As banks gear up to bring down its lending and borrowing rates, top officials confirm that interest rates for deposits made or loans taken before Jul 2 are not coming down. However, banks will be not barred to offer its clients the reduced rate, if they want.
Commercial banks follow certain agreements on term deposit, so they can’t move from it, Association of Bankers’, Bangladesh (ABB) President Syed Mahbubur Rahman told Bangla Tribune.
The board, however, can bring down the lending rate to 9 percent if they want, he added.
It will require some time to adjust the new rate with the previously disbursed loans because the banks had borrowed at high rate over the past six months, according to Rahman, the managing director of Dhaka Bank.
Pubali Bank Managing Director Abdul Halim Chowdhury said that they will not change interest rate for existing deposits. “Banks have to provide the interest as per its agreements with the clients.”
Meanwhile, private banks will receive idle funds with state-owned banks and deposit of different government, semi-government and autonomous organizations at 6 percent interest.
Bangladesh Bank, however, says it is for the banks to decide on their rates.
“If any bank faces problem the central bank will provide all possible assistance,” said Deputy Governor Abu Hena Mohd Razee Hassan.
However, the new rates will be only effective for industrial loans at the first phase, according to industry insiders.
Rates for consumer and SME loans and credit cards will be reduced gradually.
However, it all depends on banks getting funds at 6 percent interest, until then loan disbursement is expected to remain sluggish, according to banks.
Bangladesh Bank, however, has opened talks with the government over releasing idle funds with state-owned banks to the private banks.
On Jun 20, the Association of Bankers, Bangladesh (ABB) instructed all banks to bring down the lending rate to single digit, effective from Sunday (Jul 1).
Lending and borrowing rate witnessed a sharp rise with as high as 18 and 11 percent respectively since liquidity crisis hit the country’s banking sector at the beginning of this year.