Bangladesh Bank has directed all banks not to fix interest rates on term deposits below the inflation rate.

From now on, no bank will be able to pay less interest on term deposits than the inflation rate. This instruction will apply to deposits declared for a period of three months or more.

Bangladesh Bank’s Banking Regulation and Policy Department issued a directive and sent it to the chief executives of all scheduled banks on Sunday.

The decision was taken due to a gradual drop in the interest rates of deposits and many people’s livelihood depends on the interest rate of their deposits, the circular added.

According to Bangladesh Bank data, by the term basis, currently the minimum rate of fixed deposits is 1 per cent and maximum is 9 per cent.

However, in the last three months (April, May, June), the average inflation was about 5.50 per cent.