Transactions in a state-owned bank is going on at Motijheel, the commercial hub of Bangladesh. BBN file photo

Dhaka, Bangladesh (BBN)– Interest rate spread in the Bangladesh’ banking sector fell slightly in October as the banks slashed their interest rates more on lending than that of deposits, officials said.

The weighted average spread between lending and deposit rates offered by the commercial banks came down to 4.50 per cent in October 2017 from 4.55 per cent in the previous month, according to the central bank’s latest statistics.

The spread was 4.70 per cent in October 2016.

The central bank is now working to bring down the spread within 4.0 per cent from the existing level in the near future, they added.

The BB officials said the banks have already been advised to reduce their interest rate spread through improving their efficiency as well as profitability instead of slashing interest rates on deposits.

The weighted average rates on deposits came down to 4.89 per cent in October last from 4.90 per cent in the previous month while interest on lending dropped to 9.39 per cent from 9.45 per cent, the BB data showed.

The spread being maintained by at least nine commercial banks out of 57 still remains high. It ranges between more than 5.0 per cent and 8.45 per cent.

Average spread with state-owned commercial banks (SoCBs) was 3.85 per cent, private commercial banks (PCBs) 4.48 per cent, foreign commercial banks (FCBs) 6.39 per cent and specialised banks (SBs) 2.82 per cent in October 2017.

Excluding consumer finance and credit card, the spread of all banks also came down to 4.40 per cent in October 2017 from 4.45 per cent a month ago.

BBN/SSR/AD