Eight private banks plan deposit rate spike
Monday, 1 November 2010
FE Report
Eight private commercial banks (PCBs) hiked this month interest rates on deposits while lending rate remained almost unchanged in the country's banking sector, bankers said Sunday.
"Some banks may increase the interest rates on deposits in the upcoming months to meet growing demand for cash," a senior official of a leading PCB told the FE.
He also said banks prefer fixed deposits to savings, even by offering higher interest rates-part of the strategy to mobilise funds.
Currently, banks offer interest rates upto 10.03 per cent on fixed deposits, while the rates for savings stand at 8.50 per cent, according to the central bank statistics.
"The overall interest rate spread in the banking sector may decline in the near future if the banks increase their interest rates on deposits, keeping the lending rates unchanged," a senior official of the Bangladesh Bank (BB) said.
He added that the central bank was monitoring the interest rate spread closely.
The weighted average spread between lending and deposit rates in the banking sector rose to 5.27 per cent as on June 30, 2010, from 5.20 per cent in March last.
The weighted average rates on lending stood at 11.23 per cent in June last while the interest rates on deposit were paid at 5.96 per cent by the banks.
"We expect the interest rate spread to come down to 5.0 per cent, from the existing level in the coming months," another BB official said, adding that the banks slashed the interest rate spread with improvement of their efficiency.
Currently, the banks provide loans to large and medium-scale industries at interest rates ranging from 11 per cent to 13 per cent and to small industries at rates between 10 per cent and 18 per cent.
Interest rates on housing loans hover at 9.99 per cent-13.00 per cent and on consumer credits at 11.50 per cent-19.50 per cent.
The banks' lending rates on working capital to large and medium scale industries vary between 10 per cent and 13 per cent and for small industries between 11.50 per cent and 17.00 per cent.
Eight private commercial banks (PCBs) hiked this month interest rates on deposits while lending rate remained almost unchanged in the country's banking sector, bankers said Sunday.
"Some banks may increase the interest rates on deposits in the upcoming months to meet growing demand for cash," a senior official of a leading PCB told the FE.
He also said banks prefer fixed deposits to savings, even by offering higher interest rates-part of the strategy to mobilise funds.
Currently, banks offer interest rates upto 10.03 per cent on fixed deposits, while the rates for savings stand at 8.50 per cent, according to the central bank statistics.
"The overall interest rate spread in the banking sector may decline in the near future if the banks increase their interest rates on deposits, keeping the lending rates unchanged," a senior official of the Bangladesh Bank (BB) said.
He added that the central bank was monitoring the interest rate spread closely.
The weighted average spread between lending and deposit rates in the banking sector rose to 5.27 per cent as on June 30, 2010, from 5.20 per cent in March last.
The weighted average rates on lending stood at 11.23 per cent in June last while the interest rates on deposit were paid at 5.96 per cent by the banks.
"We expect the interest rate spread to come down to 5.0 per cent, from the existing level in the coming months," another BB official said, adding that the banks slashed the interest rate spread with improvement of their efficiency.
Currently, the banks provide loans to large and medium-scale industries at interest rates ranging from 11 per cent to 13 per cent and to small industries at rates between 10 per cent and 18 per cent.
Interest rates on housing loans hover at 9.99 per cent-13.00 per cent and on consumer credits at 11.50 per cent-19.50 per cent.
The banks' lending rates on working capital to large and medium scale industries vary between 10 per cent and 13 per cent and for small industries between 11.50 per cent and 17.00 per cent.