The Chittagong Chamber of Commerce and Industry (CCCI) has urged Bangladesh Bank to reject commercial banks’ proposal to impose charges on 14 new banking services and raise several existing fees. It warned that the move would increase the cost of doing business at a time when the government is seeking to revive private investment and economic activity.
In a letter to Bangladesh Bank Governor Md Mostaqur Rahman on Wednesday, the chamber argued that the proposed charges would shift more banking costs onto businesses and retail customers, eroding the benefits of recent policy measures aimed at lowering financing costs and stimulating investment.
The appeal follows reports that the Association of Bankers, Bangladesh (ABB) has sought the central bank’s approval for a broad revision of banking service charges, including new fees for trade finance services and higher charges on lending and other banking transactions.
The proposals include a Tk100 fee for submitting a letter of credit (LC) application, a $20 charge for processing foreign LCs, Tk1,000 for processing local LCs, Tk100 for LC endorsements, Tk500 for LC cancellations and Tk300 for balance confirmation certificates.
ABB has also proposed raising loan processing fees to 2 per cent, rescheduling charges to 1 per cent, early retirement charges for advance LCs to 2 per cent, buyers’ credit management fees to 1 per cent, corporate loan and trade finance restructuring fees to 1 per cent and introducing an additional risk premium of 1 per cent in applicable cases.
The chamber argued that the proposals would increase financing and transaction costs for businesses by making widely used trade finance and lending services more expensive.
While the changes could bolster banks’ profitability, it said, the additional costs would ultimately be borne by businesses and consumers, weakening the competitiveness of locally produced goods and services.
The CCCI said the proposals run counter to recent government initiatives aimed at encouraging private-sector investment, including a Tk60,000 crore capital financing facility for local enterprises, temporary relaxation of single-borrower and large-exposure lending limits, import facilities without letters of credit in selected cases and a 4 per cent cap on banks’ interest spreads.
Imposing additional banking charges, it argued, could offset the intended benefits of those measures by increasing transaction costs across the economy.
The chamber also objected to ABB’s proposal to allow banks to raise service charges by 10 per cent annually to reflect higher administrative, technology and inflation-related costs.
Such a mechanism, it warned, could discourage savings, weaken public confidence in the banking system and undermine the government’s efforts to promote digital transactions and build a cashless economy.
CCCI President Mohammed Amirul Haque urged the central bank not to approve the proposals, saying affordable banking services are essential to sustaining investment, supporting private-sector growth and maintaining the competitiveness of Bangladesh’s businesses.
