The interest rates of banks may experience further increases in the coming days, said Prime Minister's Private Industry and Investment Adviser Salman F Rahman on Thursday.
"The government had controlled the bank interest rate for a long time, but now due to rising interest rates on deposits, it will not be possible to keep it under control in the future," he said responding to a query from journalists while briefing media on the Commonwealth Trade and Investment Forum at the Bangladesh Investment Development Authority (Bida) conference room in Agargaon of the capital.
The Commonwealth Trade & Investment Forum will be held in Dhaka on 13-14 September. The forum is going to be organised by the Commonwealth Enterprise and Investment Council (CWEIC) in partnership with the Bangladesh Investment Development Authority (Bida), Ministry of Foreign Affairs and ZI Foundation.
At the press conference, Salman F Rahman pointed out that in the past, the interest rates in the country were as high as 17%-18% even though international interest rates were quite low during that period.
He went on to say, "The Libor rate was less than 1%. Moreover, neighbouring countries also maintained lower interest rates. Consequently, there was a perception that the country's banks were earning excessive profits, and it became challenging for businesses to thrive with interest rates as high as 16-17%."
"To address this issue, the prime minister later imposed a limit on interest rates, capping them at 9%. This naturally led to a decrease in deposits. This practice has been successfully maintained for an extended period, with the government effectively controlling bank interest rates for a considerable duration."
Mentioning that interest rates are now high in major economies worldwide, he said, "With the absence of Libor, the prevailing SOFR [Secured Overnight Financing Rate] stands at around 5%. The interest rate for borrowing in dollars is now between 8%-9%, whereas private sector institutions used to borrow dollars at 2%-3% interest in the past. As a result, this shift in global interest rates is expected to impact the interest rates within the country."
Salman F Rahman said that the Bangladesh Bank has already made the 9% cap flexible by providing a formula.
"As a result, the rates started to rise. However, the cap has not been fully lifted to prevent the rates from rising to previous levels of 16%-17%. Consequently, if the treasury bill rates increase in the auction, the commercial rate will also rise," he added.
Before the press conference, the newly elected representatives of the Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) met Salman F Rahman.
The business leaders also highlighted various challenges of the country's trade and various harassment of the revenue department. In response, Salman F Rahman advised the FBCCI to work closely with the revenue department to resolve the crisis.
"We aim not only to reduce harassment but also to ensure that taxpayers can fulfil their obligations in a smooth and hassle-free manner. That is our primary objective," said Salman F Rahman.
Commonwealth Trade & Investment Forum
The Commonwealth Trade & Investment Forum will feature 12 sessions attended by leading representatives from both the public and private sectors hailing from Bangladesh and various Commonwealth member countries.
On 13 September, Prime Minister Sheikh Hasina will inaugurate the event at the Bangabandhu International Conference Centre in the capital. During the opening ceremony, the prime minister will present the "Commonwealth Bangabandhu Sheikh Mujibur Rahman Green Investment Award."
The two-day event, focusing on trade and investment opportunities among Commonwealth member countries, will take place at the InterContinental Hotel in Dhaka on 13-14 September.
Speaking about the event, Salman F Rahman said the forum will offer a platform for promoting trade, investment, and economic growth.
"Bangladesh will be able to showcase its trade and investment opportunities before the Commonwealth countries during the forum. It will be a win-win situation for everybody," he said.
He mentioned that this is the first ever Commonwealth Trade & Investment Forum going to be organised in Bangladesh.
Salman F Rahman said, "Our primary focus is on Bangladesh. Prominent international business figures have shown keen interest in Bangladesh and are eager to understand the country's growth over the past 15 years. They perceive significant business opportunities here."
Bangladesh Investment Development Authority (Bida) Executive Chairman Lokman Hossain Miah was also present at the press conference.