24 banks now lending at single digit

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The number of banks lending at single digit rose to 24 in September this year as the weighted average lending rate continued to fall in the market.

The average lending rate in the market came down to 10.15% in September which was 11.48% in the same period a year back, according to Bangladesh Bank latest data.

Excess liquidity has pushed the banks to cut their lending rates for enhancing the credit demand, said a senior executive of Bangladesh Bank.

Though the lending rate is still in double digit, most banks are, however, offering loans at single digit to their good clients, he said.


The average interest rate on advance for the state banks came down to single-digit of 9.12% in September, which was 10.19% in the same period of the last year.

Of the six state-owned commercial banks, four are lending at single digit. The banks are- Agrani, Sonali, BASIC and Bangladesh Development Bank. Out of the state-owned banks, BASIC bank is now lending at lowest 5.73% as of September compared to 8.7% in the same period of the last year.

Though the largest state-owned Sonali Bank is lending at single digit of 8.79%, the rate is higher from 8.39% in the same period a year back.

Sonali Bank raised its lending rate slightly as it is reluctant to lend after the Hallmark loan scam. On the other hand, BASIC Bank has cut its lending rate drastically to boost loan disbursement to minimize loss by expanding business, said a senior executive of Bangladesh Bank.

The two specialized banks Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank have also slashed down their lending rates at single-digit.

Of the private commercial banks, 10 have brought down their average interest rate on advance at single-digit. The banks are- Islami Bank, The City, UCBL, Publai, ICB Islamic, NCC, Prime, Southeast, Al-Arafah Islami and Dutch-Bangla Bank.

The weighted average lending rate of private banks came down at 10.5% as of September this year compared to 11.95% in the same month of the last year.

Foreign banks are also ahead in the race of cutting down the lending rate to compete with the local banks. Of the nine foreign banks, all but Standard Charterd Bank are offering single-digit interest against loans. The lending rate of Standard Chartered Bank is still comparatively very high at 11.48% as of September, which was 12.05% in the same month of the last year. The deposit rate of the foreign banks is very low at 1.31%.

The lending rates of the new banks are still very high as they are facing very difficulties to get business since their inception. The weighted average lending rate of the nine new banks are hovering in between 12% and 14%. Of them, Farmers Bank is lending at highest 14.33% as of September.

Spread, the gap between lending rates and deposit rates, still remains below 5 as per the expected level of Bangladesh Bank due to the fall in the lending rates.