The Financial Express

Compound interest rate not feasible, says Kamal

17 cos short-listed to import LNG

| Updated: September 04, 2019 10:47:50

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File Photo (Collected) File Photo (Collected)

Finance minister AHM Mustafa Kamal said on Wednesday the compound interest rate of bank loans is not feasible in modern times.

He said the borrowers do not want to pay 14-16 per cent interest in bank loans, thus becoming defaulters.

"What's the benefit of it? You won't get back the money. Nowhere in the world such a high interest rate of bank loan exists," he told reporters after a cabinet committee meeting at the Bangladesh secretariat.

He said by calculating compound interest rate the banks overstate the size of balance sheet and raises the volume of intangible assets.

"It is serving no purpose to the government, nor the Bangladesh Bank, or the customers," he said.

Mr Kamal noted he has taken the steps regarding one time exit facility and special facility for loan defaulters based on his long experience and learning.

Once the measures are implemented, neither the banks, nor the borrowers and depositors will incur loss, he said.

When his attention was drawn to extending rescheduling facility again to 11 defaulters by Bangladesh Bank board of directors on Tuesday, Mr Kamal said it did not obtain approval from him in this connection.

"I will look into the matter," he said.

The minister said he will check on which consideration the rescheduling facility has been extended to them again and what the previous conditions were.

While offering the rescheduling facility to 11 businessmen back in 2015, the central bank reportedly mentioned that they would be considered defaulters again unless they pay two consecutive installments.

Meantime, the cabinet committee on economic affairs, with finance minister in the chair, approved the imports of liquefied natural gas (LNG) from spot markets alongside the existing arrangements of long term deals with various countries.

The minister said some 17 companies out of 43 have been short-listed for signing master sale and purchase agreement with LNG suppliers.

Mr Kamal said the demand for LNG in the country is on the rise.

In the past, LNG was sourced from a few countries, including Qatar, but now many have emerged as their alternatives, he said.

The meeting of cabinet committee on public procurement also approved a proposal for the appointment of Saif Powertec Limited as operator of the Chittagong Container Terminal.

The Saif Powertec Limited, which is presently operating the terminal, will pay Tk 3.04 billion to the port authority for running the terminal over the next six years.

But the minister said that the dependence on a single source for the terminal operation is risky.

He emphasised the decentralisation of services or the government itself should operate the terminal.

Mr Kamal said if the dependence on a single source is increased the company can become dominating.

"If alternative arrangement is there it can be good for all," he said.

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