Banks Raise Interest Rates On Deposit In Bangladesh

May 25, 2008 12:46 p.m. EST

Dhaka, Bangladesh (AHN) - Bangladesh's banking sector continued to maintain an upward trend in interest rates on deposits in May while the lending rates remained almost unchanged, officials said on Sunday.

At least 21 commercial banks out of 48 have increased their interest rates on deposits in this month to reduce the spread between lending and deposit rates so that clients are encouraged to keep their money with banks, they added.

"All the banks are trying to reduce the interest rate spread," a senior chief executive officer of a private commercial bank told AHN Media Corp. in Dhaka, adding that the rate of interest depends on the country's overall macro-economic situation.

Earlier, the commercial banks, particularly the private commercial banks, agreed with the central bank to bring down the interest rate spread to around 5 per cent from the existing 6.05 per cent.

The commercial banks have raised their deposit rates in the range between 0.25 and 3.00 percentage points depending on the period aiming to collect fresh funds from general depositors, according to the central bank statistics.

"The interest rates on lending have remained almost static in the current month," a senior official of the Bangladesh Bank (BB), the country's central bank, told AHN in the capital, Dhaka, adding that the BB is closely watching the interest rates situation.