Dhaka, Bangladesh (BBN) – Overall interest rate spread in Bangladesh’s banking sector increased slightly in December as the interest rate on deposit was decreased more than that of lending, bankers said.

The weighted average spread between lending and deposit rates offered by the commercial banks rose to 4.84 per cent in December 2015 from 4.81 per cent in the previous month, says latest statistics of Bangladesh Bank, the central bank of the country.

The spread was 4.77 per cent in October of 2015.

On the other hand, the weighted average rates on deposits came down to 6.34 per cent during the period under review from 6.46 per cent in November 2015 while interest rates on lending dropped to 11.18 per cent from 11.27 per cent.
The spread being maintained by 21 commercial banks out of 56 still ranges between more than 5.0 per cent and 9.58 per cent, the Bangladesh Bank (BB) data showed.

“The overall interest-rate spread may fall in the coming months as the banks are re-fixing their interest rates on both lending and deposit in line with the BB’s indication,” a senior official of a leading private commercial bank (PCB) told BBN in Dhaka.

He also most banks slashed the interest rates on deposits by 50 basis points in February while lowered lending rates only for selective areas, particularly corporate entities

Talking to BBN, a BB senior official said the central bank is now working to bring down the spread nearly 4.0 per cent from the existing level.

He also said the BB wants that the banks reduce the interest rate spread with improvement of their efficiencies instead of slashing interest rates on deposits.
Country’s business community earlier urged the central bank governor to take initiative to lower the lending rates to facilitate business activities, particularly to help augment industrialisation in the country.