There is no fund crisis in the banking sector, rather the problem lies with the distribution of the deposits, a top banker said yesterday.
Anis A Khan, managing director of Mutual Trust Bank, said state-run banks are sitting on a pile of deposits whereas private commercial banks are running after funds that led to a severe liquidity shortage.
He spoke at the launch of the MTB Student Banking, a new product designed to attract long-term deposits, at the MTB Tower at Bangla Motor in Dhaka.
Khan said private banks are meeting the major portion of credit demand of the economy as state-run banks have limitations in lending due to their agreement with the Bangladesh Bank.
As a result, private banks' appetite for deposits is rising, he added.
Khan said about Tk 10,000 crore was available in the banking system after the one percentage point cut in cash reserve ratio (CRR) that came into force yesterday.
“It will take three to four months for the lending rates to come down as some deposits were taken at high-interest rates during the crisis period.”
On April 3, the central bank slashed the CRR to 5.5 percent from 6.5 percent.
Khan urged banks to diversify their products to attract small but low-cost deposits.
Under the student banking umbrella, the bank is offering six kinds of products: MTB Junior, MTB Graduate, MTB Children Education Deposit Scheme, MTB Education Plan, MTB EDU Finance, and MTB Student File Services.
Students will enjoy bank accounts with a free of cost along with complimentary insurance service, said Tarek Reaz Khan, head of the SME and retail division of MTB.
Under the student banking service, the lender is offering attractive interest rates on savings and discounts on student file processing fees, among other benefits.
MTB Junior and MTB Graduate accountholders will be entitled to a complimentary insurance coverage of up to Tk 10,000 in the event of any natural or accidental death of the paying parent.
The accountholders will get Tk 5,000 per month for 60 months after the accidental death of the paying parent.
The bank also introduced a loan scheme to enable parents to bear the expense when the accountholder goes for higher education.
The MTB Edu Finance product is a specially designed product with an unsecured loan facility of up to Tk 20 lakh, according to a statement of the bank.
The accountholders will receive 4.5 percent interest on savings and can get a loan at 10-11 percent interest.