Kamal defends interest rate caps

Finance Minister AHM Mustafa Kamal yesterday vehemently defended the much-maligned policy of capping the interest rates for lending and saving, saying the move saved the banking sector from a disaster.

The interest rate caps helped stage a faster economic recovery from the pandemic, he told reporters at his office in the secretariat. The press briefing was called to inform of the government's investment in 10-year Treasury bonds with the Tk 11.31 crore raised under the Universal Pension Scheme.

Without the caps, the country's small and medium industries would have been in ruins and the financial sector's defaulted loans could have blown up, he said.

Asked about Bangladesh Bank Governor Abdur Rouf Talukder's remark that the interest rate cap was a "political decision", Kamal said: "It is his personal opinion."

It is not possible to tell in advance whether the policy will be good or not.

"But no policy is fixed for good. The government has to make adjustments from time to time to march forward with the progress in the global economy."

Asked about the elevated inflation levels, Kamal said the government is working to control the commodity prices.

He, however, said countrymen will have to tolerate high commodity prices for the time being.

Responding to another query on the declining foreign currency reserves, he blamed it on the global economic crisis that has cropped up due to different events including war and the pandemic.

As of yesterday, 15,000 beneficiaries enrolled under the four schemes of the universal pension system, depositing a total of Tk 12.45 crore, said Khairuzzaman Mozumder, the finance secretary.

From the deposited money, the government invested Tk 11.31 crore in the 10-year treasury bond, the finance secretary said.

The universal pension system saw about 13,000 enrolments in the month after its launch on August 17. However, only 2,000 beneficiaries enrolled for the four different schemes in the following month.