Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Sunday, December 17, 2017 08:19:36 AM
Follow Us On: Facebook Twitter Twitter Twitter Twitter
BREAKING NEWS:

Banks suffer

Lower interest drives away depositors

By
21st-Mar-2017       
Comments
Share your thought
Post a comment »
Read all () »

Anisul Islam Noor :
The country's banking sector has witnessed slow growth of deposit in the current year compared with previous year, sector insiders said.
They said, the depositors these days feel discouraged from putting money in banks for lower interest rates.
The growth of deposits, on a year-on-year basis, rose to 13.13 per cent in the last calendar year from 13.08 per cent a year ago while the credit growth increased to 15.32 per cent from 12.58 per cent, shows a Bangladesh Bank data.
The deposit growth decreased gradual mainly due to lower interest rates, offered by the banks, central bank sources said.     The growth rate of deposits came down to 13.5 per cent in September 2016 from 14.46 per cent at the end of June. It further came down to 13.13 per cent in December the same year.
On the other hand, the credit growth climbed to 15.32 per cent in December from 14.5 per cent in September 2016. The rate was 15.42 in June.
Bankers and experts said, depositors now feel encouraged to invest their money in government savings schemes and stock market for getting higher returns on their investments.
Some depositors also prefer Non-Banking Financial Institutions (NBFIs) to banks in depositing their money because it offers higher interests on term deposits, they added.
The NBFIs are now offering interest rates on term deposits ranging between around 6.0 per cent and 16 per cent while the banks offer a near-negative 0.10 per cent to maximum 9.50 per cent.
The NBFIs are now allowed to collect fixed deposit from individuals and organizations for three months instead of previous term of six months.
The banks, however, offer interest rates on savings deposits ranging between 0.40 per cent and 6.0 per cent, according to the BB's latest monitoring report.
"Such falling trend in interest rates has pushed far down the overall deposit growth than credit growth in the banking sector," a senior official of the Bangladesh Bank explained.
He also said the deposit-growth rate fell slightly in the recent months following adjustment of loans with loans and 'push loans' particularly in small and medium enterprise (SME) sector.
Such comparative trends between deposits and credits had continued until February last, according to the central banker.
All banks' deposits, excluding inter-bank balance, rose to Tk 9088.64 billion as of last December from Tk 8583.31 billion as of June 30, 2016. The aggregate deposit amounted to Tk 8033 billion as of December 2015.
On the other hand, their outstanding loans, excluding inter-bank balance, rose to Tk 6864.80 billion as of December 2016 from Tk 6421.74 billion. The amount was Tk 5953 billion in December 2015.
"Depositors, particularly small ones, are now losing interest in making further deposit with the banks mainly due to lower interest rates on deposits," said Dr. Salehuddin Ahmed, a former BB governor.
Besides, such lower interest rates on deposits cast an adverse impact on people's savings habit, particularly in the banking system, Dr. Ahmed explained.
"Such discouraging savings tendency has also pushed up currency outside banks," the former governor said while explaining the impact on the financial front.
The overall currency outside banks (money kept in traditional caches instead of depositing into bank account) jumped by 22.27 per cent or Tk 206.08 billion to Tk 1131.53 billion in December 2016 from Tk 925.45 billion a year ago, the BB data showed.   
Contacted for his remark on such a situation with savings, SK Sur Chowdhury, Deputy Governor of the BB, said the central bank had already issued a directive to the managing directors and chief executive officers (CEOs) of all the scheduled banks to remain proactive and help check the falling interest rates on deposits.
The latest BB move came against the backdrop of a faster decline in deposit rates than that of the lending rates.
The weighted average interest rates on deposits came down to 5.22 per cent in December 2016 from 5.39 per cent three months ago. It was paid at 5.54 per cent by the banks last June.
The weighted average deposit rate at more than 20 banks slipped below 5.0 per cent in December 2016, according to findings in the BB report.
On the other hand, the weighted average interest rates on lending came down to 9.93 per cent in December 2016 from 10.15 per cent three months before. It was 10.39 per cent in June last. In January 2017, the weighted average interest rates on deposits came down to 5.13 per cent from 5.22 per cent a month before while the weighted average interest rates on lending fell to 9.85 per cent from 9.93 per cent.
"We've taken the latest measures to protect the interests of depositors," Mr. Sur Chowdhury told media while explaining the main objective of the moves.
It will also help discourage expenses in the less-productive sectors, the Deputy Governor noted.
He also said the falling trend in the interest rates on deposits affected the saving habit of the people, prompting them to spend on wasteful consumption and unproductive sectors.
However, the credit-deposit ratio (CDR) -- officially known as advance-deposit ratio (ADR) -- of all banks reached 71.85 as of December last from 71.59 per cent as of June 30. It was 70.98 per cent as of December 31, 2015.
Earlier, the central bank had set the safe limit of CDR at 85 per cent for conventional banks and at 90 per cent for Shariah-based Islamic Banks.

