Five state-owned commercial banks have made a decision to decrease the rate of interest on their existing fixed deposit schemes by up to 0.50 percentage points.
Sonali Bank managing director Pradip Kumar Dutta told New Age on Sunday that the new decision would be implemented from June 1 (today). But the clients, who earlier opened fixed deposit scheme with their banks, will receive the interest according to the previous rate, he said.
Pradip said the high-ups of the five banks — Sonali, Janata, Agrani, Rupali and BASIC — had made the decision last week in a bid to decrease the rate of interest on their lending products.
The businesspeople have long been demanding a decrease in the interest rate on lending and the latest decision will play a role in making a decision in this regard, he said.
From today, Sonali, Janata and Rupali will offer interest rate at 7.50 per cent on FDR scheme of three months or above and less than six months instead of existing 7.75 per cent.
The three banks will offer interest rate at 7.75 per cent on FDR scheme of six months or above and less than one year instead of existing 8 per cent.
Agrani Bank will offer interest rate at 7.25 per cent on FDR scheme of three months or above and less than six months while clients of the bank will get 7.75 per cent on the FDR of six months or above and less than one year.
BASIC Bank will offer interest rate at 7.30 per cent on FDR of one month, 7.50 per cent for three months or above and less than six months, and 7.70 per cent for six months or above and less than one year.
The five banks, however, will offer the rate of interest at 8 per cent on the FDR for one year and above.
The branch managers of the banks will be allowed to change the interest rate by taking permission from their respective management if the fixed deposit amount stand at five crore or above.
Banking
Nine win Mercantile Bank Achievement Award-2015
Morshed Alam, chairman of Mercantile Bank, announcing names of the Mercantile Bank Achievement Award-2015 winners at the press conference at the National Press Club in the city Sunday.
Nine eminent personalities and two organisations have been nominated for Mercantile Bank Achievement Award-2015 for their special contribution in different fields.
They include Prof Shamsuzzaman Khan (education), Prof AK Azad Khan (medical), Maj Gen C.R. Datta (retd), Bir Uttam (freedom fighter), Dr AB Mirza Azizul Islam (economics and economic research) and Hayat Mamud (Bangla language and literature).
Other nominated ones are Mujibul Haider Chowdhury (banking), Abed Khan (journalism), Partha Pratim Majumder (culture), Mohammad Mushfiqur Rahim (sports), Bangladesh Agricultural University (agricultural research and development), and BSRM Group of Companies (industry and trade).
The Mercantile Bank Ltd will hand over gold medals, cash and crests to them at its 16th anniversary celebration, which is set to be held at a city hotel today (June 1).
Commerce Minister Tofail Ahmed, MP is likely to attend the function as the chief guest.
Morshed Alam, chairman of the bank, announced names of the awardees and the celebration programme at a press conference at the National Press Club in the city Sunday.
The press meet was addressed, among others, by M. Ehsanul Haque, managing director and CEO of Mercantile Bank.
They also shared various different success stories, future plan and corporate social responsibility (CSR) activities of the bank.
Every year, 1.0 per cent of the bank's profit or Tk 4 million (whichever is higher) is donated to the Mercantile Bank Foundation among others, to help the distressed people, flourish the talents and develop the sports.
On the occasion of its 16th anniversary, the bank also arranged a blood donation programme after the press conference.
12 listed banks post lower profit in Q1
Twelve out of the 30 listed commercial banks witnessed fall in profits in the first quarter of 2015 compared with that in the same period of the previous year. According to the latest Dhaka Stock Exchange data, 17 listed banks, however, made higher profits in the January-March period of 2015 compared with that in the same period of 2014. NCC Bank is yet to disclose its Q1 financial results. Bank sources said political unrest in the January-March period of 2015 was the major reason for the decline in profits of the banks. They said the political turmoil affected the economy and the bank’s received fewer L/Cs and the collection was also slow because of the situation. ‘In the first quarter of this year there was political turmoil that affected the overall economy. And as a integral part of the economy the banking sector also paid its share,’ Eastern Bank managing director Ali Reza Iftekhar told New Age on Saturday. Eastern Bank’s profit declined to Tk 63.41 crore in Q1 of 2015 compared with that of Tk 71.33 crore in the same period of the previous year. ‘As things are getting back to normalcy, I am not much worried about the Q1 results. I hope we will turn around,’ he said. Prime Bank witnessed the biggest slump as the bank’s profit declined to Tk 78.21 crore in the January-March period from Tk 128.86 crore in the same period of the previous year. Pubali Bank also witnessed a slump in profit to Tk 17.70 crore in Q1 this year compared with that of Tk 55.68 crore in the same period of the previous year. ONE Bank’s profit, however, rose sharply to Tk 21.20 crore from that of Tk 5.14 crore in the same period of the previous year. Trust Bank’s profit also witnessed a sharp rise to Tk 49.77 crore in Q1 this year compared with that of Tk 20.37 crore in Q1 last year. Bangladesh Bank officials said collection of loans was slow in the opening quarter of 2015 because of the political unrest. According to the BB data, the overall defaulted loans rose to Tk 54,657.69 crore as of March 31, 2015 from Tk 50,155.77 crore as of December 31, 2014.
