No alternative to hiking lending interest: Mirza Azizul

Justifying the recent loan interest increase, Dr A B Mirza Md Azizul Islam, Former Adviser of the last Caretaker Government, said the Bangladesh Bank had no alternative to this.

He made the statement to the media after the central bank announced cautious monetary policy hiking loan interest of the commercial banks.

Earlier, the central bank had fixed loan interest discouraging the banks and casting negative impact on lending disbursements.

Similarly, the deposition of the people had also declined following the previous interest rate, he said.

Inflation is eating up the interest depositors get on the money kept in banks. They are unlikely to make fresh depositions. In such a situation, the banks are suffering from liquidity crisis.

Annual consumer financing of the banks is less than 10 percent, he said, adding that only increase in interest on consumer financing may not help the situation. 

Although the new interest is detrimental to the people already affected by inflation, there is no alternative to making lending costlier in the given circumstances.

Many countries in the world hiked loan interest rate to tackle the recession.

Bangladesh has stepped in to save the economy though belated.

However, I am skeptical about putting a halter on the inflation, he continued.