Staff Correspondent

The gap between average lending and deposit interest rates is the highest among the foreign banks, standing at 8.83 per cent.

The average lending rate of the foreign commercial banks stood at 13.88 per cent while the average deposit rate was 5.05 per cent at the end of 2007, according to the Bangladesh Bank.

The Standard Chartered Bank had the highest spread with an average lending interest rate of 14.88 per cent, but paid only 3.37 per cent interest on deposits. The National Bank of Pakistan charged on an average 15.24 per cent interest while it paid 11.52 per cent on deposits.

The Woori Bank of South Korea gave only 1.24 per cent on deposit, but charged 12.12 per cent on lending. The Citi Bank NA’s average rate on deposits was 4.5 per cent and the average lending rate was at 12.25 per cent.

The average lending interest rate of the HSBC was 13.19 per cent and the deposit rate 5.99 per cent. Specialised banks including the Bangladesh Krishi Bank and the Shilpa Bank had the lowest spread with 2.95 per cent. Their average deposit rate was 6.71 per cent against the lending rate of 9.66 per cent.

The private banks had a spread of 5.84 per cent while the spread with the government-owned commercial banks was 5.95 per cent. The private commercial banks on an average charged 13.91 per cent interest on loans while the government-owned commercial banks charged 10.88 per cent.

The private commercial banks had an interest rate of 8.07 per cent on deposits while the rate with the government-owned commercial banks was 4.93 per cent. The central bank has, meanwhile, instructed all the scheduled banks to follow a uniform method for calculating the lending and deposit rate gap and issued a letter with a formula to calculate weighted average interest rates on deposits and lending.

The central bank earlier formed a committee to work out a uniform spread calculation method to be followed by all the banks. The chief adviser in a letter in February expressed his dissatisfaction about the high spread rate and asked the central bank to take steps to reduce the gap between 4 per cent and 5 per cent.

The central bank sat with the Bangladesh Association of Banks, a group of bank chairmen, and the Association of Bankers, Bangladesh, a body of bank managing directors, and asked them to reduce the gap. The bankers on March 3 came with their proposals for the reduction of the gap by 5 per cent with a maximum ceiling of industrial lending at 14.75 per cent and working capital at 14.5 per cent. The banks are to comply with the proposals within three months.

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