ওশান কনটেইনারের লেনদেন আপাতত স্থগিত রাখা হবে
next::the interest rate cap removed Bangladesh Bank has moved to remove the interest rate cap on lending in the wake of a massive liquidity crisis in the financial market, an official said Sunday.
The central bank had imposed a 13 per cent interest rate cap on commercial banks lending in 2009 in an effort to boost industrial growth at a time of the worst global recession in six decades.
Although the cap has served some of its intended purposes, prompting banks to squeeze spread, it worsened the recent liquidity crisis sparked by last month's half a percentage point hike of Cash Reserve Requirement (CRR).
Experts have said the interest rate ceiling also forced some banks to borrow money at an unprecedented interest rate -- some taking it at 190 per cent -- from the inter-bank call money market over the past few weeks.
The effect spilled over to the capital market, as liquidity starved merchant banks and brokerages found it difficult to lend to the investors, precipating the stock market plunge.
Bangladesh Bank deputy governor Nazrul Huda told the FE that the interest rate ceiling would go very soon as the capping had already served its purpose.
"We capped the interest rate on lending to boost growth during the global recession. The world is no longer in recession," he said.
He said the inter-bank call money rate has come down to 4-5 per cent on Sunday -- a sign of easing of liquidity crunch in the money market.
He said some banks who had earlier decided to offer depositors 13 per cent interest rate dropped their plan and would now fix the rate at around 12 per cent.
"The association of banks have made the decision in its meeting on Friday," he said.
The move means the banks have to revise their interest rate on lending at least three percentage points higher than the Bangladesh Bank ceiling.
The artificial ceiling came under huge flak from the International Monetary Fund which termed the move unnecessary and contrary to the free market economy.
Ahsan H Mansur, head of private think tank Policy Research Institute (PRI), welcomed the move saying the lending rate ceiling "created distortion in the financial market."
"The policy of not allowing the interest rate to go up has created excess demand for credits -- some of which certainly have been diverted to the stock market," he said.
"If they have decided to remove the cap, it's most welcome. It has to go because it was a completely irrational decision," he said.
"Had there been no lending cap, it would have equilibrated the financial market in a better way by containing demand pressure," he said earlier.
next::the interest rate cap removed Bangladesh Bank has moved to remove the interest rate cap on lending in the wake of a massive liquidity crisis in the financial market, an official said Sunday.
The central bank had imposed a 13 per cent interest rate cap on commercial banks lending in 2009 in an effort to boost industrial growth at a time of the worst global recession in six decades.
Although the cap has served some of its intended purposes, prompting banks to squeeze spread, it worsened the recent liquidity crisis sparked by last month's half a percentage point hike of Cash Reserve Requirement (CRR).
Experts have said the interest rate ceiling also forced some banks to borrow money at an unprecedented interest rate -- some taking it at 190 per cent -- from the inter-bank call money market over the past few weeks.
The effect spilled over to the capital market, as liquidity starved merchant banks and brokerages found it difficult to lend to the investors, precipating the stock market plunge.
Bangladesh Bank deputy governor Nazrul Huda told the FE that the interest rate ceiling would go very soon as the capping had already served its purpose.
"We capped the interest rate on lending to boost growth during the global recession. The world is no longer in recession," he said.
He said the inter-bank call money rate has come down to 4-5 per cent on Sunday -- a sign of easing of liquidity crunch in the money market.
He said some banks who had earlier decided to offer depositors 13 per cent interest rate dropped their plan and would now fix the rate at around 12 per cent.
"The association of banks have made the decision in its meeting on Friday," he said.
The move means the banks have to revise their interest rate on lending at least three percentage points higher than the Bangladesh Bank ceiling.
The artificial ceiling came under huge flak from the International Monetary Fund which termed the move unnecessary and contrary to the free market economy.
Ahsan H Mansur, head of private think tank Policy Research Institute (PRI), welcomed the move saying the lending rate ceiling "created distortion in the financial market."
"The policy of not allowing the interest rate to go up has created excess demand for credits -- some of which certainly have been diverted to the stock market," he said.
"If they have decided to remove the cap, it's most welcome. It has to go because it was a completely irrational decision," he said.
"Had there been no lending cap, it would have equilibrated the financial market in a better way by containing demand pressure," he said earlier.