BB warns banks for not cutting interest rates

The central bank yesterday warned 16 private commercial banks (PCBs) for not slashing the lending rates as per their commitment, Bangladesh Bank (BB) sources said.
BB has sent a letter to the managing directors of these banks asking them to take immediate steps to comply with their own pledge on the interest rate cut.
Earlier, Bangladesh Association of Banks and Association of Bankers, Bangladesh, at a joint meeting with the BB in March, committed to cut the rate for term loans for large and medium industries by over one-percentage point - at 14.75 percent from 16 percent - in three months till June.
The interest rate for working capital was also pledged to be brought down to 14.5 percent from 15.5 percent.
But BB found 16 banks did not go by their own commitment despite passage of one month from the June deadline, the letter said.
The banks are: Pubali, Uttara, AB, Islami, UCBL, ICB Islamic Bank (Oriental), Prime, Dhaka, Al-Arafah, Social Investment, Premier, First Security, Standard, Bank Asia, Bangladesh Commerce Bank and Jamuna Bank.
The central bank, after analysing private banks' lending rates on July, came to a decision that some 16 PCBs out of 30 did not reduce its lending rates.
“With great concern, we observe that the PCBs failed to keep their commitments on adjustments in the interest rate,” the BB letter mentioned.
The letter advised these banks to go for rate cut as per its commitment.
Since early this year the central bank has been pushing hard the commercial banks to reduce their lending rates, which, the regulator, claims is simply too high.
The businesses, including apex trade body, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), has also been pressing the banks and the government as well to slash the lending rate for the betterment of the economy.
Businesses said without a reduction in lending rate, it would be tough for them to compete with their global competitors.
Bangladeshi banks have also been blamed for charging the customers on too many grounds. According to a BB investigation, banks here impose as much as 52 types of charges from clients.