Bangladesh Bank directs commercial banks not to lower savings interest rate

Bangladesh Bank has directed commercial banks not to reduce rate of interest on savings.

The central bank says doing so spurs non productive spending and discourages savings habit.

It also strains the economic policy makings, the bank told CEOs of the commercial bank in a letter.

The bank instead suggested boosting ways to recover bad debts and narrowing intermediate spread.

Figures available with the central bank show that a continued reduction in interest rates on savings has brought the rate down to 6 percent compared to 12-14 percent in 2012.

Although banks have cut down interest on savings, their interest pay back rate against loans has been left to spike consistently.

They charge a minimum of 11 percent and a maximum of 14 percent interest against loans.