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Single-digit interest for industrial loans

Single-digit interest for industrial loans

The Bangladesh Bank on Tuesday (Dec 24) decided to cap the interest rate on industrial loans to single digit. The decision, which aims to make businesses vibrant, came at a board meeting of the central bank, local media reported.

Businesspeople welcomed the central bank’s initiative, saying the measure will give a shot in the arm of the industrial sector, giving them respite from the burden of higher interest rates.

But bankers and experts expressed their concern and said it would have a negative impact on the banking sector as lenders will shy away from disbursing loans to the industrial sector due to the lower interest rate.

Banks now charge interest rates between 12 percent and 14 percent for industrial loans, creating a difficult situation for the manufacturers, according to a source. 

However, they will have to give out loans to the manufacturing sector at single digit interest rate from Jan 1.

The banking regulator will issue a notice to make the decision effective.