Declared rate vs. effective rate
Engr. Hafizur Rahman Arman East Bashabo, Dhaka
In Bangladesh we are experiencing a boom in the Consumer Credit Schemes (CCS) offered by both banking and non-banking financial institutions. Home loan, auto loan, credit card, education loan, marriage loan etc. are few of those schemes. These schemes quote interest rates accompanied by technical jargons and this way there arises a discrepancy between the declared rates and the effective rates. For instance, some state interest rate on annual basis while some opt for monthly basis or even daily basis. Moreover, some go for monthly reducing balance while others choose annual reducing balance method. This way the effective interest rate becomes higher than the declared rate by 2-4% or even more. Had there been a uniform method of quoting the interest rates the customers would not have been baffled or even, cheated. If we can ensure transparency, only then we can expect a long term sustenance. Therefore, the Bangladesh Bank is requested to take necessary steps and save millions of investors.
|
|