India central bank set for 3rd interest rate cut this year
India’s central bank is expected to cut interest rates for a third time in five months when it meets this week, confident that inflation is stable enough to weather the summer monsoon. The Reserve Bank of India has already lowered its benchmark repo rate, the level at which it lends to commercial banks, by 50 basis points to 7.5 per cent this year. And analysts believe the RBI will snip rates again at its next meeting on Tuesday in a bid to encourage greater lending to businesses and increased consumer spending, stimulating the economy. ‘I expect the RBI to cut the rate by 25 basis points,’ Ashutosh Datar, an economist at IIFL Institutional Equities, told the AFP. Rupa Rege Nitsure, chief economist at L&T Financial Services, agreed, saying she believed the Mumbai-based bank would opt for a ‘modest’ cut. ‘Given the uncertainty concerning oil prices and the depreciation in the rupee, which have a high inflationary potential, I don’t think many people are expecting a 50-point cut,’ she told the AFP. The RBI, led by governor Raghuram Rajan, sliced 25 basis points off the repo rate in January — the first reduction in 20 months — before a surprise repeat cut in March. It kept the key rate unchanged last month, citing inflation concerns and a failure of most commercial banks to pass on lower borrowing costs to customers in Asia’s third-largest economy. But Nitsure said 20 banks were now heeding Rajan’s call to reduce their base rate and another cut would motivate others to ‘follow suit’. ‘There is a need for borrowing costs to come down because demand is so low and inflation is not a threat,’ she said. Indian prime minister Narendra Modi’s right-wing government swept to power last year pledging to reform and revive a flagging economy.
News:New Age/1-Jue-20155 state banks cut interest on FDR
Staff Correspondent
Excess fund pushes govt to halt T-bond auction again
AKM Zamir Uddin
The finance ministry on Sunday asked Bangladesh Bank not to arrange any auction of treasury bond in June, for second month in a row, as the government account is still facing an excess fund of Tk 5,000 crore.
According to the government auction calendar, the government is scheduled to take loans of Tk 2,100 crore from the banking sector in every month by arranging four or five separate auctions.
Due to the finance ministry initiatives, the central bank has postponed the auction of T-bond amounting to Tk 4,200 crore between May and June this year.
The finance ministry issued a letter on Sunday asking the central bank not to arrange any auction this month in the interest of government’s proper cash management.
The excess fund in the government account had gradually enlarged in the recent months as the net investment on the national savings certificates and bonds increased during the period.
Banks have recently enjoyed one of their main income sources by investing their idle fund in T-bond and T-bills due to the lower loan disbursement to the private sector amid sluggish business, a BB official told New Age on Sunday.
He said that the decision of postponement to arrange auction of T-bond for two months in a row was a rare example as the government had not taken such type of decision in the recent years.
The government’s decision will put an adverse impact on the scheduled banks as they are now also facing excess liquidity amid slow credit demand from the businesspeople against the backdrop of dull business due to political unrest.
The cut of yield (interest rate) on the T-bonds is now between 8.40 per cent and 11.97 per cent.
The banks will be compelled to lower the rate of interest on deposit products further as their scope for investment will be narrowed due to the finance ministry’s decision not to hold any auction for T-bonds for the two months in a row, the official said.
The government prepares auction calendar at the beginning of a financial year to borrow from the banking sector by issuing T-bonds and T-bills.
The rate of interest in the country’s inter-bank call money market also hit the lowest in May since 2009 after the postponement of auction of T-bond, the official said.
The weighted average rate on lending in the call money market stood at 6.79 per cent on May 4, the first working day of this month, and the rate decreased to 5.47 per cent on May 26, according to the BB data.
The interest rate on the call money market will decrease more due to the latest finance ministry’s decision, the BB official said.
According to the latest data of the Directorate of National Savings, the net investment in the savings instruments, which is the pivotal cause of increasing the idle amount with the government account, increased by 176.38 per cent to Tk 24,141.09 crore in July-April of the financial year 2014-15 compared with that of Tk 8,734.50 crore in the same period of the FY14.
The government set a net investment target of Tk 9,056 crore from the national savings certificates and bonds for the FY15, but the investment in the instruments crossed its annual target in just four months in this financial year.
Clients invested their fund in the NSCs as the banks are now offering 7 per cent to 9 per cent interest on the fixed deposit schemes while the interest rate on the government savings tools
was between 12.59 per cent and 13.45 per cent during the period.
Due to a significant increase in investment trend in the NSCs, the government has recently cut the rate of interest by around 2 per cent on its different savings tools to curb the investment.
The latest BB data showed that the government made no net borrowing from the banking sources in the July-March period of the FY15 but made net repayment of Tk 11,846.32 crore in the same period.
The government, however, has recently increased its borrowing target to Tk 32,653 crore for this financial year against its previous target of Tk 31,221 crore from the banking sources.
The BB official said that it was an unwise decision on the part of the government to raise its borrowing target as its account was now suffering from excess fund.