The Bangladesh Bank has instructed all banks not to fix the interest rate of the deposits below the inflation rate.
“Livelihood of depositors and a part of other depositors depends on the interest rate of their deposits. Interest rates below inflation are hindering the buying capacity of depositors, which also inflicts them,” the central bank said in a circular issued on Sunday, reports BSS.
“Observing the bank statements, it was noticed that most of the banks are providing interest rates for deposits below the inflation rate,” the central bank said.
“The banks will struggle to collect funds if the interest rate of bank deposits decreases drastically, which may also trigger imbalance in liability-asset management of banks,” it warned.
Bangladesh Bank came up with the circular based on a discussion that stated the interest rate of bank deposits is gradually dropping recently.
According to the latest report of the Bangladesh Bureau of Statistics (BBS), the inflation rate was 5.64 per cent in 2021, which was 5.56 per cent in the fiscal year 2020-21.