Bank deposits now largely fetching 6pc interest
The majority of banks have already implemented the 6 per cent interest rate on their fixed deposit schemes (FDR) as part of their preparation to provide loans at 9 per cent interest in a couple of months' time.
The development comes after private banks' sponsors and managing directors in a meeting with Finance Minister AHM Mustafa Kamal on December 30 last year had agreed to set single-digit interest rates from April.
Subsequently on January 28, the Association of Bankers, Bangladesh (ABB), a forum of managing directors of banks, took the decision to provide not more than 6 per cent for FDRs from February 1.
The Daily Star has collected the FDR data of 29 banks and found seven -- Mercantile, Southeast, Trust, AB, IFIC, Premier and National -- are yet to bring down their interest rate to 6 per cent.
The seven banks, however, have already taken measures to lower the interest rate on their FDRs though.
Setting the interest rate at 6 per cent for deposits overnight is a difficult task as they have offered savers 8-9 percent rate when selling the schemes, said officials of banks.
"This is the respective bank's decision when they will lower the interest rate on deposit. But, we will have to do it if we want to make single-digit lending rate sustainable," said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.
The 6 per cent interest rate will help banks to bring down the cost of fund, which will play a role in implementing single-digit lending rate smoothly, he said.
National Bank (NBL) Additional Managing Director ASM Bulbul said that his bank had already taken initiative to bring down the FDRs to 6 per cent before April.
The bank has already fixed the interest rate of 6 per cent for 3-month FDR, he said.
NBL savers are getting 9.50 per cent interest from their 6-month and 1-year FDR products respectively.
"We will certainly decrease the rates within March," Bulbul said.
Mercantile Bank has also fixed 6 per cent interest for 3-month FDR, but it is still offering 6.50 per cent for 6-month and 7 per cent for 1-year.
The bank will implement the 6 per cent interest rate before April, said its Additional Managing Director Mati Ul Hasan.
"We have already lowered the interest rate on deposit. And the rate will be reset soon," he said.
To facilitate banks to charge 9 per cent for loans from April, the finance ministry on January 20 instructed the autonomous, semi-autonomous and government companies to keep half of their surplus funds at 6 per cent interest rate with private lenders.
The remaining half of their deposits will go to state banks, which can offer no more than 6 per cent interest.
The private banks would get government funds in line with their paid-up capital.
But Brac Bank Chairman Ahsan H Mansur said banks would have to face a dire consequence because of the 9-6 per cent bounds.
A large amount of money will go to the informal sector from banks due to the government's decision as savers will not ultimately get any return from keeping deposits at banks, he said.
"If we calculate the existing inflation level and charge imposed by banks, savers will be losers for parking their money at banks," said Mansur, also a former official of the International Monetary Fund.
He feared that savers of lenders would invest their money in cooperative societies in order to manage high returns.
But such investment will be highly risky as a good number of cooperative societies had earlier stopped their operation after embezzling funds of common people.