Tariff
Add Rate

News Archive

Inside The New Nation

International »

Trump promises `giant tax cut` as `Christmas gift` to Americans


PTI, Washington :US President Donald Trump today said the Congress has reached an agreement on tax legislation that will deliver more jobs, higher wages, and "massive tax relief" for American families and domestic companies.Trump recognised the tax reform as a campaign promise during his run-up to the 2016 presidential election, ...

Editorial »

Muslim leaders must continue to act together not to be ignored


WE welcome the OIC's (Organisation of Islamic Cooperation) decision declaring East Jerusalem as capital of Palestine at a summit at Istanbul on Wednesday as the most appropriate and timely action to denounce US President Donald Trump's unilateral declaration that Jerusalem is the capital of the state of Israel. Their call ...

Football »

Players of A Level team, the champions of the Inter-Class Victory Day Football Competition of Manarat Dhaka International School & College with the teachers of Manarat Dhaka International School & College pose for a photo session at Manarat College field on Thursday.


Entertainment »

Meryl Streep is the most Golden Globe-nominated actor


Meryl Streep has begun her Hollywood award season dominance by bagging her 31st Golden Globe nomination, which is a record in the 75-year history of the award show. Streep won the nomination in the best actress, drama category for her portrayal of the Washington Post publisher Kay Graham in Steven ...

Entertainment »

Porimoni, Zayed Khan`s Antorjwala releases today


Entertainment Report :Today across the country in 175 cinema halls Malek Afsari directed and Porimoni-Zayed Khan acted much awaited movie Antorjwala is set to be released. On the occasion its releasing Pori and Zayed will enjoy the movie along with director Malek Afsari in Dhaka’s Modhumita, Shyamoli and Sony halls.While ...

City »

Speaker Dr Shirin Sharmin Chowdhury handing over ICT Award to Director General of Health Department Prof Dr Abul Kalam Azad for his contribution in using digital technology in health services at Bangabandhu International Conference Center in the city on Tuesday.


Weekend Plus »

Quick recipes for the burger-lover in you


Weekend Plus Desk :If you are a burger lover or want to fix a burger quickly for uninvited guests, here are a few recipes which can save the day. Recipes by Chef Gaurav Chadha, in-house chef, Dr Oetker India Pvt Ltd:* Chicken and egg burger: Heat oil in a kadhai ...

Editorial »

Attack on New York City is disgusting


AN attempted terrorist attack in a New York City bus terminal by a US national of Bangladesh origin has caused widespread surprise and condemnation here and also in the Bangladesh community in the USA. The person Akayed Ullah at his 27 is a taxi driver in New York City and ...

International »

US embassy unlikely to move to Jerusalem before 2020: Tillerson


Xinhua, Washington :U.S. Secretary of State Rex Tillerson said Tuesday the U.S. embassy in Israel was unlikely to be moved to Jerusalem before 2020, national media outlets reported."It's not going to be anything that happens right away," U.S. news daily the New York Times quoted Tillerson's speech at the State ...

Football »

Crystal Palace's James McArthur (centre) celebrates scoring his side's second goal of the game with team-mates during the English Premier League match between Crystal Palace versus Watford at Selhurst Park, London on Tuesday.


Sports »

A scene from the SA Group Premier Division Chess League at the Auditorium of the National Sports Council Tower on Wednesday.


Entertainment »

Akshay shares the new poster of PadMan while giving the hint about trailer


Akshay Kumar is gearing up for his next release PadMan which is all set to release on Republic Day, 26th January 2018. Recently Akshay is on spree of releasing new posters of the films. A day before yesterday Akshay shared a poster of the film in which he can be ...

City »

DU VC Prof Aktaruzzaman speaking at a seminar on' Mass Media Vs Social Media at TSC organised by the Dhaka University Journalists Association on Wednesday .


Editorial »

Colleges without enrolment should cease to exist


OVER 1,500 colleges are in fear of closure as they have failed to fulfil the condition of the Education Ministry in terms of students' admission at Higher Secondary level, The concern is genuine because opening of new colleges and also their closure is not small thing, as it impacts lives ...

Cricket »

A good number of spectators arrived at the Sher-e-Bangla National Cricket Stadium to watch the final match of the AKS Bangladesh Premier League (BPL) Twenty20 Cricket between Rangpur Riders and Dhaka Dynamites at the Sher-e-Bangla National Cricket Stadium in the city's Mirpur on Tuesday.


 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news