‘Financial sector may face chaos’

Prothom Alo: So you are against lessening interest rates. But the government says this has been done in the interests of economic development.

Ibrahim Khaled: I agree that interest rates must be lowered, but not forcefully. Four years ago interest rates fell to 9 per cent, but through a natural process. The government must understand that it is wrong to forcefully impose economic decisions. This harms the concerned sector. And if default loans continue to increase, there is no way that interest rates can be lowered. According to the rules, if a loan falls into default, there must be security deposit against it, which is cut from the profits. If these matters are overlooked, it will have a bad impact.

Ibrahim Khaled: If interest on deposits is fixed at 6 per cent, inflation will take away everything. Then there are bank charges and tax. The depositors’ money will decrease and so people will not want to keep their money in banks. If the banks don’ get deposits, how will they provide loans? I feel that if the banks reduce these interest rates, people will start investing in MLM companies. Various groups will silently emerge, taking deposits for 10 per cent interest and then laundering the money.

I want to caution the government against intervening everywhere. Let Bangladesh Bank carry out its duties.

Prothom Alo: Is Bangladesh Bank able to carry out its duties properly?

Ibrahim Khaled: Only share holder representatives are on the bank’s board. It is the responsibility of Bangladesh Bank to look after the depositors’ interests. But the government is now powerful and Bangladesh Bank has buckled under government pressure.

The Bangladesh Bank officials can look at India. The bank’s governor did not heed the prime minister’s directives. He simply resigned. According to the Bangladesh Bank Order, the government or any minister cannot legally issue directives to Bangladesh Bank. But the law is now violated. The bank’s governor is summoned and given orders. It is the finance ministry that ordered Bangladesh Bank to issue the notice for regularising the default loans with just a 2 per cent down payment. This directive was drawn up by someone who doesn’t even know Bangla well and so was written in English. The central bank translated the directives and published it. How the economy is being tortured! The prime minister is not being given the facts about the financial sector. She is being misguided.