MEDIA reports have said banks won’t be allowed to fix interest rates on deposits below 5 per cent; it must be at 5 per cent or above and not be below the inflation rate which the government claims in July at 5.35 per cent. The Bangladesh Bank made the order early this week creating a big shock among banks which are sitting over huge idle liquidity without demand for credit from private sector for investment. If they can’t make more investment, they can’t earn profit to pay higher interest to depositors. Depositors particularly the people on retirement on the other hand are facing a dire situation because their income from bank savings is so small making their life difficult.
Now we may expect individual depositors to feel some relief that the new interest rate at or above 5 per cent would protect the value of their savings. It would moreover bring a bit higher income, though it will be insignificant compared to twice as much higher interest from buying national saving certificates. The government is allowing around 11 per cent interest on such saving tools and such discriminatory interests were agitating savers at banks. We would say a bit higher interest to depositors is not enough, because the food inflation is higher than what the government would say. Inflation has come down is just a misleading disclosure; it is up too much to make people’s life difficult.
Just look at the prices of rice, edible oil or vegetable items at the city’s kitchen markets. Inflation is running like a mad horse and proving the government leaders claim that it is under control as quite misleading. Vendors are realising higher prices for edible oil than the government fixed price. Three times over past six months edible oil importers forced the government to agree with their proposals to raise prices. And when the government agreed they hiked the price beyond the agreed level. Similarly rice millers are taking the rice market hostage. House owners said they lowered rent during the pandemic, but instead they raised it disregarding the government claim.
In fact inflation at all levels is soaring every month and if the government wants to help people, it must take effective steps to bring down the cost of living of the lower income people. Raising interest on deposits alone will not help.
