Banks raise interest rates on deposits

June 22, 2010

The commercial banks have raised their interest rates on deposits in the current month to attract the special notice deposit (SND) accountholders as well as reduce the interest rate spread, officials said.

At least 13 commercial banks have increased interest rates on deposits in June, while interest rates on lending remained almost the same in the country’s banking sector.

“Most of the banks have revised their interest rates on deposits to offer better rates to the SND accountholders,” a senior official of the Bangladesh Bank (BB) told the FE Monday.

The banks will have to report on the SND accounts to the central bank regularly from this month, he said, adding that the interest rates on SND accounts cannot be higher than the normal saving deposit accounts.

The country’s commercial banks now offer interest rates ranging between 1.25 per cent and 10.03 per cent on fixed deposits, while the rates for savings accounts vary between 1.00 per cent and 8.00 per cent, according to the central bank statistics, released Monday.

“The overall interest rate spread may decline in the coming months if the banks increase their interest rates on deposits keeping the lending rates unchanged,” the BB official said, adding that the central bank is monitoring the interest rate spread closely.

Currently, the banks provide loans to large and medium-scale industries at interest rates ranging between 11 per cent and 13 per cent and to small industries at rates between 10 per cent and 18 per cent.

Interest rates on housing loans range between 9.99 per cent and 13.00 per cent and on consumer credits between 11.50 per cent and 19.50 per cent.

The banks’ lending rates on working capital to large and medium scale industries vary between 10.25 per cent and 13 per cent and for small industries between 11.50 per cent and 17.25 per cent.

Banks raise interest rates on deposits

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