2018-06-28 06:48:34 BdST
Single-digit lending, deposit ratesPCBs decide to comply with decisions of their boards
Private commercial banks (PCBs) will fix interest rates for both lending and deposit as per the decision of their board of directors.
The decision was made at a general meeting of the Association of Bankers, Bangladesh (ABB), held at the headquarters of a bank in Dhaka on Wednesday with ABB Chairman Syed Mahbubur Rahman in the chair.
All ABB member banks' chief executive officers (CEOs) and managing directors (MDs) were invited to attend the meeting.
"We're are committed to implement the cut in the banks' lending and deposit rates in line with the decision of the Bangladesh Association of Banks (BAB)," the ABB chief said after the meeting.
Earlier on June 20 last, the BAB decided to bring down the interest rates on both lending and deposit at 9.0 per cent and 6.0 per cent respectively from July 01.
He also said the banks will have to reduce the interest rates on lending to help create employment opportunities through boosting investment across the country.
"The ABB is an advocacy group so it cannot impose anything," Mr. Rahman said while replying to a query.
The banks will slash the lending rates to 9.0 per cent from the existing level in line with their respective board of director's decisions, he explained.
When asked as to whether banks would reduce their interest rate on term-deposit before maturity or not, the ABB chief replied in the negative.
The banks, particularly conventional ones, cannot reduce the interest rate on such deposit before the maturity, he explained.
As per the BAB decisions, the proposed interest rate on deposit will be applicable in the case of deposits having three-month maturity only.
The interest rates of other term-deposits for six months and one year will not come under such jurisdiction.
"The banks may face challenges in a certain period but those may turn into opportunity in future," the ABB chief said while replying to a query relating to impact on the latest moves.
At the meeting, all ABB members have been informed about the meeting with the central bank held on June 25, meeting sources said.
The ABB leaders had urged the Bangladesh Bank (BB) to ensure deposits from government agencies with their banks at rates below 6.0 per cent for implementing the single-digit lending rate.
They have also requested the central bank to intervene and ask the public sector banks for depositing their funds with the PCBs at maximum 6.0 per cent interest rate.
The government had already allowed the state entities to deposit 50 per cent of their funds with the PCBs instead of the previous 25 per cent to meet their growing demand for liquidity.
Meanwhile, the BAB has requested its member banks to take necessary steps for keeping the deposit and lending rates within 6.0 per cent and 9.0 per cent respectively from July 01.
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