Writ challenges 9pc interest on bank loans
The writ said the Bangladesh Bank circular only mentioned the banking sector but there was no information about the non-banking financial institutes
A writ petition was filed with the High Court on Sunday challenging the validity of the Bangladesh Bank circular which set interest rate on bank loans at nine percent.
Three people, including the finance secretary and the central bank governor, were made respondents to the petition.
Barrister Syed Sayedul Haque Sumon filed the petition on behalf of an apprentice High Court lawyer.
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The High Court bench of Justice Tariq ul Hakim and Justice Md Iqbal Kabir said they would hear the petition on Monday.
Barrister Sumon told reporters, "The circular said the nine percent interest rate to take effect from April 1 would only be applicable for the banking sector.
"The central bank had orally said interest rate would be six percent for depositors, but there is no mention about it on the circular," he said.
The lawyer said at least two crore depositors would be harmed by the central bank decision.
"At present, interest rate on loans in the manufacturing sector is 11-14 percent. Consumer and SME loan interest rates are even higher," Barrister Sumon added.
"I will talk to the court to find out what policy the decision was based upon.''
The writ said the Bangladesh Bank circular only mentioned the banking sector but there was no information about the non-banking financial institutes.
This is why such institutes will get the opportunity to set interest rate as they wish, it said.
The petition demanded that all banking and non-banking financial institutes is included in the Bangladesh Bank directive.
Otherwise, it would be unconstitutional, said the writ.
The Bangladesh Bank circular said high-interest rates stand as a major hurdle to the development of the business and services sectors, including small, medium and large industries.
High-interest rates will also cause production costs in the industries to increase. Thus, products will be deprived of competitive advantage in the market.
As a result, industries, businesses and service organisations sometimes face adverse conditions, and the borrowers cannot repay the loan on time. This disrupts the loan system in the banking sector and hampers the country's economic development as a whole.
