Dhaka, Bangladesh (BBN)- Overall interest-rate spread in the country’s banking sector widened slightly in May last as commercial banks slash interests on deposits deeper than that on leading, bankers said.
The weighted average spread between lending and deposit rates offered by the commercial banks rose to 4.90 per cent in May 2016 from 4.87 per cent in the previous month, according to the central bank’s latest statistics.
It was 4.86 per cent in March 2016.
On the other hand, the weighted average rates on deposits came down to 5.67 per cent in May from 5.77 per cent in the previous month while interest rates on lending dropped to 10.57 per cent from 10. 64 per cent.
“We’ve already advised the banks to reduce the interest-rate spread with improvement in their efficiency, not only by reducing the interest rates on deposits,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
The spread being maintained by at least 23 commercial banks out of 56 still ranges between more than 5.0 per cent and 9.48 per cent.
Average spread with the six state-owned commercial banks (SoCBs) is 4.13 per cent, private commercial banks (PCBs) 5.05 per cent, foreign commercial banks (FCBs) 7.00 per cent and specialised banks (SBs) 1.89 per cent.
The central banker also said the BB is still working to bring the spread down to nearly 4.0 per cent shortly from the existing level. “The banks may offer lower interest rates on lending if they can cut the volume of their non-performing loans (NPLs).”
BBN/SSR/AD