The push for the rise in the lending and deposit rates basically comes from a significant hike in the benchmark rate called SMART, to 9.61 per cent for this March from the February figure of 8.63 per cent.
The Bangladesh Bank (BB) in a circular issued Tuesday lowered the interest margins to 2.50 per cent and 5.50 per cent for deposits and loans respectively in addition to the SMART rate with "immediate effect".
Earlier, the maximum margins were SMART-plus 2.75 per cent for deposit and 5.75 per cent for lending.
With the latest direction, the maximum interest on deposit and loan for NBFIs now stands at 12.11 per cent and 15.11 per cent respectively.
"The new rates will be applicable to new deposits and loan disbursements," says the BB order carried in the circular.
Before circulation of the circular, the maximum interest rates on deposits and loans in the NBFIs were 11.38 per cent and 14.11 per cent respectively.
Meanwhile, interest rates in bank lending and deposit have gone up following withdrawal of the crisis-time caps and introduction of the interest corridor instead in a regulated deregulation of the money market.
Businesses and economists say the cost of fund would lead to increase in cost of production, with its domino effect on the already-overheated consumer market.
Rate rise was a global phenomenon only recently as the central banks applied the tool for taming inflation. The western central bankers have made a pause of late with inflation taking a downturn-in certain cases, deflation creeping in some economies.
Bangladesh Finance Limited CEO Kyser Hamid says the latest rise in both deposit and lending rates would lower spread. "But if the volume of NPLs is properly managed, it would be fine."
Regarding deposit scenario, he predicts that the deposit rates would definitely increase with the rise in SMART rate. "But the rate is not so high considering the growing yield on government securities."
On the other hand, there are few banks which are now offering rates higher than that of the NBFIs.
"So, there is a fear among the NBFIs of outflow of the deposits to the banks and government treasury operations," says the nonbank CEO.
The NBFI sector has been fighting hard to rebound from the burdens of non-performing loans in recent years because of massive lending-related irregularities by some 8-10 NBFIs.
And it had caused trust deficit to many in recent years. But various steps by the BB and the industry players help a rebound in the key financial sub-sector in recent times.
According to the available data of the central bank, the entire volume of NPLs in the sector had risen over 20 per cent as per data available until FY'22.
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