The New Nation - Internet Edition

BSS, Dhaka

The Parliamentary Standing Committee on the Ministry of Finance on Tuesday recommended bringing down the bank rate to a single digit from existing 13 per cent for the eligible industries.

The Committee at a meeting held here on Tuesday at Jatiya Sangsad also recommended measures to make the related rules and regulations more effective, so the willful loan defaulters could not dodge the loan recovery drive through the persisting loopholes in the law.

Members of the Committee suggested the commercial banks to cut their

lending rates in phases to below 10 per cent to encourage further industrialisation in the country.

'The lending rates need to be cut further to encourage more entrepreneurs in investment, and the banks could do it by introducing innovative products instead of depending mainly on the income from interests,' said AHM Mostafa Kamal, Chairman of the Committee, while briefing reporters after the meeting.

Kamal, also a Chartered Accountant and businessman, said that he advised the banks to find the ways of reducing their cost of funds, improve efficiency in loan recovery and services.

He said the Committee had found that certain weaknesses in three key laws-Artha Rin Adalat (Financial Loan Court) Act, Insolvency Act and Bank Companies Act-gave defaulters the opportunity of evading legal actions.

"We are going to refer the matter to the Ministry of Law for ways and means on how to plug the loopholes of the existing rules to nab loan defaulters," Kamal, who chaired the meeting, said.

Referring to the Prime Minister Sheikh Hasina's assurance of all possible steps to strengthen the tax collection and loan recovery machinery, Kamal said the government would appoint additional Judges in Courts to speed up loan recovery and revenue earning drives.

The Committee Chairman said the meeting recommended appointing more Judges in the Artha Rin Adalat to facilitate people its activities at all district level.

He said the Committee also advocated the Bangladesh Bank's directive to raise the amount of capitalisation of each of the private commercial banks to Tk 400 crore by 2011 to ensure safety of the clients of the banks.

Kamal, however, admitted that huge excess liquidity with the banking system became a matter of concern, but said the banks could lend the money soon as investment confidence was increasing with the signs of global financial recovery.

Committee members Professor Muhammad Ashraf Ali, AKM Saidul Islam, Lutful Hye, Muhammad Tajul Islam, Golam Dastagir Gazi, M A Mannan, M K Anwar and Farida Rahman were present at the meeting.

Also present at the meeting were Governor of Bangladesh Bank Dr Atiur Rahman, Chairman of the National Board of Revenue Dr Nasir Uddin Ahmed, Chairman of the Securities and Exchange Commission Ziaul Haque Khandaker and Managing Directors of private commercial banks.