BB warns 27 banks against higher spread - Share market analysis of dhaka stock exchange, Bangladesh
Black
White

Send This Page To Friends and Colleagues

You can Enter more than one email separated by (,)
Allowed 100 characters only
20 September, 2012 09:24 AM Source: The Daily Star Bangladesh
2012-09-20__bs04.jpg

Twenty-seven banks are not following the directives of the central bank to cut down the interest rate spread.

Bangladesh Bank has long been asking these banks to bring down their spread, the gap between the interest rates on credit and deposit, to the permissible limit of 5 percent.

The spread at the 27 banks is more than 5 percent. Six banks have more than 7 percent spread, according to data from the central bank.

In a bankers' meeting last week, all banks were advised to bring down their spread below 5 percent.

Chief executives of all banks attended the meeting, presided over by Governor Atiur Rahman.

A central bank official said, due to an unhealthy competition, some banks are giving higher interest on deposit, and as a result, the rate of interest on credit is going up.

In the meeting, the BB placed a report on the rate of interest on credit and deposit.

The report said the upper cap of the rate of interest on credit was withdrawn earlier. It resulted in an upward trend in the rate of interest on credit and deposit in the banking sector.

The BB official said the spread in the private and foreign banks is higher than that in other banks.

The central bank on several occasions has warned a number of banks that were offering higher interest on deposit, said the official.

A bank was fined under the Banking Company Act for offering higher interest than its announced rate, said the report.

But even after that the bank continued offering higher interest.

The BB report said, due to the higher rates of interest, credit flow into small and medium enterprises is being hindered.

Some weak banks are hampering the healthy competition in the banking sector, said the managing director of a private commercial bank.

These banks resort to various ill practices to attract depositors, the official said, requesting not to be named. "As a result, other banks have to increase their rate of interest as well."

Another official of a private bank said, if the rate of interest on deposit could be kept low, the rate of interest on credit will also remain low and in turn the spread will come down.

He said the central bank should strengthen monitoring so that banks do not go for any unhealthy competition.

Add Comment | 1   comment

Readers Comment

1 - Overall Impact Musfiq 13 November 2014 07:05 PM
Low interest rate make less costlier of borrowing fund. I think it will be good for economy especially for capital market.
(0 down / 0 up )
One item found. page number 1

Add Comment

Please login first to comment Click here to login
Advanced Charts
Market Map
Real-Time Market Watch
Order Book Data
Stock Screener
LankaBangla Client Login
CSE iTrading
DSE iTrading

Stocks in Focus


Features for Registered Users

E-mail Alerts
Daily Newsletter
Your Watchlist
Advanced Tools
and
Many more

Will automatically display the last quotes you have visited here.

All Rights Reserved - DUInvest © 2013

Login

Do You have an Account ? , Click here to create a new account

Your Opinion Matters

What do you think about the new Website?