SMALL, medium or large enterprises are mainly dependent on bank funds for their financial needs. So, higher borrowing costs put them under tremendous pressure.

Businesses also face internal and external adversaries -unscheduled power cuts and a shortage of gas and skilled labour - which also push their operating costs up.

In this situation, Rubel Aziz, chairman ofThe City Bank, told The Daily Star in a recent interview that it has become difficult for the business community to survive.

"High interest rates inhibit investors, which is evident in the slow economic activities nowadays," said the chairman of the first generation private commercial bank.

Borrowing rate now stands at 15 percent, which goes up to 18-20 percent after various charges are included, he said. This high interest rate has made many businesses vulnerable and increased banks' non-performing loans, he said.

The City Bank chairman said time is running out and the central bank should take immediate steps to ease the borrowing costs, as banks are sitting on surplus funds and the country has a record reserve of foreign exchange.

Aziz, who is a second-generation businessman of Partex Group that was founded by his father MA Hashem, is taking the bank to new heights. He introduced core banking systems and other technologies in the bank to ensure accountability and improve services. The bank launched around 20 new products in the last five years and many more modern and attractive products are in the pipeline.

The 40-year-old chairman also spoke about the bank's new business window -■ a money transfer company opened in Malaysia to formally channel remittances. The board of directors and top management had to go through a series of interviews to get the licences from the Bank of Negara, the central bank of Malaysia.

Aziz, who is a diverse entrepreneur having presence in beverages

to plastic products and properties to jute mills, also discussed the overall situation of the banking industry, business trends, financial scams and the economy as a whole.

But he said the interest rates are exorbitant as it is not being reduced at this time when the demand for money from the business community is declining.

The interest rate market has become more volatile with nine new banks coming into business recently to take the total number of scheduled banks to 56, Aziz said.

"Competition to get deposits has intensified," he said. If his

bank offers lower rates for deposits, other banks will take away the money by offering higher returns, he added.

When many countries are bringing down the number of their banks for better regulation and services, the opposite is true in Bangladesh, said the chairman. He cited examples from Thailand and Malaysia where the number of banks has come down to 7-8 from around 100 a few years ago.

He urged the central bank to address the crisis.

"Bangladesh Bank can set a cap on interest rates, both for deposits and lending," Aziz said. If the cap on deposits is set at 7 percent, the cost of borrowing would not be more than 12 percent, he added.

On the growing number of scams in the financial sector, he said introducing a centralised system is important to monitor and supervise the activities of the bank branches.

"No branch ofThe City Bank can approve any loan, regardless of the amount. It must go through the head office's credit appraisal."

On government policies, he said those should not be implemented before consulting the stakeholders. He cited examples of loan rescheduling and classification rules, which were imposed on the banking sector all of a sudden at a tough time.

Aziz said the overall business environment in the banking sector was challenging in 2012 but it is getting worse this year due to growing political uncertainty.

"We are trying to survive through crisis management. The rest depends on the country's politics.”