Single digit interest rate dilemma

Dear Sir

Government has decided to implement the single digit interest in the manufacturing sector loans from upcoming January. No doubt, it is a praiseworthy effort from the concerned policy makers but the way forward is not on the right track. Single digit interest cannot be justified keeping the higher National Savings Certificates (NSCs) rate to attract more government fund deployment and it is very controversial bizarre policy of the government, whereas most of the banks are under pressure of acute deposit crisis in the last few years. Here, banks are bound to set higher interest rate on deposit keeping parallel to the NSCs rate and for this loans interest is also high.
It is to be believed that the government's decision to single digit interest will soaring up the interest rate of the SME loans. The banking sector is passing a record high non-performing loans and so it will create extra pressure on setting the others sector interest rate.
Keeping the higher NSCs rate and setting the single digit interest is one kind of intervention by the government on the banking sector, so the government should set the banking sector parameters without any disruption of laissez faire policy.

Md Zillur Rahaman
Gandaria, Dhaka