Four banks raise deposit rates, five cut rates in March

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FE Report
The country's banking sector witnessed a mixed trend in interest rates on deposits in the current month while the lending rates remained almost unchanged.
At least four commercial banks have increased their deposit rates while five banks slashed the interest rates in March this year, officials said.
"Some banks are trying to reduce their interest rate spread by re-fixing the interest rates on deposits," a senior official of the Bangladesh Bank (BB) told the FE Saturday, adding that the central bank is monitoring the interest rate spread closely.
The country's commercial banks now offer interest rates ranging between 1.25 per cent and 10.01 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 mixed trend in interest rates on deposits may continue until June this year following the government's cut of bank borrowing target for this fiscal year," a senior official of a commercial bank told the FE.
On March 16 last, the government slashed its borrowing target from banking system by almost half by the end of this fiscal following a significant increase in debt on account of selling national savings directorate (NSD) certificates.
The finance ministry has revised the government's bank borrowing target for fiscal 2009-10 (FY10) down to Tk 86.61 billion from the original Tk 167.55 billion, according to the official figures.
Corporate clients, particularly traders, who are interested to borrow from different banks at maximum 11:30 per cent, the commercial bank official said while explaining the latest interest rates on deposits.
He said the interest rates on deposits started increasing since November last year after a rise in private sector credit demand and it continued in February last.
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 11.75 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 17.20 per cent.