• Wednesday, Sep 19, 2018
  • Last Update : 01:04 pm

10 banks flouting central bank directive to keep interest rate spread under 5%

  • Published at 10:50 pm April 3rd, 2018
10 banks flouting central bank directive to keep interest rate spread under 5%
Although the Bangladesh Bank has strictly directed commercial banks to maintain their interest rate spread under 5%, at least 10 private banks are not following the directive, according to central bank sources. Five foreign banks – Standard Chartered Bank, State Bank of India, Woori Bank, Citibank N.A., and HSBC Bank – and five local banks – Brac Bank Ltd, Dutch-Bangla Bank Ltd, Uttara Bank Ltd, Premier Bank Ltd, and NRB Commercial Bank Ltd – were found to have an interest spread – the difference between interest rates on credit and savings – greater than 5% in March this year. Of them, the Standard Chartered Bank topped the list with 8.23% interest rate spread, followed by Brac Bank's 7.35%. Sources said Bangladesh Bank issued the directive to maintain an interest rate spread under 5% in order to make the savings schemes more attractive as well as keep the interest rates on loans business-friendly. However, the aforementioned banks, particularly the foreign banks, have been found to be flouting the directive on a regular basis. The Standard Chartered Bank offered 1.26% interest on savings amounts in March this year, while its loan interest rate was 9.49%. Brac Bank's savings interest was 4.31% last month, while it charged 11.66% interest rate on loans. The Bangladesh Bank data further revealed that in March, the average savings interest rate in the banking sector was 5.01% and the average interest rate on loans was 9.42% – keeping the interest rate spread at 4.41%.