Six banks increase their interest rates on deposits

FE Report

At least six commercial banks increased their interest rates on deposits this month while the rates on lending remained almost unchanged, the central bank officials said Saturday.

"The interest rates on deposits have been increased in recent months indicating a rising trend of investment in different sectors including agriculture, small and medium enterprises (SMEs) and trade financing," a senior official of the Bangladesh Bank (BB) told the FE.

"Some banks are trying to reduce their interest rate spread by increasing the interest rates on deposits," he said, adding that the central bank is monitoring the interest rate spread closely.

The country's commercial banks now offer interest rates ranging from 1.25 per cent to 10.03 per cent on fixed deposit schemes, while the rates for savings accounts vary between 1.00 per cent and 8.00 per cent, according to the central bank statistics.

"The upward trend of interest rates on deposits will help reduce the overall interest rate spread in the country's banking system," Managing Director and Chief Executive Officer of the Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed told the FE, adding that the savers will be benefited following rising trend of interest rates on deposits.

The interest rates on deposits started increasing since November last year after a rise in private sector credit demand, a senior official of a commercial bank said.

"Some banks are interested to consolidate their fund position by collecting deposits from public to meet credit demand in the near future," the official said, adding that the private sector credit demand started increasing since October last and it continued until December last year.

Private sector credit growth rose to 16.73 per cent in November last from 15.42 per cent in October 2009, the BB data showed.

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 11.75 per cent and 13.00 per cent and on consumer credits between 11.50 per cent and 19.50 per cent.