The Dhaka Chamber of Commerce and Industry (DCCI) has expressed concerns that the gradual increase in bank loan interest rates may temporarily curb inflation but could reduce loan availability for individuals in the long term.
“If the interest rate on bank loans increases, both investment and employment will decline. In the long run, raising interest rates is not a sound decision,” said DCCI President Ashraf Ahmed during a seminar on Sunday.
The seminar focused on various topics, including monetary policy, microeconomics, challenges facing the private sector and pathways to prosperity.
Ashraf Ahmed highlighted the ongoing loan crisis in the country's Mid-Market Enterprises (MME) sector, stressing the need for increased loan flow to support its growth.
The DCCI president also noted that the central bank has assured businesses that there will not be a significant depreciation of the Taka against the US dollar. He mentioned that while smaller depreciations might bring some relief to businesses, larger depreciations would be more concerning.
Additionally, DCCI suggested that the government explore multiple avenues to bolster Bangladesh's foreign currency reserves. To address external debt pressures, Ashraf Ahmed emphasised the need for increased VAT and revenue collections.
He also called for measures to revive struggling banks and ensure the security of depositors' funds. "If any bank faces difficulties, small borrowers suffer the most. While large clients can easily switch to other banks, small borrowers do not have the same flexibility," Ashraf Ahmed pointed out.
He further mentioned that during liquidity crises, interest rates for small borrowers tend to rise and he urged the central bank to address these issues.
Panelists at the seminar included Dr. Md. Selim Al Mamun, Director (Research) at the Chief Economist Unit of Bangladesh Bank; Dr. Mohammad Abu Yusuf, Professor of Development Studies at Dhaka University; and Dr. KAS Murshid, former Director General of the Bangladesh Institute of Development Studies (BIDS).
