‘Balanced bank interest rates crucial for economic growth’

Staff Reporter :

For economic growth and stability, balanced bank interest rates are extremely important. This is because they help regulate investment, spending, and productivity, which in turn affect the overall economy. A proper interest rate keeps inflation under control, maintaining economic stability, which is essential for economic recovery and long-term growth.

If interest rates are too high, economic growth may slow, and the risk of recession increases. Conversely, if rates are too low, inflation may rise uncontrollably, undermining economic stability. Frequent fluctuations in interest rates create instability in the economy. In this context, experts have stressed the need to set balanced bank interest rates.

Business leaders, entrepreneurs, bankers, and economists shared to the media recently about governance in the banking sector, balanced interest rates, investment, employment, and the country’s economic situation.

Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), said that balanced bank interest rates are crucial for investment, but lowering rates alone does not automatically increase investment. Previously, interest rates on deposits and loans were set at 6%-9%, but this was not truly effective. Therefore, a business-friendly environment must be created. She emphasized that restoring governance in the banking sector is most urgent. Since the current government took office, institutions of international standards have begun working on this issue, and the actual data on non-performing loans is now emerging.

Ali Reza Iftekhar, Managing Director (MD) of Eastern Bank, recently highlighted his bank’s achievements, saying, “We are very careful about who our customers will be. I have never instructed or advised anyone to give loans. There are designated departments for that, and they handle it.

In this regard, Sakif Shamim, co-vice president candidate of the Progressive Business Council in the upcoming FBCCI election and Deputy Managing Director of LabAid Group, said that a balanced bank interest rate helps maintain harmony between investment, consumption, and savings in the economy. He expressed hope that the central bank will try to determine the “right” interest rate, which on one hand encourages economic growth and on the other controls inflation, ensuring stability.

He added that for priority sectors-especially agriculture, SMEs (small and medium enterprises), health, education, renewable energy, housing, garments, and women entrepreneurs-loans should be made available at lower interest rates and under easy terms. Many businesspeople have already taken loans at rates below 9% to establish industries. However, they now have to pay 14-15%. If the policy interest rate continues to rise this way, the cost of borrowing will increase further in the future, creating an overall crisis. Bangladesh will lose its competitiveness in international markets. Those who invested with high-interest loans may default under the burden.