Spread up slightly in April

Siddique Islam | Published: June 02, 2015 00:00:00 | Updated: November 30, 2024 06:01:00

The interest rate spread in the country's banking sector moved up slightly in April as the interest rate on deposit decreased while the same on lending increased.
The weighted average spread between lending and deposit rates offered by the commercial banks rose to 4.95 per cent in April 2015 from 4.87 per cent in the previous month. It was 5.04 per cent in February last.
"The interest rate on lending increased slightly because the banks prefer SME (small and medium enterprises) retail banking than corporate entities," a senior official of a leading private commercial bank (PCB) explained.
He also said most of corporate entities are now receiving loans from overseas sources due to lower interest rates.
Meanwhile, a good number of banks including five state-owned commercial banks (SoCBs) slashed their interest rates on term deposits on an average 0.50 per cent that came into effect from Monday.
"The average interest rates on term deposits may come down to 8.50 per cent from the existing around 9.0 per cent by the end of this month," the private banker hinted.
The deposits that cover tenures between three months and 12 months are prime sources of fixed deposits which have contributed around 90 per cent to total bank deposits.
On the other hand, the weighted average rates on deposits came down to 7.04 per cent in April last from 7.06 per cent in the previous month while interest rates on lending rose to 11.99 per cent from 11.93 per cent, according to the Bangladesh Bank (BB) latest statistics.
The spread being maintained by at least 32 commercial banks out of 56 still ranges between more than 5.0 and 10.21 per cent.
Average spread of the five government-owned commercial banks (SoCBs) is 3.36 per cent, 39 private commercial bank (PCBs) 4.29 per cent, nine foreign commercial banks (FCBs) 7.12 per cent and three specialised banks (SBs) 1.49 per cent, the BB data showed.
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