Dhaka Chamber of Commerce and Industry (DCCI) President Ashraf Ahmed said if interest rate increases it would slow down the flow of credit to business and investment, especially to CMSMEs.
In terms of SME financing, Bangladesh Bank has several schemes for financing SMEs and they would be impacted if lending rates increases, he said.
The DCCI president said it during a courtesy call between board of directors of the chamber and the Governor of Bangladesh Bank Dr Ahsan H Mansur at the Bangladesh Bank headquarter on Tuesday, says a press release.
Deputy Governors of Bangladesh Bank Nurun Nahar and Dr. Md. Habibur Rahman were present in the meeting while the DCCI Senior Vice President Malik Talha Ismail Bari, Vice President Md. Junaed Ibna Ali and members of the Board were also present.
The Dhaka Chamber president requested facilitating foreign trade credit processing, foreign loan processing and increasing credit flow to banks. Above all, he requested the central bank to take initiative on reducing of pressure of interest rates on loans to CMSMEs.
He calls on Bangladesh Bank not to continue increased interest for a long period and start reducing rates as soon as practicable.
Ashraf said DCCI wants inflation to be controlled, because high inflation not only increases the cost of living of the common people but also it increases the costs of doing businesses.
He also said if banks bad loans come down, lending rates can also decrease subsequently. He welcomed the central bank's initiative to bring stability to country's financial sector.
The Dhaka Chamber President said for the development of the CMSME sector, assistance is needed to deal with the pressure of interest rate increase and maintain the flow of credit.
Bangladesh Bank Governor Dr. Ahsan H. Mansur said if the existing inflation can be brought down to a tolerable level within the next 6-7 months, reduction of policy interest rate and other interest rates will be possible.
He also said deposit collection in the banking sector is crucial now and its growth should be reached to double digit. The Governor emphasized on making credit guarantee facilities for SMEs more operational.
He emphasized on the need of limiting government borrowing to increase the flow of credit to private sector. He said improving payment history and credibility will help getting foreign trade credit for entrepreneurs.
The Governor also said a banking commission will be formed soon, based on which the necessary roadmap will be formulated to bring stability to the financial sector. He further advises new investors to invest in special economic zones to get all facilities together.
