ET Report
A large number of commercial banks raised their interest rate on deposits in July this year narrowing the gap with lending rate.
At least 18 commercial banks have increased interest rates on deposits this month, while interest rates on lending remained almost unchanged in the country's banking sector, Bangladesh Bank (BB) officials said.
"The banks have increased the interest rates on deposits for receiving fresh funds from general depositors to keep their loan-deposit ratio, generally known as AD ratio stable," a senior treasury official of a leading private bank said.
"At least 41 scheduled banks out of 47 have reported their interest rates on special notice deposit (SND) accounts in the current month in line with the BB's directive," a BB senior official said.
The banks will have to report on the SND accounts to the central bank each month regularly, he said, adding that the interest rates on SND accounts cannot be higher than the normal saving deposit accounts.
The country's commercial banks now offer interest rates up to 10.03 per cent on fixed deposits, while the rates for savings accounts at 8.50 per cent.
"The overall interest rate spread may decline in the coming months if the banks increase their interest rates on deposits keeping the lending rates unchanged," the central bank official said, adding that the BB is monitoring the interest rate spread closely.
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 9.99 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 10.25 per cent and 13 per cent and for small industries between 11.50 per cent and 17.25 per cent.
Meanwhile, the central bank continues its intervention in the foreign exchange market through purchase of US dollar from banks directly to keep the market stable, officials said.
As part of the operation, the Bangladesh Bank (BB) bought US$2.0 million from a private commercial bank Thursday at market rate to mop up excess foreign exchange from the market.
The US dollar was quoted at Tk 69.4000- Tk 69.4200 in the inter-bank foreign exchange market on the day against Tk 69.4000- Tk 69.4010 of the previous working day, according to the central bank statistics.
"We've bought the US currency at market rate from the commercial bank directly aiming to keep the rate of local currency stable against the greenback," a BB senior official said.