Dhaka, Bangladesh (BBN)– Overall interest rate spread in Bangladesh’s banking sector fell further slightly in October, as the banks decreased their interest rates on lending more than on deposits.
The weighted average spread between lending and deposit rates, offered by the commercial banks, came down to 4.70 per cent in October 2016 from 4.76 per cent in the previous month, according to the central bank latest statistics.
The spread was 4.80 per cent in August 2016.
“We’re now working to bring down the spread to nearly 4.0 per cent in the near future from the existing level through persuasion the banks continuously,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
He also said the central bank has already advised the banks to reduce their interest rate spread through improving efficiency as well as profitability instead of slashing interest rates on deposits.
The weighted average rates on deposits came down to 5.33 per cent in October from 5.39 per cent in the previous month, while interests on lending dropped to 10.03 per cent from 10.15 per cent, the BB data showed.
The spread being maintained by at least 15 commercial banks, out of 56, still ranges as high as between more than 5.0 per cent and 8.93 per cent.
Average spread with the state-owned commercial banks is 3.90 per cent, private commercial banks 4.82 per cent, foreign commercial banks 6.66 per cent, and specialised banks 2.60 per cent.
Excluding consumer finance and credit card, the spread of all banks came down to 4.60 per cent in October 2016 from 4.66 per cent in September, the official figures showed.
Talking to BBN, a senior private banker said most of the banks are now offering single-digit interest rate on different types of lending, including the term-ones, to attract corporate clients.
He also said the existing trend may continue in the next couple of months.
Country’s business community earlier urged the central bank governor to take initiative to lower the lending rates to facilitate business activities, particularly to help augment industrialisation in the country.