The Bangladesh Bank on Sunday showed reluctance to remove the interest rate cap fixed upon the non-bank financial institutions (NBFIs) as they requested the central bank to withdraw the capped rate.
“We requested the BB governor to withdraw the cap but he decided not to do so at this moment,” BLFCA Chairman Mominul Islam told The Business Post after a meeting held with the financial regulator at its headquarters in Motijheel, Dhaka.
The BLFCA (Bangladesh Leasing and Finance Companies Association), a forum of top executives of NBFIs, sat with the central bank and made the request as they are not getting deposits at the fixed rate.
Bangladesh Bank Governor Abdur Rouf Talukder, who presided over the meeting, turned down the request and asked the NBFIs to improve their corporate governance, said Mominul, also the managing director and chief executive officer of IPDC Finance Limited.
He, however, said that it is very difficult to mobilise deposits at a 7 per cent interest rate fixed by the central bank and following the consequence, the NBFI sector is now facing a liquidity shortage.
“If the country’s inflation rate exceeds the interest rate, the depositors will not be interested in parking money in financial institutions,” the BLFCA chief added.
In April this year, the central bank set interest rates on deposits at 7 per cent and loans at 11 per cent for the NBFI sector, which was made effective from July 1.
