BB asks banks not to fix deposit rate less than inflation

Bangladesh Bank (BB) has instructed all banks not to fix the interest rate of the deposits below the inflation. “Livelihood of depositors and a part of other depositors depends on the interest rate of the deposits. Interest rates below inflation are hindering the buying capacity of depositors, which also inflicts them,” as per a BB circular issued today.

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, BB 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 Bangladesh Bureau of Statistics (BBS), the inflation rate was 5.64 percent in 2021, which was 5.56 percent in fiscal year 2020-21.