Banks may refix interest rates on deposits, lending next month
Friday, 21 March 2008
Siddique Islam
The central bank expects that the interest rates on both deposit and lending will be changed from next month as promised by the bankers earlier.
"We are expecting that most of the banks will re-fix their interest rates on both deposit and lending from the month of April aiming to reduce the interest rate spread," a senior official of the Bangladesh Bank (BB) told the FE Thursday.
The private commercial banks (PCBs) have already given commitments to the central bank to lower their lending rates by more than 1.0 percentage point on lending rates and slash different bank charges.
Meanwhile, the country's banking sector witnessed an upward trend in interest rates on deposits in the current month while the lending rates remained almost unchanged, officials said.
At least eight commercial banks have increased their deposit rates in the range between 0.25 and 1.50 percentage points depending on the terms to encourage clients to keep their money with the banks.
The banks have raised the rates of interest for savings and term-deposits, such as three-month, six-month and one-year schemes.
The banks are now offering variable rates of interest on fixed deposit schemes ranging between 3.75 per cent and 13.00 per cent, according to the central bank statistics, released Thursday.
The banks have offered interest rates on savings accounts ranging between 3.75 per cent and 8.00 per cent to attract more funds from the general depositors.
"The latest move will help the banks reduce their existing spread between lending and deposit rates and encourage the depositors," the central bank official noted.
He also said the interest rates on lending have remained almost static in the current month.
Only two banks out of 48 have reduced their interest rates on loans ranging between 0.50 per cent and 1.75 per cent, the official added.
On the other hand, commercial bank officials said interest rates on deposits, particularly long term, may go up in the near future but interest rates on long-term loans may remain unchanged.
"Most of the commercial banks will offer higher interest rates on deposits to collect fresh fund from general depositors to meet the growing demand of liquidity that will also help to reduce their interest rate spread," a senior official of a commercial bank told the FE.
The banks have lending rates on working capital ranging between 10.50 per cent and 16.30 per cent while export credit is offered at seven per cent, the BB's data showed.
The banks, however, offered their lending rates ranging between 11 per cent and 16 per cent for large and medium scale industries while interest rates on loans for small industries were between 10 per cent and 16.30 per cent.
The banks also offered lending rates on housing loans between 10 per cent and 16.50 per cent while for consumer credits at 10.50 per cent and 19.00 per cent rate of interest.
The central bank expects that the interest rates on both deposit and lending will be changed from next month as promised by the bankers earlier.
"We are expecting that most of the banks will re-fix their interest rates on both deposit and lending from the month of April aiming to reduce the interest rate spread," a senior official of the Bangladesh Bank (BB) told the FE Thursday.
The private commercial banks (PCBs) have already given commitments to the central bank to lower their lending rates by more than 1.0 percentage point on lending rates and slash different bank charges.
Meanwhile, the country's banking sector witnessed an upward trend in interest rates on deposits in the current month while the lending rates remained almost unchanged, officials said.
At least eight commercial banks have increased their deposit rates in the range between 0.25 and 1.50 percentage points depending on the terms to encourage clients to keep their money with the banks.
The banks have raised the rates of interest for savings and term-deposits, such as three-month, six-month and one-year schemes.
The banks are now offering variable rates of interest on fixed deposit schemes ranging between 3.75 per cent and 13.00 per cent, according to the central bank statistics, released Thursday.
The banks have offered interest rates on savings accounts ranging between 3.75 per cent and 8.00 per cent to attract more funds from the general depositors.
"The latest move will help the banks reduce their existing spread between lending and deposit rates and encourage the depositors," the central bank official noted.
He also said the interest rates on lending have remained almost static in the current month.
Only two banks out of 48 have reduced their interest rates on loans ranging between 0.50 per cent and 1.75 per cent, the official added.
On the other hand, commercial bank officials said interest rates on deposits, particularly long term, may go up in the near future but interest rates on long-term loans may remain unchanged.
"Most of the commercial banks will offer higher interest rates on deposits to collect fresh fund from general depositors to meet the growing demand of liquidity that will also help to reduce their interest rate spread," a senior official of a commercial bank told the FE.
The banks have lending rates on working capital ranging between 10.50 per cent and 16.30 per cent while export credit is offered at seven per cent, the BB's data showed.
The banks, however, offered their lending rates ranging between 11 per cent and 16 per cent for large and medium scale industries while interest rates on loans for small industries were between 10 per cent and 16.30 per cent.
The banks also offered lending rates on housing loans between 10 per cent and 16.50 per cent while for consumer credits at 10.50 per cent and 19.00 per cent rate of interest.