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Banks’ interest spread widens in Dec

23 banks fail to keep the gap at required level

Staff Correspondent

Interest spread rate in the banking sector crossed five percentage points in December last year as 23 scheduled banks failed to maintain the rate in accordance with the central bank’s directions.
According to the latest BB data, the overall interest spread, the gap between the interest rate on credit and deposit, stood at 5.06 percentage points in December against 4.97 percentage points in November last year.
A BB official told New Age on Thursday that there was no logical cause of the rise in the interest spread rate in the recent months as the credit demand from the private sector declined in the period amid political unrest.
‘Banks are now holding huge amount of liquidity due to lower credit demand from the private sector. Under the circumstances, they are going to bond market to invest their idle fund,’ he said.
Banks could have decreased their interest spread rate, but they did not do so in a bid to earn high profit by lending, he said.
Against the backdrop, the central bank will place the issue before the upcoming bankers’ meeting to be held on February 18 at the BB headquarters.
The BB will ask the scheduled banks to take necessary measures in this connection so that the businesspeople can get bank loans at a tolerable interest rate, he said.
The weighted average rate on lending stood at 13.45 percentage points in December which was 13.42 percentage points in November while the interest rates on deposits were paid at 8.39 percentage points in December from 8.45 percentage points in November, the BB data showed.
In October of 2013, the average lending rate was 13.42 percentage points and average deposit rate was 8.47 percentage points.
The BB data showed that 23 banks maintained the interest spread rate at more than five percentage points in December, violating the central bank’s direction.
The 23 banks are  Rupali Bank, Standard Chartered Bank, Habib Bank, Citibank NA, Commercial Bank of Ceylon, Woori Bank, HSBC, AB Bank, The City Bank, IFIC Bank, Pubali Bank, Uttara Bank, Eastern Bank, Prime Bank, Southeast Bank, Social Islami Bank, Dutch-Bangla Bank, ONE Bank, Bangladesh
Commerce Bank, Premier Bank, Bank Asia, Jamuna Bank and BRAC Bank.
The average spread of the four state-owned commercial banks was 3.47 percentage points in December and 3.22 percentage points in November, that of the private commercial banks 5.27 percentage points and 5.23 percentage points, that of the foreign commercial banks 8.59 percentage points and 8.44 percentage points and that of the specialised development banks 3.04 percentage points and 2.79 percentage points. 

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