The New Nation - Internet Edition

Staff Reporter

Finance Adviser Dr Mirza Azizul Islam vowed to consider the whole issue of the bankers' proposal to reduce the lending and deposit interest rate gaps.

According to him, his office would look into the absolute lending rate and the actual gap between the lending and deposit rates, as the bankers decided to cut the lending rate by one plus percentage point.

Businessmen in instant response on Monday to the bankers' rate-cut proposal expressed disappointment and termed it "jugglery with figures."

They said the interest rates on term loans have been mostly below the 15 per cent level.

The Finance Adviser said he would first see the proposal and talk to the Bangladesh Bank Governor on the issue, as the Governor has been assigned to look into the matter.

As per the bankers' proposal submitted to Bangladesh Bank on Monday, the average lending rate would be reduced by one plus percentage point to 14.75-15.00 from existing average of 16 per cent.

However, bankers claimed that it would help reduce the interest rate spread at a desired level within five per cent.

On February 25, the Finance Adviser told reporters that commercial banks in Bangladesh maintain a much higher gulf between lending and deposit rates by any international standard.

The spread is around 10 per cent, as the average deposit rate is 7 to 8 per cent and lending rate 16 to 18 per cent, he added.