Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has issued show-cause notices on three state-run banks for their alleged violation of announced interest rates on deposit, officials said.
The Bangladesh Bank (BB), the country’s central bank, has also asked the managing directors and chief executive officers of these banks to explain within a week their positions and why a disciplinary action will not be taken against them under the existing Bank Company Act.
“We’ll take the next course of action in line with the existing Bank Company Act after receiving replies from the CEOs of the banks within the stipulated timeframe,” a BB senior official told BBN in Dhaka on Tuesday, adding that the central bank has issued the notice to the MDs of the three commercial banks on the basis of its probe report. 
The BB’s inspection teams are now investigating into allegations of offering higher interest rates on deposit contrary to announcement by three other private commercial banks (PCBs). 
Currently, four teams are probing into allegations of offering higher interest rates on deposit by the PCBs through violating their announced interest rates.
The commercial banks earlier this month announced their interest rates on deposit maximum at 12.50 per cent in line with the Association of Bankers, Bangladesh (ABB) decision.
“We’ve been reported that a few banks offered higher interest rates on deposit ranging between 13 percent and 15 percent to attract depositors from both public and private sectors to their banks from other ones,” another BB official said.
He also said the central bank has advised all concerned to act rationally in fixing both deposit and lending rates to avoid any ‘unhealthy’ competition in the country’s financial sector.
On February 7 last, the ABB called upon its member-banks to re-fix the deposit at a maximum of 12.50 percent and lending rate at a maximum of 15.50 percent.
The ABB’s decision followed the withdrawal of capping of interest rates by the central bank in early January, 2012. Before that, the central bank had enforced on April 19, 2009, the capping of lending rate at 13 percent in five specific areas to help mitigate the impact of the then global economic meltdown. 
 
BBN/SSR/AD-28Feb12-9:25 pm (BST)