Kazi Zahidul Hasan :
The interest rates on bank deposits have spiralled out of control amid liquidity crisis in the banking system bringing hayday for depositors, insiders said.
They said liquidity starved banks are offering high rates on deposits for attracting more liquid funds from the people.
The rates were varying from 9.0 percent to 12 percent as compared to 4-5 percent earlier.
Increased interest rates on deposits also pushed up lending rates too high to 15-16 per cent from the 8-9 percent earlier.
“Most banks have raised interest rates on deposits amid shortage of liquid funds. The interest rates continue to spiral from the beginning of this year after a downtrend of two and a half years,” a senior executive of a private bank told The New Nation yesterday.
He said aggressive lending, high non-performing loan, massive rise in import and loan scams are responsible for the liquidity crisis in banks
“Over Tk 2.0 lakh crore liquid funds of banks have been stuck due to loan irregularities. Banks also lost a significant volume of deposits due to the government’s NSD policy,” he added.
The private banker also said that banks have engaged themselves in an uneven competition to hunt deposits pushing up their rates to record high. It also led to higher borrowing cost and possible deterioration in credit quality.
Since 2015 interest rates on deposits helved. The weighted average interest rate on deposits stood at 4.89 percent in July last year.
“Commercial banks have been offering interest rates of as high as 12 percent on fixed deposit schemes as their liquidity dried up,” Mohammed Nurul Amin, a senior Banker told The New Nation.
He said the high rates were imminent, as bankers are not seeing immediate solution to the crisis.
“Banks are aggressively hunting for deposits with high rates which come near to the rates of savings tools. It has brought a big opportunity for the savers and depositors who earlier put their money on savings tools for high return,” said Amin.
He, however. said that the high cost of fund is also adversely impacting on lending rates that already hit double digit.
When asked, Nurul Amin said the situation has been created due to high lending growth against sluggish deposit growth.
Referring to an official figure, he said, in 2017, the lending growth stood at over 18 per cent against the deposit growth of 10.66 percent.
Total deposit in the banking sector stood at Tk 10.05 lakh crore as against total advance of Tk. 8.10 lakh crore as of December last year.
The interest rates on bank deposits have spiralled out of control amid liquidity crisis in the banking system bringing hayday for depositors, insiders said.
They said liquidity starved banks are offering high rates on deposits for attracting more liquid funds from the people.
The rates were varying from 9.0 percent to 12 percent as compared to 4-5 percent earlier.
Increased interest rates on deposits also pushed up lending rates too high to 15-16 per cent from the 8-9 percent earlier.
“Most banks have raised interest rates on deposits amid shortage of liquid funds. The interest rates continue to spiral from the beginning of this year after a downtrend of two and a half years,” a senior executive of a private bank told The New Nation yesterday.
He said aggressive lending, high non-performing loan, massive rise in import and loan scams are responsible for the liquidity crisis in banks
“Over Tk 2.0 lakh crore liquid funds of banks have been stuck due to loan irregularities. Banks also lost a significant volume of deposits due to the government’s NSD policy,” he added.
The private banker also said that banks have engaged themselves in an uneven competition to hunt deposits pushing up their rates to record high. It also led to higher borrowing cost and possible deterioration in credit quality.
Since 2015 interest rates on deposits helved. The weighted average interest rate on deposits stood at 4.89 percent in July last year.
“Commercial banks have been offering interest rates of as high as 12 percent on fixed deposit schemes as their liquidity dried up,” Mohammed Nurul Amin, a senior Banker told The New Nation.
He said the high rates were imminent, as bankers are not seeing immediate solution to the crisis.
“Banks are aggressively hunting for deposits with high rates which come near to the rates of savings tools. It has brought a big opportunity for the savers and depositors who earlier put their money on savings tools for high return,” said Amin.
He, however. said that the high cost of fund is also adversely impacting on lending rates that already hit double digit.
When asked, Nurul Amin said the situation has been created due to high lending growth against sluggish deposit growth.
Referring to an official figure, he said, in 2017, the lending growth stood at over 18 per cent against the deposit growth of 10.66 percent.
Total deposit in the banking sector stood at Tk 10.05 lakh crore as against total advance of Tk. 8.10 lakh crore as of December last year.
