BB asks banks to keep spread within 4.0pc

FT ONLINE

The central bank has asked the commercial banks to keep their intermediation spread between the lending and average deposit rates within 4.0 per cent.

To this end, it issued a circular on Wednesday.

The Bangladesh Bank (BB) expressed concern over the recent trend of 'illogical' rise in lending rates.

"In recent times, interest rates on different types of credit are being increased irrationally, which is a matter of concern," said the BB circular.

"To keep interest rates on credit for different sectors excepting credit cards and consumer loans at rational levels, banks are advised to keep the intermediation spread within 4.0 per cent," it added.

Earlier, the BB's Banking Regulation and Policy Department (BRPD) issued a couple of circulars on November 15 and December 14 in 2015.

It asked the banks to keep the intermediation spread within the "lower single digit" at 5.0 per cent.

The BB's latest instruction has come in the wake of a slight rise in the intermediation spread of the banks to 4.40 per cent in March from 4.37 per cent in February.

On the other hand, the weighted average interest on lending rose to 9.70 per cent in March compared to 9.55 per cent in February, official figures showed.