The interest rate imposed by the central bank can hurt the key macroeconomic indicators like savings, investment in small and medium enterprises, production, employment, the profit of banks, and liquidity.
"People may go for investing in the capital market and deceivers like multi-level marketing groups, fake cooperative societies if they do not get a fair rate of interest," said Mamun Rashid, managing partner of PricewaterhouseCoopers Bangladesh.
"Implementing the same interest rates for all banks is a half-baked idea," said Mamun Rashid while presenting the keynote paper of the seminar "Financial Sector: Economy of Loan and Interest," organised by daily Banik Barta and the City Bank on Thursday.
The seminar was organised as a part of the day-long "Bangladesh Economics Conference" to celebrate the birth centenary of Father of the Nation Bangabandhu Sheikh Mujibur Rahman.
Economists and senior bankers, at the programme, said that depositors would face loss when earnings from deposit after tax get lower than the rate of inflation, and no one would be interested in saving.
However, the Bangladesh Bank Governor Dr Fazle Kabir argued that interest rate on loan and deposit had been fixed – to boost production and employment – by securing sufficient private sector investment. "There is an extra Tk1 lakh crore liquid in the banking sector, which will unburden the credit flow."
Meanwhile, Agrani Bank Chairman Dr Zaid Bakht said no one – except for some small banks – would face losses because of the new interest rates. "Four state-owned banks' deposit growth doubled despite implementing the 6-9 percent interest rates in one and a half years."
However, Mamun Rashid pointed out, "Imposing restrictions on interest rates caused an increase in loans received by the large organisations in Kenya, but the SMEs received 10 percent fewer loans."
"Kenya's GDP decreased by 0.75 percent because of a 5 percent decrease in loans given by small banks, and a 25 percent hike in public sector credit."
At the programme, former Bangladesh Bank governor Dr Farashuddin said, "Many countries in the world achieved significant growth by making the interest rate flexible. We, too, should keep these rates flexible for the greater good of the economy."
Former lead economist at the World Bank Dr Zahid Hussain said, "There will be no competition if the interest rate is the same for all. So, speculation about who will get loans will be the main concern."
"If decisions on who will get how much loans are taken based on political consideration, it will affect the economy negatively."
Managing Director of the City Bank Mashrur Arefin said, "If the interest rate on saving certificates are more than 10 percent, then the banks will not get deposit on a 6 percent interest rate."
Managing Director of the Mutual Trust Bank Syed Mahbubur Rahman said, "Each year Tk64,000 crore is laundered from Bangladesh and it may go up if the interest on deposit is lowered."
Executive Director of the Centre for Policy Dialogue Dr Fahmida Khatun said, "The government is moving away from the international standard by fixing the interest rates. The Bangladesh Bank has sufficient freedom to act, but it does not exercise it."
Dr Fazle Kabir said, "There is a lack of good governance in the country, and the banking sector is also being affected by it."
Currently, the weighted average lending rate is below 10 percent, and it is lower than 5 percent on deposit.