Interest rates have risen in 30 banks in November

The overall weighted average interest rate spread of 30 banks increased in November as they managed to reduce their cost against deposits.


Tightened sales process of national savings certificates and the downward trend of Bangladesh's stock market in the last couple of months enabled the banks to attract more funds, bankers said.


As a result, the banks got the scope for offering lower interest rate against their deposit products as they were still having adequate amount of liquidity in their hands, they said.


The officials said that the credit demand in the country’s private sector was inadequate to absorb the excess liquidity and so the banks were reluctant to offer higher interest against deposit products.


The banks, however, were barred from offering interest rate below the inflation rate against pension funds of the government entities or private entities and term deposits of any amount meant for the payment of post-retirement benefits.


According to the latest Bangladesh Bank data, still 22 banks’ weighted average deposit rates were less than 4 per cent.


Against the increase of weighted average interest rate spread of 30 banks, the spread of 27 banks declined and it remained unchanged in three banks.


However, the overall interest rate spread of the banks inched up to 0.02 percentage points to 3.16 percentage points in November against 3.14 percentage points in the previous month.


Of the banks, weighted average interest rate of spread was highest 5.15 percentage points in the foreign commercial bank, the rate was 3.3 percentage points in private commercial bank, 2.18 percentage points in state-owned commercial banks and 1.54 percentage points in specialised banks.


In November, weighted average lending rate in the banking sector remained unchanged at 7.15 per cent.


In the private commercial banks, the weighted average lending rate was 7.45 per cent, the rate was 5.97 per cent in foreign commercial banks, 6.12 per cent in state-owned commercial banks and 7.09 per cent in the specialised banks.


On the other hand, weighted average deposits rates in the banking sector declined by 0.02 percentage points to 3.99 per cent from 4.01 per cent in the previous month.


Weighted average deposit rate in the private commercial banks stood at 4.15 per cent, the rate was 0.82 per cent in foreign commercial bank, 3.94 per cent in state-owned commercial bank and 5.55 per cent in specialised banks.