Interest spread rate increases to 5.17 percentage points
Scheduled banks in November further cut rates of interest on their deposit products due to rising excess liquidity in the banking sector amid lower loan disbursement in the industrial sector for dull business, according to the Bangladesh Bank data released last week.
The weighted average interest rate on deposit in the banking sector declined to 7.32 percentage points in November from 7.40 percentage points in October of 2014.
The weighted average interest rate on deposit was 7.48 percentage points in September, 7.63 percentage points in August, 7.71 percentage points in July, 7.79 percentage points in June, 8.01 percentage points in May, 8.11 percentage points in April, 8.21 percentage points in March, 8.34 percentage points in February, 8.40 percentage points in January of this year.
The BB data showed that the scheduled banks had not changed their weighted average interest rate on lending as they registered the rate at 12.49 per cent between November and October of 2014.
Against the backdrop, the interest spread rate, the gap between the interest rates on credit and deposit, increased to 5.17 percentage points in November from 5.09 percentage points in October.
A BB official told New Age on Thursday that it was not a good practice for the banking sector that the interest rate on deposit had decreased against the increased trend in the rate on lending.
The banks are doing so to earn quick profit putting an extra burden to the borrowers, he said.
The BB frequently asked the banks to maintain the interest spread rate limit below five percentage points but they continued to avoid the direction to earn more profit.
The official said the majority of the banks had recently cut their interest rates for deposits as they were now reluctant to collect funds due to a lower credit disbursement amid political unrest uncertainty.
The business community has adopted a ‘wait and see’ approach to expand their business by taking loans from the banks due to political uncertainty, he said.
The official the political uncertainty had put an adverse impact on the private sector credit growth.
The year-on-year credit growth rate in the private sector, however, slightly increased to 12.67 per cent in November compared with that of 12.12 per cent in October of 2014, much lower than the central bank target of 14 per cent by December.
The BB data showed that the year-on-year credit growth rate in the private sector stood at 12.27 per cent in the FY14 against the central bank-set target of 16.50 per cent.
For this reason, the BB set a lower private sector credit growth of 14 per cent in its monetary programme for July-December 2014.
The BB official said that the excess liquidity and reserve excluding the statutory liquidity ratio in the banking sector stood at around Tk 1,50,000 crore in the first week of September.
The BB data showed that the weighted average rate on deposit in the state-owned commercial banks stood at 7.08 percentage points in November from 7.14 percentage points in October, that in specialised development banks at 8.57 percentage points from 8.64 percentage points, that in private commercial banks at 7.60 percentage points from 7.68 percentage points, and that in foreign commercial banks at 3.70 percentage points from 3.79 percentage points.
The weighted average rate on lending in the state-owned commercial
banks stood at 10.67 percentage points in November from 10.72 percentage points in October, that in specialised development banks at 11.91 percentage points from 11.83 percentage points, that in private commercial banks at 13.05 percentage points from 13.06 percentage points, and that in foreign commercial banks at 11.81 percentage points from 11.77 percentage points.
-With New Age input
