Eight banks raise interest rates on deposits

FE Team | Published: November 26, 2009 00:00:00 | Updated: February 01, 2018 00:00:00

Siddique Islam
At least eight banks increased interest rates on deposits this month after slashing the rates nine months continuously while the interest rates on lending were almost stable, bankers said Wednesday.
"The commercial banks have offered higher interest rates on deposit aiming to attract clients for depositing their money with them," a chief executive of a private commercial bank told the FE.
He also said the banks are interested to consolidate their fund base by collecting deposit from public avoiding short-term lending from the country's money market.
The country's commercial banks now offer interest rates ranging from 1.25 per cent to 10.03 per cent on fixed deposit schemes, while the rates for savings accounts vary between 1.00 per cent and 8.00 per cent, according to the central bank statistics.
"The banks have raised their interest rates on deposit to minimise mismatch of their fund position by the end of this calendar year," Managing Director and Chief Executive Officer of the Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed told the FE.
"More banks may raise their interest rates on deposit in the month of December to square up their fund position," a senior official of the Bangladesh Bank (BB) said, adding the central bank is monitoring the overall interest rate situation closely to ensure implementation of its instructions properly.
On April 19 last, the central bank asked the commercial banks to fix the interest ceiling on lending in five specific areas at maximum 13 per cent to help mitigate the impact of the global economic meltdown.
Currently, the banks provide loans to large and medium-scale industries at interest rates ranging between 11 per cent and 13 per cent and to small industries at rates between 10 per cent and 18 per cent.
Interest rates on housing loans range between 12.50 per cent and 13.00 per cent and on consumer credits between 11.50 per cent and 19.50 per cent.
The banks' lending rates on working capital to large and medium scale industries vary between 11 per cent and 13 per cent and for small industries between 11.50 per cent and 18.00 per cent, the BB data showed.
In March this year, the commercial banks started slashing their interest rates on deposit in line with the central bank's interest rate policy.
On March 11 last, the BB slashed its interest rate on repurchase agreement (repo) and reverse repo after nearly seven months aiming to offset the ongoing global financial recession through boosting fresh investment.