Scheduled banks further cut rate of interest on their deposit products in June due to increasing trend of excess liquidity in the banking sector, said officials of Bangladesh Bank.
According to the latest BB data, the weighted average interest rate on the deposit in the banking sector declined to 7.79 percentage point in June from 8.01 percentage point in May this year.
The BB data, however, showed that the weighted average interest rate on the lending also declined to 13.10 percentage point in June from 13.23 percentage point in May.
A BB official told New Age on Sunday that the interest rate on lending was still high in the banking sector against the interest rate on deposit, resulting that the interest spread rate, the gap between the interest rates on credit and deposit, continued to maintain an upward trend in the last few months.
The interest spread rate increased to 5.31 percentage point in June from 5.22 percentage point in May this year.
BB governor Atiur Rahman told reporters at the monetary policy unveiling session on July 26 that the interest spread rate had maintained the upward trend in the recent months due to the lower interest rate on lending against the higher rate on deposit.
The central bank has recently asked the banks at a bankers’ meeting to cut their rate of interest on their industrial credit in the interest of entrepreneurs.
The BB official said that majority number of the banks had recently cut their interest rates on deposits as they were now reluctant to collect funds due to a lower credit disbursement amid political uncertainty.
The business community has adopted a ‘wait and see’ approach to expansion of their business by taking loans from the banks due to political uncertainty.
The political uncertainty has put an adverse impact on the private sector credit growth.
The year-on-year credit growth rate in the private sector stood at 11.39 per cent in May against 11.86 per cent in April.
For this reason, the BB set a lower private sector credit growth of 14 per cent in its monetary programme for June-December 2014 against a 16.50 per cent target of the previous monetary policy.
The BB data showed that the excess liquidity excluding the statutory liquidity ratio in the banking sector had increased to Tk 1,20,675 crore as of March 31, 2014 from Tk 58,988 crore as of March 31, 2013.
The BB data showed that the weighted average rate on deposit in the state-owned commercial banks stood at 7.26 percentage points in June from 7.53 percentage points in May, that of specialised development banks 9.39 percentage points from 9.54 percentage points, that of private commercial banks 8.13 percentage points from 8.37 percentage points and that of foreign commercial banks 4.49 percentage points from 4.57 percentage points.
The weighted average rate on lending in the state-owned commercial banks stood at 11.04 percentage points in June from 11.06 percentage points in May, that at specialised development banks 13.11 percentage points from 13.09 percentage points, that of private commercial banks 13.68 percentage points from 13.87 percentage points and that of foreign commercial banks 12.45 percentage points from 12.85 percentage points.
-With New Age input
