Dhaka, Bangladesh (BBN) - Overall spread in the country’s banking sector decreased slightly in September as the banks slashed their interest rates on lending more than that of deposits.
The weighted average spread between lending and deposit rates offered by the commercial banks came down to 4.51 per cent in September 2017 from 4.53 per cent in the previous month, according to the central bank latest statistics.
The spread was 4.76 per cent in September 2016.
The weighted average rates on deposits came down to 4.83 per cent in September last from 4.93 per cent in the previous month while interests on lending dropped to 9.34 per cent from 9.46 per cent.
The interest rate on deposit decreased slightly in the month of September after witnessing increasing trend in the last consecutive two months.
In September 2017, the weighted average interest rate on deposits, offered by six state-owned commercial banks (SoCBs), came down to 4.46 per cent from 4.51 per cent a month ago.
On the other hand, the average interest rate on deposits at the private commercial banks (PCBs) dropped to 5.15 per cent in September last from 5.27 per cent in August 2017 while the foreign commercial banks (FCBs) collected deposits offering interest rates on the same at 1.66 per cent against 1.74 per cent.
The official data showed that most of new PCBs offered higher interest rates on deposit raging between 5.92 per cent and 8.79 per cent.
Talking to the BBN, a senior official of the Bangladesh Bank (BB) said the interest rate on deposits may increase shortly as most of banks receive funds offering higher rates to improve their deposit growths than credit ones.
Currently, the overall deposits in the country’s banking system witnessed a slower growth than that of credits as depositors feel discourage to keep their money with the banks mainly due to lower interest rates.
Nearly one-and-half dozen banks are now searching deposits to meet their regulatory requirements, according to market insiders.
They also said large corporate entities have already increased their interest rate on deposits particularly FDR (fixed deposit receipt) for banks and others financial institutions.
The spread being maintained by at least 10 banks out of 57 still ranges as high as between more than 5.0 per cent and 7.97 per cent.
Average spread with the SoCBs was 4.01 per cent, PCBs 4.49 per cent, FCBs 6.33 per cent and specialised banks (SBs) 2.74 per cent in September 2017.
Excluding consumer finance and credit card, the spread of all banks also came down to 4.41 per cent in September 2017 from 4.43 per cent a month ago, the BB data showed.
BBN/SSR/AD