The Dhaka Chamber of Commerce and Industry (DCCI) urged the Bangladesh Bank to take steps to reduce the bank interest rate to achieve the 16.50 per cent private sector credit growth targeted in the monetary policy for the second half of the current fiscal year.
Terming the newly announced Monetary Policy Statement (MPS) as investment-friendly, DCCI said it will assist in achieving the targeted economic growth by taking the internal and external economic indices to a positive place.
The chamber body in a statement on Tuesday said that the 15.50 per cent private sector credit growth targeted in the previous monetary policy could not be achieved. ‘The DCCI feels that the high rate of interest on bank loan and contemporary political instability were the major factors behind non-achievement of that target,’ it said.
“DCCI believes that the newly declared investment-friendly and cautious MPS will assist in reaching the internal and external economic indices to a positive place with a view to reducing inflation and achieving the targeted economic growth,” said the DCCI in a statement today.
“DCCI thinks that the declaration of policy benefits as like: loan rescheduling facility, extending the loan sectors for importing materials from Export Development Fund (EDF) and reducing interest rate will be helpful in bringing back the confidence of entrepreneurs and investors,” it added.
DCCI said the new MPS encourages the deposit-based small investors in getting loan and avoiding the risk associated with loan and hoped that Bangladesh Bank will play a cautious role in this regard.
“DCCI feels that the MPS emphasizes the large corporate and conglomerates to raise their funds from capital market through issuing equity and debentures instead of getting loan from banks which will create positive impact in reviving the capital market,” it said.
The new MPS emphasized on enhancing investment and reducing inflation in the country, the DCCI said , adding that private sector credit growth has been targeted at 16.5 percent which was 15.5 percent in the previous MPS that target could not be achieved entirely.
“DCCI feels that the high rate of interest on bank loan and contemporary political instability were one of the major factors behind non-achievement of that target. So, Bangladesh Bank should take effective steps in achieving the target of private sector credit growth through reducing the SPREAD of interest rate of the commercial banks,” it said.
It said the target of public sector credit growth has been increased to 22.9 percent from the existing 19.5 percent.
Terming the declining trend of the government’s borrowing, it said the government has taken credit of Tk 46 billion only from banks up to the first half of the current fiscal against its target of Tk 260 billion.
“In the MPS, the central bank has given special attention to providing adequate agriculture loan and we hope that this initiative will have positive impact on reducing the inflationary pressure. But we have to wait for some time until the downward flow of food inflation takes place,” it added.