HC questions legality of BB’s 9pc interest rate cap

March 04, 2020

Star Business Report

The High Court yesterday questioned the legality of a Bangladesh Bank’s decision that instructed banks to set a maximum 9 per cent interest rate on all loans except credit cards.

The court issued a rule asking the respondents to explain why the central bank’s decision should not be declared illegal.

The finance secretary and the BB governor and its general manager for banking regulation and policy have been made respondents to the rule.

The HC bench of Justice Abu Taher Md Saifur Rahman and Justice Md Zakir Hossain came up with the ruling after hearing a writ petition that challenged the legality of the BB’s decision.

During the hearing, petitioner’s lawyer Barrister Sayedul Haque Suman told the court that about two lakh people would be benefited following the BB’s decision, whereas about 50 lakh depositors and their family members would be victimised.

On March 1, Md Mahfuzur Rahman, an apprentice lawyer, submitted the writ petition.

The central bank’s February 24 decision may severely affect the already under-pressure banking sector and such capping of the interest rate is unlawful against the establishment of financial policies and international practices of free market economy, he said in the petition.

The limit will further stifle the availability of loans needed to set up and expand small, medium and large businesses and commercial entities and industries, he said.

The significant reduction in the interests or profits charged by banks would impact the income of depositors via fixed deposit schemes, resulting in serious prejudice to middle income groups of the country, the lawyer said.

Therefore, the BB decision is a violation of the fundamental right of “equality before law” guaranteed in the constitution, he added.

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