Businesses seek single-digit interest rate

Business leaders yesterday urged the central bank governor to lower bank interest rates to single digits, as they said high borrowing costs are affecting businesses.

They made the demand at a meeting between a business delegation representing various leading sectors and Bangladesh Bank Governor Ahsan H Mansur at his office in Dhaka.

The delegation was led by the apex trade body -- the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

The business leaders also said they need better banking facilities and improved services as they prepare to face the challenges of Bangladesh's graduation from the group of least developed countries (LDCs) in November next year.

They added that the affected business units need government policy support to overcome current challenges and prepare for the post-LDC period.

Bangladesh will lose its preferential market access once it graduates to a developing nation, and local businesses may lose their competitiveness in the global supply chain, they said.

To remain competitive after graduation, businesses are working to improve efficiency by reducing the cost of doing business and increasing trade facilitation, they added.

The business leaders noted that they have been severely affected by the fallout from the Covid-19 pandemic, the Russia-Ukraine war, and the mass uprising in July-August last year, which caused major disruptions to business activities.

They also demanded that small and medium enterprises (SMEs) be allowed to open back-to-back letters of credit even if they do not have bond licences, as many small enterprises cannot afford such licences due to limited financial capacity.

At the same time, the high bank interest rate is hampering business operations, they said.

After the meeting, Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association, said that apart from lower bank interest rates, businesses also want an extension of the tenure of the central bank's loan rescheduling facility.

Many firms could not avail themselves of the facility within the stipulated timeframe, he said.

Hatem also said they demanded an increase in the size of the Export Development Fund (EDF) to $7 billion from the existing $3 billion, as the amount had been reduced by the previous government.

They further requested the formation of a contact point at the central bank where businesses can discuss their problems and the necessary actions to be taken by both the government and the central bank.

The business leaders also called for the relaunch of the pre-shipment credit scheme, as the tenure of the previous Tk 5,000 crore fund ended in April this year.

Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the central bank informed them that a committee headed by a deputy governor has been formed to address various banking problems faced by businesses.

He also urged the governor to ensure the timely completion of bank mergers so that businesses do not face challenges as a result of the process.