As many as 26 banks failed to comply with the Bangladesh Bank’s directive to bring down their interest spread rate below five percentage points by March, said central bank officials on Thursday.
The BB in a meeting with the managing directors and chief executive officers of all the banks on January 27 had asked them to bring down their interest spread rate to below 5 percentage points by March, they said.
The overall interest spread rate — the gap between the interest rates on credit and deposit — and weighted average advance rate had decreased in the last few months amid the central bank’s pressure, a BB official told New Age.
But, 26 banks were charging higher interest rates for lending and offering lower rates for deposit collection in March, he said.
The latest BB data showed that seven foreign commercial banks out of nine that are doing business in the country had not complied with the spread rate rules in March and their weighted average advance rates were higher than the local banks.
The spread rate in the nine FCBs had stood at 8.56 percentage points while their weighted average advance rate was 14.40 percentage points.
The seven FCBs are Standard Chartered Bank, Habib Bank, Citibank NA, Commercial Bank of Ceylon, Woori Bank, HSBC and Bank Alfalah.
Among the local private commercial banks, 17 banks failed to comply with the spread rate rule. They are AB Bank, National Bank, The City Bank, IFIC Bank, United Commercial Bank, Pubali Bank, Uttara Bank, Eastern Bank, Prime Bank, Dhaka Bank, Social Islami Bank, Dutch-Bangla Bank, ONE Bank, Bangladesh Commerce Bank, Premier Bank, Jamuna Bank and BRAC Bank.
Among the four state-owned banks, all but Agrani Bank and among the four specialised banks all but BASIC Bank successfully maintained the spread rate.
The central bank has already asked the defaulter banks to explain why they had failed to bring down their spread rate to five percentage points.
The banks argued that the interest rates for SME and consumer loans were considered to be out of the purview of the five percentage point spread rate rule set by the BB, he said.
They also said that their spending had increased recently due to the introduction of different types of services, including setting up automated teller machine booths, said the BB official.
Under the circumstances, the cost of fund of the banks increased, resulting in their failure to maintain the interest spread rate below five percentage points, he said.
‘We are now examining the banks’ arguments. Then we will decide what measures will be taken to this end,’ said the official.
The country’s trade bodies have long been demanding that the BB takes steps to lower the interest spread rate in the banking sector.
They alleged that their businesses had been facing difficulties due to high interest rates on bank loans.
-With New Age input
