BB likely to set interest rate ceiling for SME loansAKM Zamir Uddin
Bangladesh Bank may set a ceiling of interest rate for SME loans to curb the existing high banks’ interest rate of 18 to 20 per cent in the sector, said central bank officials.
A BB official told New Age on Thursday that the central bank had taken a measure after the private sector development policy coordination committee had suggested imposing maximum 9 per cent interest rate under SME refinance schemes.
The coordination committee arranged a meeting on July 27 and suggested the BB to make a ceiling of 9 per cent interest rate for refinance schemes of small and medium enterprise sector.
The BB issued a circular on January 22, 2012 asking the commercial banks to maintain a spread between average deposit rate and lending rate up to five percentage point for all types of loan, except the high-risk consumer loans, including credit card, and SME loans.
The circular said the banks would be able to set their interest rates for SME sector as loans for the sector were collateral-free and thus risky.
After issuance of the circular, the commercial banks imposed 18 to 20 per cent interest rate for SME loan including the three refinance schemes financed by Asian Development Bank, Japan International Cooperation Agency and BB fund.
The BB, however, imposed a rule for the commercial banks to disburse loan to the woman entrepreneurs with 10 per cent interest rate under refinance schemes.
The commercial banks are able to get loans at 5 per cent interest from the refinance schemes after which they give the fund to SME entrepreneurs with higher interest rate.
The official said the banks imposed higher interest rate of 18 to 20 per cent in the refinance schemes like other SME loan, which was illogical.
He, however, said the BB had no scope to impose any ceiling to curb the interest rate of ADB and JAICA fund, as the lending agencies signed agreements with government that the central bank or any authority concerned would not intervene the banks’ interest rate of the fund.
The lending agencies are operating their credit programmes under free market economy, so they attached conditions not to intervene the market interest rate when they signed in the agreement, he said.
He said, ‘The banking regulation and policy department of the BB is now doing how to make a reasonable ceiling of interest rate for all SME loan considering weighted average of fund and a logical spread.’
The central bank is now operating three refinance schemes which are — Tk 750 crore of ADB fund, Tk 415 crore of JICA fund and Tk 100 crore of BB fund.
Sukamal Sinha Choudhury, general manager at SME and Special Programmes Department of BB, told New Age that the ADB and JICA had singed agreements with the government, so the central bank had no scope to make a ceiling of interest rate of their fund.’
He, however, said the BB might take measures to impose ceiling for overall SME and industrial loan.
He said, ‘We are not disbursing loan to the banks under the refinance schemes which impose illogical interest rate of their fund.’
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