The weighted average lending rate of 18 banks dropped below 7% in April
Lending rate of most of the banks dropped below 7% in April owing to the poor credit demand amid the ongoing Covid-19 pandemic.
The weighted average lending rate of 18 banks dropped below 7% in April, while the deposit rate of 19 banks dropped below 4% in the month under consideration as the banks were reluctant to attract savers at a time when they were holding excess liquidity in their hand.
Amid the significant decline in deposit and lending rates in the last one year, 27 banks have managed to enhance their interest rate spread while the spread of 31 banks has dropped during the period.
The overall interest rate spread in the country’s banking sector, however, returned above 3% after it fell below 3% following the implementation of a 9% lending rate cap just after the outbreak of coronavirus in the country.
Due to the outbreak of coronavirus and the subsequent economic fallout, the credit disbursement from the banking sector has remained dull even though the central bank has so far injected a huge amount of liquidity in the banking system by implementing stimulus packages and against the purchase of dollars from the local market.
At the end of April this year, excess liquidity in the banking sector stood at Tk201,546 crore, up from Tk198,400 crore a month ago, as per the latest data from the Bangladesh Bank.
Of the total, Tk90,038 crore was excess liquidity in the state-run banks, Tk89,955 crore in the private banks, and the remaining Tk21,553 crore in foreign banks.
The surplus fund rose 78.35% in April compared to the same month a year ago, when the amount stood at Tk 113,000 crore.
Even though the central bank has supplied adequate liquidity to make money available for economic recovery, the private sector credit remained far away from the BB’s projection with the achievement of just 8.29% in April against the projection of 14.8% growth in FY21.
BB latest data showed that weighted average lending rate of Janata Bank, Rupali Bank, Sonali Bank, BASIC Bank, Bangladesh Development Bank, Habib Bank, Citibank NA, Commercial Bank of Ceylon, National Bank of Pakistan, Woori Bank, The Hong Kong and Shanghai Banking Corporation, Bank Al-Falah, Islami Bank Bangladesh, National Bank, Southeast Bank, Bangladesh Commerce Bank, Padma Bank and ICB Islamic Bank dropped below 7% in April.