Dhaka, Bangladesh (BBN)– Bangladesh’s private commercial banks (PCBs) will slash interest rates for both lending and deposit from July 01 as per the decision of their board of directors.

Top bankers took the decision at a general meeting of the Association of Bankers, Bangladesh (ABB), held at the headquarters of a bank in Dhaka on Wednesday with ABB Chairman Syed Mahbubur Rahman in the chair.

The member banks of ABB are committed to implement the cut in the banks’ lending and deposit rates in line with the decision of the Bangladesh Association of Banks (BAB), according to the ABB chief.

Earlier on June 20 last, the BAB decided to bring down the interest rates on both lending and deposit at 9.0 per cent and 6.0 per cent respectively from July 01.

He also said the banks will slash the lending rates to 9.0 per cent from the existing level in line with their respective board of director’s decisions.

“The ABB is an advocacy group so it cannot impose anything,” Mr. Rahman explained.

The banks, particularly conventional ones, cannot reduce the interest rate on term-deposit before maturity, the ABB chairman said while replying to a query.

As per the BAB decisions, the proposed interest rate on deposit will be applicable in the case of deposits having three-month maturity only.

The interest rates of other term-deposits for six months and one year will not come under such jurisdiction.

At the meeting, all ABB members have been informed about the meeting with the central bank held on June 25, meeting sources said.

The ABB leaders had urged the Bangladesh Bank (BB) to ensure deposits from government’s agencies with their banks at rates below 6.0 per cent for implementing the single-digit lending rate.

They have also requested the central bank to intervene and ask the public sector banks for depositing their funds with the PCBs at maximum 6.0 per cent interest rate.

The government had already allowed the state entities to deposit 50 per cent of their funds with the PCBs instead of the previous 25 per cent to meet their growing demand for liquidity.

Around BDT 1.80 trillion government funds has been deposited with all the scheduled banks, a senior official of the Bangladesh Bank (BB) told the BBN in Dhaka.