Dhaka, Bangladesh (BBN)- Interest rate spread in the country’s banking sector remained unchanged in September 2013 despite the central bank’s continuous persuasion, officials said.
The weighted average spread between lending and deposit rates offered by the commercial banks remained unchanged at 5.01 per cent in September 2013. It was 5.02 per cent in July.
“The central bank is continuously working to bring down the interest rate spread between deposit and lending below 5.0 percent from the existing level of 5.01 per cent,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
He also said the spread will decrease in the coming months, as the commercial banks are now receiving deposits at lower interest rates.
“We expect that the spread will come down below 5.0 percent by the end of this calendar year, if the existing trend continues,” the central banker noted.
Earlier, on January 22 last year, the BB asked the commercial banks to keep the interest rate spread at less than 5.0 percent, barring operations relating to credit cards and small and medium enterprises (SMEs).
The weighted average rate on lending stood at 13.51 per cent in September, while the interest rate on deposit was 8.50 per cent, the BB data showed.
In August, the average lending rate was 13.56 per cent, and average deposit rate 8.55 per cent.
The spread, being maintained by at least 22 commercial banks, out of 54, still ranges between more than 5.0 and 10.18. The average spread of the four government-owned commercial banks (SoCBs) is 3.35 percent, PCBs 5.25 percent, foreign commercial banks (FCBs) 8.59 percent, and specialised banks (SBs) 2.69 percent.
Earlier, at a meeting on August 25, the central bank asked the chief executive officers of all the banks to bring down the interest rate spread below 5.0 per cent immediately.
The country’s business community earlier urged the BB governor to take initiatives for reducing the lending rates to facilitate business activities and augment industrialisation.
BBN/SSR/AD-06Nov13-10:01 am (BST)
