21 banks raise interest rates on deposits
Siddique Islam | Monday, 26 May 2008
The country's banking sector continued to maintain an upward trend in interest rates on deposits in the current month while the lending rates remained almost unchanged, officials said.
At least 21 commercial banks out of 48 have increased their interest rates on deposits in May to reduce the spread between lending and deposit rates so that clients are encouraged to keep their money with banks.
The commercial banks have raised their deposit rates in the range between 0.25 and 3.00 percentage points depending on the period aiming to collect fresh funds from general depositors.
All the commercial banks are in the process of bringing down the overall interest rate spread to around 5.0 per cent from the existing 6.06 per cent by June this year, Chairman of the Association of Bankers Bangladesh (ABB) K Mahmood Sattar said.
"All the banks are trying to reduce the interest rate spread," the ABB chairman told the FE Sunday adding that the rate of interest depends on the country's overall macro-economic situation.
Earlier, the commercial banks, particularly the private commercial banks, agreed with the central bank to bring down the interest rate spread to around 5.0 per cent from the existing 6.05 per cent.
"The interest rates on deposit are likely to ease in the near future if the inflow of fresh funds increases in the inter-bank money market," Mr. Sattar observed.
Bankers and experts, however, said that the real interest rate in the country is still low and, to some extent, negative because of high inflation rate that was over 10 per cent in February last. As a result, the banks are raising the interest rates on deposit to attract more deposits from their clients.
The country's commercial banks presently offer interest from 3.75 per cent to 13.00 per cent on fixed deposits schemes while the rates for saving accounts varies between 3.75 per cent and 8.00 per cent, according to the central bank statistics.
"The interest rates on lending have remained almost static in the current month," a senior official of the Bangladesh Bank (BB) told the FE Sunday, adding that the central bank is closely watching the interest rates situation.
The country's commercial banks' lending rates on working capital range between 10.50 and 16.30 per cent while export credit is offered at seven per cent, the BB's data showed.
Currently, the banks provide loans to large and medium scale industries at interest ranging between 10 per cent and 16 per cent and to small industries between 10 per cent and 16.30 per cent.
Interest rates on housing loans range 10 per cent to 16.50 per cent and consumer credits 10.50 per cent to 19.50 per cent.
At least 21 commercial banks out of 48 have increased their interest rates on deposits in May to reduce the spread between lending and deposit rates so that clients are encouraged to keep their money with banks.
The commercial banks have raised their deposit rates in the range between 0.25 and 3.00 percentage points depending on the period aiming to collect fresh funds from general depositors.
All the commercial banks are in the process of bringing down the overall interest rate spread to around 5.0 per cent from the existing 6.06 per cent by June this year, Chairman of the Association of Bankers Bangladesh (ABB) K Mahmood Sattar said.
"All the banks are trying to reduce the interest rate spread," the ABB chairman told the FE Sunday adding that the rate of interest depends on the country's overall macro-economic situation.
Earlier, the commercial banks, particularly the private commercial banks, agreed with the central bank to bring down the interest rate spread to around 5.0 per cent from the existing 6.05 per cent.
"The interest rates on deposit are likely to ease in the near future if the inflow of fresh funds increases in the inter-bank money market," Mr. Sattar observed.
Bankers and experts, however, said that the real interest rate in the country is still low and, to some extent, negative because of high inflation rate that was over 10 per cent in February last. As a result, the banks are raising the interest rates on deposit to attract more deposits from their clients.
The country's commercial banks presently offer interest from 3.75 per cent to 13.00 per cent on fixed deposits schemes while the rates for saving accounts varies between 3.75 per cent and 8.00 per cent, according to the central bank statistics.
"The interest rates on lending have remained almost static in the current month," a senior official of the Bangladesh Bank (BB) told the FE Sunday, adding that the central bank is closely watching the interest rates situation.
The country's commercial banks' lending rates on working capital range between 10.50 and 16.30 per cent while export credit is offered at seven per cent, the BB's data showed.
Currently, the banks provide loans to large and medium scale industries at interest ranging between 10 per cent and 16 per cent and to small industries between 10 per cent and 16.30 per cent.
Interest rates on housing loans range 10 per cent to 16.50 per cent and consumer credits 10.50 per cent to 19.50 per cent.