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Business leaders on Thursday urged the central bank to reinstate single-digit lending rates.
They deplored that ramped-up interest, currently hovering above 14 per cent, was harming business growth, investment and global competitiveness.
The strong plea for rate cut was made during a meeting with Bangladesh Bank (BB) Governor Ahsan H Mansur, following a stocktaking of the country's overall trade and economic situation that took latest twists amid political upheavals associated with last year's uprising.
A 14-member delegation representing major trade bodies, including the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), and Bangladesh Textile Mills Association (BTMA), attended the meeting. Several deputy governors and senior officials of the central bank were also present.
Speaking to The Financial Express after the consultation was over, BTMA President Showkat Aziz Russell said the textile and garment sectors were under immense financial pressure and urgently needed a return to single-digit lending rates to survive.
He also raised concerns over five banks currently undergoing mergers, stating that they owe large sums to member textile mills but are failing to make payment.
"These delays are putting our mills at risk of becoming overdue on their own bank obligations," he said.
Russell urged the banking regulator to issue specific guidelines to help mills recover their dues.
Furthermore, he noted, some weaker industries are defaulting on their loans and selling yarn at unsustainably low prices, creating unfair competition and financial stress for other spinners. He suggests that BB step in to address these market distortions.
Russell also has requested an extension of the central bank's circular on importing industrial raw materials on credit, which is set to expire on December 31, 2025. He proposes that the deadline be extended to December 2026 to support long-term planning and supply-chain stability.
Echoing similar concerns, FBCCI Secretary-General Md Alamgir Hossain argues that the current interest structure is unsustainable, especially for small and medium enterprises (SMEs) which typically operate on profit margins of 10 to 11 per cent.
"At the current rates, many businesses cannot break even, let alone expand or remain competitive globally," he says to underpin the business community's demand for lower-cost funds with interest rates slashed.
The apex chamber-FBCCI-called on the central bank to gradually reduce lending rates to single digits in the next monetary policy.
Hossain emphasized that lower rates are essential not only for investment and competitiveness but also for curbing inflation and supporting economic growth.
He also highlighted the challenges businesses continue to navigate due to the COVID-19 pandemic, the Russia-Ukraine war, floods, and political instability.
He requested a six-month extension of the committee formed to restructure the operations of affected borrowers, noting that its term expired in September.
The delegation also proposed forming a dedicated committee to monitor and support loans below Tk 500 million, ensuring that smaller enterprises receive timely policy attention.
To streamline problem resolution for exporters, business leaders suggested creating a high-level committee within BB, drawing in representatives from the FBCCI, BGMEA and other export-related bodies.
The Governor agreed and assigned a deputy governor to oversee export-related banking issues. "This will allow us to work more closely with Bangladesh Bank and resolve critical matters more efficiently," Hossain said.
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