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Most private banks have ventured into risky business to bag excessive profits that inflated share prices and call-money rates. According to Bangladesh Bank (BB) statistics, the credit-deposit ratio in private banks was 89 percent last year, which was 73 percent in state-owned commercial banks (SCB) and 83 percent in foreign banks. Banks are allowed to lend up to 82 percent after maintaining a statutory liquidity requirement against deposits. If any bank wants to go for aggressive banking it can raise the ratio to 85 percent by adding capital alongside deposits, the central bank said. It was revealed that 20 out of 30 private banks lend up to 85 percent against deposits. Some banks lend more than 100 percent, which means they lend by borrowing from the callmoney market at higher interest rates. Lending growth of 30 out of 43 local and foreign commercial banks was much higher than their deposit growth.
Daily Star: 18.01.2011
months of the current fiscal year, import growth jumped 36 percent. The situation was opposite in the same period last year, as it went down 12 percent. Food grain import increased by 92 percent in the July-November period this fiscal year, compared to the same period a year before.
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The banks are offering interest rates up to 13 per cent in January, up 10.47 per cent on December, while the rate for savings accounts rose to 9.50 per cent from 9.0 per cent, according to the central bank statistics released 20.01.2011. But private banks agreed to cut interest rates on deposits to 12 per cent from the current 13 per cent. On April 19, 2009, the central bank asked commercial banks to keep lending rate at 13 per cent in five specific areas to help mitigate the impact of the global economic meltdown. The areas include agriculture, term loan to large and medium-scale industries, working capital to large and medium-scale industries, housing, and trade finance. The inter-bank call money rate shot up a record 190 per cent on December 19 last, indicating that some commercial banks were facing a big mismatch in their fund position. Term loans to large and medium-scale industries attract interest rates ranging between 11 per cent and 13 per cent while rates for small industries were fixed between 10 per cent and 18 per cent. Similarly, interest rates on housing loans range from 9.99 per cent to 13.00 per cent and on consumer credits are between 11.50 per cent and 19.50 per cent. Bank charge 10.25 to 13 per cent on working capital to large and medium scale industries and interests for small industries vary between 11.50 per cent and 17.00 per cent.