Corporate Bangladesh has lambasted commercial banks for not delivering on their promises to reduce lending rates and charges on services.

In a meeting with Bangladesh Bank Governor Salehuddin Ahmed last week, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Anwar-UI Alam Chowdhury Parvez said banks were yet to lower the cap on interest rate from 16 percent to 14.75 percent. Garments accounted for over three-fourths of the total exports of $12.18 billion (Tk 83,600 crore) in 2006-07.

Bangladesh Bank sources said the governor has conveyed the BGMEA concerns to the banking regulations and policy department for further action.

After a series of meetings between BB and banks' promoters in February, the chief executive officers of the commercial banks had agreed to lower the interest rate ceiling and also the charges on 30 different services offered to 11 sectors. But business houses claim there has been no follow-up by banks on the promise, with charges remaining the same as before.

When contacted, Parvez said, “The banks have neither reduced the charges nor the interests rates so far." "They have made a mockery of the issue," he added.

Tofazzal Hossain, chairman, National Credit and Commerce Bank Limited, however, said banks take time to implement a decision since it needs to be approved by their boards. "We have approved the proposal at today's (Thursday) board meeting."

According to a recent report by Bangladesh Bank, the average interest spread of commercial banks is 6.16 percentage points compared with the average international spread of 4-5 percentage points. While the spread is lower at 5.88 percentage points for state-owned banks, it is 6.17 percentage points for private banks, and significantly higher at 8.98 Banks take time to implement a decision since it needs to be approved by their Boards

percentage points for foreign banks.

The BB report shows that private sector BRAC Bank has the highest spread of 13.47 percentage points. While its average deposit rate is only 6.51 percent, it average lending rate is almost 20 percent (19.98 percent to be precise). Standard Chartered Bank follows closely with a spread of 11.6 percentage points. Its average interest rate on deposits is 3.31 percent and on lending is 14.91 percent.

Commercial banks charge customers on 51 different transaction services that according to Bangladesh Bank (BB) increase prices of both export products

* \Banks have neither reduced the charges nor the interests rates so far. They have made a mockery of the issue

and local consumer items. Of these, 25 charges and commissions are on import related transactions, 14 on export transactions and 12 on local transactions.

The BB report observed that a government-owned bank did not charge clients for account closure while private commercial banks charge Tk 300-Tk 500 and the foreign commercial banksTk300-Tk 1,000. The banks also take negotiation commissions in case of opening letters of credit for exports. "A leasing company takes maxi7 mum 16 percent interest rates, so a bank's rate must be lower than that," Parvez said. Sajjad@thedailystar.net