Most banks slashed the interest rates on deposits by 50 basis points this month while lowered lending rates only for selective areas, particularly corporate entities, bankers said.
Most of the private commercial banks (PCBs) re-fixed their interest rates on term deposits on average at 5.75 per cent from 6.25 per cent while the average rates on deposit of state-owned commercial banks (SoCBs) came down to 6.75 per cent from 7.25 per cent.
"We're re-fixing our interest rates in line with the ongoing monetary policy statement, announced by the central bank on January 14 last," Syed Mahbubur Rahman, managing director and chief executive officer of Dhaka Bank Ltd, told the FE on Monday.
He also said it's a continuous process depending on the market scenario.
The central bank of Bangladesh earlier had slashed its policy rates by 50 basis points aiming to spur investment, particularly in productive sectors, for achieving maximum economic growth by the end of this fiscal year.
Thus interest rate on repurchase agreement (repo) came down to 6.75 per cent from 7.25 per cent on 14 January last while the reverse repo rate was re-fixed at 4.75 per cent from 5.25 per cent earlier.
Talking to the FE, a senior executive of a leading private commercial bank said most of the PCBs are lowering their interest rates on lending in some particular areas to attract their good customers, particularly corporate entities.
"Some PCBs are now offering interest rate on short-term financing to the corporate clients at below 10 per cent," the private banker noted.
He also said such interest rate may fall further in the near future.
On the other hand, three SoCBs -- Sonali, Janata and Rupali-have already revised their overall interest rates in line with the BB signal, a SoCB senior official said.
He also said Agrani Bank Limited is now working to re-fix their interest rates on both lending and deposit.
However, overall interest-rate spread in the country's banking sector increased slightly in December as the interest rate on deposit was decreased more than that of lending, according to the bankers.
The weighted average spread between lending and deposit rates offered by the commercial banks rose to 4.84 per cent in December 2015 from 4.81 per cent in the previous month, according to the central bank latest statistics.
The spread was 4.77 per cent in October 2015.
On the other hand, the weighted average rates on deposits came down to 6.34 per cent during the period under review from 6.46 per cent in November 2015 while interest rates on lending dropped to 11.18 per cent from 11.27 per cent.
The BB is now working to narrow the spread to nearly 4.0 per cent from the existing level, a senior central banker told the FE.
"We want that the banks reduce the interest rate spread with improvement of their efficiencies instead of slashing interest rates on deposits," he explained.
The spread being maintained by 21 commercial banks out of 56 still ranges between more than 5.0 per cent and 9.58 per cent, the BB data showed.
Country's business community earlier urged the central bank governor to take initiative to lower the lending rates to facilitate business activities, particularly to help augment industrialisation in the country.
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