The Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) has sought cooperation from the central bank so that the interest rate on loans does not increase by a large margin. 

A delegation of the apex chamber of the country led by its President Mahbubul Alam made the request in a meeting with Bangladesh Bank Governor Abdur Rouf Talukder at the central bank headquarters yesterday.

Talking to reporters after the meeting, the FBCCI chief said that the interest rate on loans continues to rise after the withdrawal of the rate cap.

In June, the central bank scrapped the interest rate ceiling and adopted a new interest rate regime, which came into effect on July 1.

Under the new interest rate-setting system, the lending rate for banks is determined at SMART (six-month moving average interest rate) plus a margin of up to 3 percent.

FBCCI president said that the interest rate on loans continues to rise after the withdrawal of the rate cap

The reference lending rate is fixed on the basis of the 182-day treasury bills and announced on the first working day of each month.

The applicable interest rate on loans stood at 10.14 percent in September as the SMART is 7.14 percent. The benchmark lending rate was 7.10 percent in June and July.

Borrowers enjoyed a 9 percent cap on most loans between April 2000 and June this year.

According to an analyst, the central bank controls the interest rates of T-bills and T-bonds since it can quote lower rates compared to commercial banks during the auctions of government securities.

"We are very concerned about the rising interest rate. Thus, we sought cooperation from the Bangladesh Bank so that it does not increase too much," Alam said.

He said businesses are finding it difficult to open letters of credit (LCs) as they are not getting the American dollar at Tk 110, a rate fixed by the Bangladesh Foreign Exchange Dealers Association and the Association of Bankers Bangladesh.

On August 31, the two associations decided to buy the US dollar at Tk 109.50 and sell them at Tk 110 from the first working day of this month.

Although a number of importers are getting the dollar at the fixed rate, many others are being compelled to cough up an additional amount to open LCs, Alam added.

"We told the central bank that small and medium-sized businesses are facing trouble in opening LCs owing to the higher USD rate."

Md Mezbaul Haque, spokesperson of the BB, said businessmen expressed their concerns about the interest rate.

The governor assured them that the interest would not rise much, he added.

Haque said the governor requested the business leaders to bring their export proceeds to the country as early as possible.

After the meeting, the FBCCI issued a press release, saying women entrepreneurs would be able to secure loans by showing women as guarantors after the BB governor assured it.

Currently, a woman entrepreneur can show her father, brother or husband as the guarantor.

BB deputy governors Kazi Sayedur Rahman and Abu Farah Md Nasser were also present during the meeting.