The New Nation - Internet Edition

Bangladesh Bank has recently fixed up the interest rate at 12% for the import financing with an objective to keep the import cost at lower level and to ease reducing the related prices of imported goods in the market But practically this decision may create scope of conflicts with the Central Bank's policy on banking operation of the country and it many suffer from the following demerits and affect the economy adversely :

1. Lending bank will be less interested in import-financing since margin of profit would not be commensurating.

2. Hoarding of imported goods will increase since client will pay less interest

3. Supply of goods will decrease in the market to increase prices of the goods.

4. Financing banks may not compel their clients to take release of the goods within mandatory time period of, say; 45 days or 60 days.

5. Dishonest importers will rush to their bankers to open import L/c without due arrangement of fund necessary to retire import bills which may ultimately lead to forced loan to cause loss to the financier.

Therefore, the authorities concerned should think of alternative way including monitoring the sale of the imported goods within given period.

Md. Abdul Malek

Distillery Road,

Gandaria, Dhaka.