The average interest rate spread, the gap between the lending and deposit rates, went up to 5.21% in December last year.
The increase is highest in five months since June last year when spread was 5.31%, according to the Bangladesh Bank data released yesterday.
The spread was 5.17% in November and hovered above the desired level of 5% for last 10 months.
The gap increased due to cut in deposit rates deeper than the lending rates, said a senior executive of Bangladesh Bank.
In December, the average lending rate of banking sector came down to 12.46% from 12.49% in previous month while deposit rate dropped to 7.25% from 7.32%, according to the central bank data.
The lending rate of private commercial banks stood at 12.99% and the deposit rate at 7.55% in December and it was 13.05% and 7.6% respectively in November.
The latest monetary policy statement said that at the retail level, both the deposit and lending rates rose in the second half of the fiscal year 2014 and since then interest rate spreads have on average fallen from 5.31% in June to 5.17% in November last year.
The gap between the lending and deposit rates reduced due to faster fall of lending rate than deposit rate.
The spread of all banks came down to 4.99% in January last year but further crossed the expected level from February that year and remained above 5%.