Governor gives a strong message about bank interest rates
Bangladesh Bank Governor Dr. Ahsan H. Mansur said that banks will not reduce interest rates on loans if businessmen pressure them. He said this at a discussion meeting held at Eskaton in the capital on Tuesday.
The governor said, “I want the policy rate to be positive in real terms. Otherwise, inflation will not come down quickly. It has to be positive in real terms. Look at the European Union, America, India – there are significant positive policy rates everywhere. So I have to bring them there. I have not gone there yet. However, the interest rate structure and inflation are moving in the right direction. In time, it will have a positive impact on the economy.”
He said, “We do not need to rush. I will not reduce interest rates if businessmen pressure me. Inflation, Treasury bills, interest policy, all rates will come down, then I will reduce the policy rate slowly, not before that.”
Dr. Ahsan H. Mansur said, ‘We want to move forward quickly and rebuild the financial sector. The work of strengthening the central bank is going on vigorously. The chief advisor is quite interested in this matter. In this regard, the World Bank is also helping us find the best system or policy worldwide. A regulatory body is being formed according to international standards. We are working on restructuring the central bank.’
He said, ‘We want to ensure the independence of the central bank by July-August this year. We will try to strengthen its foundation, but the interim government will not be able to do all the reforms. When the next government comes to power, this reform process will continue.’
The governor said, ‘We are appointing housewives, wives and daughters as directors of the bank. They do not have the qualifications and experience. We do not want these. The fit and proper test (experience and qualification test) is being reviewed to become a director of the bank. Everyone, including those who are currently directors, will have to go through this scrutiny. They must have the qualities to be a director of the bank. The owners of the banks will also have to go through this scrutiny. If they are qualified, the owners will be directors, if they are not qualified, they will not be. No one knows who the owners of City Bank-NA are.’
Regarding government loans from the banking sector, he said, ‘I am in a cycle with government loans. I am not the kind of person who will bring money by flattery. The way the economy has turned around in the last 6 months, especially the prevention of the fall of reserves, a kind of stable situation in the exchange rate, good situation in exports and expatriate income, control over imports, all together, the current account and financial account have returned from a negative situation to a positive trend. If only the revenue income could be maintained, we would not have had to protest to the IMF for just 5.5 billion dollars. We need a policy to increase revenue collection.’
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