hear the petition today.