Single Digit Interest Rate

Make govt deposits

interest-free

Says govt committee, suggests bringing down banks’ cost of funds

Akm Zamir Uddin

It has always been the law of supply and demand that determined the interest rate at which one can borrow.

When the demand is up and the supply is down the price goes up -- and this is exactly what is happening in case of lending rates.

Instead of fixing the problems in the supply side of funds, instead of mending the ills, the government is coming up with one impractical solution after another to bring down the interest rate on lending to single digits.

For instance, the government committee on implementing the single digit lending rate has now come up with the idea of making government’s deposits of its project funding interest free.

About Tk 230,000 crore of the government’s development budget is currently parked with banks, which is 20 percent of total deposits in the banking sector.

Having to pay no interest against

see page 13 col 1