Interest rates on fixed, term deposits slashed by state-owned commercial banks in Bangladesh 

State-owned commercial banks have once again reduced interest rates on term and fixed deposits, the second such downward revision in four months.

Sheikh Abdullahbdnews24.com
Published : 10 Oct 2015, 03:53 AM
Updated : 10 Oct 2015, 03:53 AM

Sonali, Janata, Agrani, Rupali, Basic and Bangladesh Development Bank Limited (BDBL) announced cutting down on interest rates for various term and fixed deposits between 0.25 and 1 percent.
 
The latest interest rates were approved at a meeting of the board of directors of these banks, after their chief executives had decided on the cutbacks.   
 
Sonali, Janata and Rupali banks have already implemented the new rates with effect from October 1.  Agrani, Basic and BDBL will do that from October 11.
 
According to the banks, interest on deposits were slashed to lower the rates of interest on lending.  
 
The interest rate on fixed deposits for three to six months has been reduced to 7 percent from 7.25 percent.
 
The rate on fixed deposits for six months to one year has been brought down to 7.25 percent from 7.50 percent. For deposits for one year or above, it has been lowered to 7.50 percent from 8 percent.
 
In case of Special Notice Deposits (SND), the interest rate has been fixed at 4 percent, from the previous 5 percent, on any deposit of less than Tk 100 million.
 
On SND of more than Tk 100 million, but less than Tk 1 billion, the new rate will be 4.5 percent. Earlier it was 5 percent.
 
However, the rate remained unchanged at 5 percent on deposits of more than Tk 1 billion.   
 
The rate on saving deposits too remained unchanged at 5 percent.
 
Agrani Bank Chairman and economist Zaid Bakht told bdnews24.com, “Each bank has excess liquidity. Through this rate cut an effort has been made to lower the lending rates to encourage businessmen and entrepreneurs to take loans.”

According to Bangladesh Bank, more than Tk 250 billion was lying idle in various banks at the moment.
 
Lacking opportunity to invest in the private sector, banks have invested more than Tk 1,000 billion in various government securities.
 
Rupali Bank’s Managing Director M Farid Uddin told bdnews24.com, “The entire banking sector has surplus liquidity. The interest rates on terms and fixed deposits have been slashed to lower interest on lending in a bid to increase the demands for loans.”
 
There are 56 commercial banks in the country having 9,500 branches.  The state-owned banks have more than 3,000 branches spread across the country.
 
For the last few months, interest rates on deposits are declining as the banks have surplus liquidity.  
 
According to Bangladesh Bank statistics, the average rate of interest on deposits came down below 7 percent in May. The average interest rate that month was 6.99 percent.  
 
Since then rates have been gradually dropping.