Depositors are to gain as the interest-rate spread narrowed slightly as banks increased deposit rates after nearly two years by keeping lending rates unchanged, bankers say.
Adjustments are taking place well within the government-set 9-6-per cent bracket in banking operations, determined amid lending rates climbing high and thus making funds costlier while the deposit rates dropping into negative domain if calculated against inflation.
The weighted average spread between the lending and deposit rates offered by the scheduled banks came down to 3.16 per cent in September 2021 from 3.19 per cent a month ago, according to the central bank's latest statistics.
The weighted average interest rate on deposits rose to 4.08 per cent in September from 4.04 per cent in the previous month while such rate on lending remained unchanged at 7.24 per cent.
And the weighted average interest rate on deposits returned into positive territory in September following implementation of rationalisation of interest on term deposits by the banks in line with Bangladesh Bank (BB) instructions.
The weighted average interest rate on deposits rose to 5.30 per cent in January 2019 from 5.25 per cent a month before, the BB data showed.
Earlier on August 08, all the scheduled banks were instructed to fix interest rates on term deposits with maturity of three months and above at rates not less than the rate of inflation published three months before.
Only individuals and holders of two recognized funds-provident fund and gratuity fund-are eligible to receive such interest rate on their deposits, according to the central bankers.
The banks are now offering interest rate on such fixed deposits at 5.60 per cent as per the BB directives, according to senior bankers.
The interest rates on corporate deposits have also witnessed an upward trend following the BB instructions on rationalisation of interest rate on term deposits, according to the senior bankers.
On the other hand, minimum interest rate on lending is now fixed at 8.0 per cent instead of 7:30 per cent earlier following the mopping up of excess liquidity from the market by the central bank, they explained.
Earlier on August 09 last, the central bank resumed the mopping up of excess liquidity through BB Bills from the money markt after more than three years of suspension, aiming to ensure proper liquidity management in the banking system.
Some banks are now offering lending rate at minimum at 8.00 per cent instead of 9.0 per cent, set by the central bank earlier, to their 'good paymasters', according to the bankers.
"The upward trend in lending rates may continue in the coming months as the demand for fresh credits has increased gradually following the reopening of the overall economic activities," a senior executive of a leading private commercial bank (PCB) told the FE Wednesday while explaining the latest situation on interest rates.
Talking to the FE, Syed Mahbubur Rahman, former chairman of the Association of Bankers, Bangladesh, said the overall cost of funds may increase gradually in the near future which ultimately is expected to narrow the spread.
The average spread with state-owned commercial banks (SoCBs) was 2.34 per cent in September, 3.30 per cent with private commercial banks (PCBs), 5.02 per cent with foreign commercial banks (FCBs) and 1.42 per cent with specialised banks (SBs).
In April 2020, the spread dropped significantly to 2.92 per cent from 4.07 per cent in March following the implementation of the government-mandated single-digit interest rate in the banking sector.
