Interest spread rate in the banking sector continued to decline as the most of the scheduled banks are now enjoying balanced deposit against a lower loan disbursement amid dull business situation in the private sector, said officials of Bangladesh Bank.
According to the latest BB data, the overall interest spread rate, the gap between the interest rate on credit and deposit, decreased to 5.01 percentage point in August from that of 5.02 percentage point in July. The interest spread rate was 5.13 percentage point in June.
A BB official told New Age on Thursday that the credit demand from the private sector had declined significantly as the businesspeople had recently adopted a ‘wait and see’ approach due to the recent spates of political violence ahead of next general elections.
Under the circumstances, a majority number of banks are now holding available deposit which compelled the banks to decline their rate of interest on the deposit products, he said.
Against the backdrop, the banks have also cut their rate of interest on lending as the credit demand from the private sector slowed in the last few months due to the existing stagnant situation in the industrial sector, he said.
‘For this reason, the interest spread rate in the banking sector decreased in the recent months. The spread will also decline in the months to come if the lower credit demand continues’, he said.
The BB data showed that the credit growth in the private sector had stood at 11.61 per cent in July this year compared with that of 20.26 per cent in the corresponding month of 2012.
Another BB official said that the central bank continued to pursue the banks to maintain their interest spread rate below five percentage points.
The interest spread rate in the banking sector hovered more than five percentage point in every month of 2012.
Earlier on August 25 this year, the central bank in a meeting asked the chief executive officers of all banks to bring down the interest spread rate below five percentage point immediately from the level of 5.13 percentage point in June.
The weighted average rate on lending stood at 13.56 per cent in August while the interest rates on deposits were paid at 8.55 per cent, the BB data showed.
In July this year, the average lending rate was on 13.63 per cent and average deposit rate was 8.61 per cent.
The BB data, however, showed that the interest spread rate in 25 banks maintained more than five percentage point in August, while the average spread of the four state-owned commercial banks was 3.34 percentage point.
The average spread was 5.26 percentage point in private commercial banks, 8.67 percentage point in foreign commercial banks and 2.70 percentage point in specialised banks.
-With New Age input
