The lending rate in Bangladesh’s banking sector dropped to 11.05% in January this year from 12.32% one year ago, said Bangladesh Bank data released recently.
The interest rate on deposit also fell to 6.21% from 7.26% during the same period.
During the period, the lending rate plunged by 1.27 percentage points compared to 1.05 percentage points drop of deposit rate.
A senior executive of a private bank in the country said the deposit rate fall was slower than that lending rate as the new banks were still struggling to attract deposits.
However, the banking sector moved to reduce lending rate gradually to stimulate credit demand amid economic recovery after a long stagnation, added the executive asking not to be named.
Bangladesh Bank data showed that the gap between lending and deposit rates, known as spread, came down to the “expected level of 4.84%” in January this year from 5.05% a year earlier.
The private bank executive said the downward trend of lending rate had played a role in boosting credit growth to 14.19% in December last year, which was high in three years.
Alhough the average lending rate has come down to 11.05%, the new banks are still lending at high interest rates like 13%-14% in January 2016. The lending rate of nine new banks were between 14% and 15% in January last year.
Of the new banks, Farmers Bank lent at the highest 14.54% rate while its interest rate against deposit was 9.56% in January this year, and Midland Bank, another new bank, offered lowest lending rate of 12.18% against deposit rate of 7.56%.
However, the weighted average lending rate of state-owned banks fell to 10.2% in January this year from 11.28% one year ago. The deposit rate dropped to 6.42% from 7.19% during the same period.
Sonali Bank, the largest state-owned commercial bank, saw 2.66% credit growth year-on-year in December last year. But the bank experienced negative credit growth of 1.95% one year ago.
The lending rate of private commercial banks dropped to 11.45% in January from 12.82% a year earlier while the deposit rate also fell to 6.3% from 7.52%.News:Dhaka Tribune/1-Mar-2016