Industries will suffer if the lending rate cap is lifted: FBCCI chief

Staff Reporter :
Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has opposed a proposal of lifting the existing interest rate cap (9 per cent) on lending and on deposits (6 per cent) and called for reducing banks’ expenditure to reduce their cost of funds.
“The domestic industries will suffer if the interest rate is increased by removing the cap,” he said at a dialogue organised by the Economic Reporters’ Forum (ERF) at the latter’s office in the capital on Saturday.
He also said that the trouble facing the industry and the economy may deepen if the ongoing electricity and gas crisis is not resolved soon.
“The government should restore discipline in the banking sector as some banks made abnormal profits by selling US dollars cashing in on the exchange rate volatility,” said Jashim .
He added, “Some banks even have made Tk 200 crore to Tk 300 crore within a short span of time as they sold dollars at an abnormal rate by taking advantage of the situation.”
“The interest rate of bank loans cannot be increased to the sake of expanding investment and keep all the industries running in the country. If the interest rate is raised many of those will lose the capacity to operate and produce,” he added.
The capacity of the bank needs to be increased by reducing the additional expenses. Expenditure should be reduced in other areas of the bank, including reduced expensive branches, he added.
He also urged to solve the energy crisis by encouraging the use of coal in power generation.
 “We have to use our own coal. In addition to increasing investment in industry, environment-friendly energy cooperation will be needed for the development of the country,” he said.
Jashim said, “The government is taking more tax than what it is giving subsidy on gas. 47 per cent tax on LNG and Tk24 per liter on diesel. By reducing this tax rate, the new reasonable price can be fixed by adjusting the excess price.”
He thinks that the businessman should also take responsibility to keep the industry running. Again the tax should be reduced and the price of energy should be kept at a tolerable level.
Citing no need to borrow from the International Monetary Fund (IMF) by sacrificing the country’s dignity, he said, “The condition of Bangladesh is not so bad that the loan has to be taken on any condition from the IMF, initiatives to increase to hike lending rate will impact to increase production costs as well as raise a burden to the customers.”
In response to a question about money laundering during the election year, he said, since Bangladesh Bank says that they have found proof of up to 200 percent excess price under the guise of imports, they should bring those involved under the law. If not, you need to stop talking funny to get a popular big hand.
ERF General Secretary SM Rashidul Islam moderated the program. ERF Vice President M Shafiqul Alam presided over the dialogue. More than a hundred members of ERF were present on the occasion.