& çâÌæÚUæð´ ·¤è ¥ôÚU Îð¹Ùæ ÁæÚUè ÚU¹ð´ ¥ÍæüÌ ¥ÂÙð ÜÿØ ÂÚU ŠØæÙ ÚU¹ð´Ð ãæÚU Ù ×æÙð´, €UØô´ç·¤ ·¤æ× ·¤ÚUÙð âð ¥æÂ·¤ô ©gðàØ ·¤è Âýæç# ãôÌè ãñ ¥õÚU ÁèßÙ ·¤æ ¹æÜèÂÙ ÎêÚU ãôÌæ ãñÐ ÖÜð ãè ÁèßÙ ×ð´ ç·¤ÌÙè Öè ·¤çÆÙæ§ü €UØô´ Ù ¥æ°, çÁ™ææâæ ¥õÚU ©ˆâæã ÕÙæ° ÚU¹ð´Ð ŠØæÙ ÚU¹ð´, ÜÿØ ã×ðàææ ¥æÂ·Ô¤ Âæâ ãôÌð ãñ´ çÁ‹ãð´ ÂæÙð ·Ô¤ çÜ° ÂýØæâ ¥æÂ ·¤Öè Öè àæéM¤ ·¤ÚU â·¤Ìð ãñ´Ð

Sharp division on BB move to limit spread

Banks make huge profits at cost of clients: Businesses Strong profits needed for robust financial sector: Banks

Sajjadur Rahman
Monday's move by the central bank to limit the spread between banks' lending and deposit rates has focused the already heated debate on the practices of the country's main private banks.
Bangladesh Bank and businesspeople blame the banks for making huge profits at the cost of die clients. To back this up they point to the fact that the operating profits of the country's main private banks leapt by 41 percent last year.
However bankers claim strong profits arc needed to create a robust financial sector, while economists warned that the government should be careful about how it tries to influence private sector decisions.
Yesterday BRAC Bank, the bank picked out by BB as having the highest spread, defended its charges saying die high cost of employing 2,200 people in its small and medium sized business operations justified the high spread.
"We've to endure the huge cost for running the SME banking countrywide," Abidur Rahman Sikdar, head of marketing and corporate affairs of BRAC Bank Ltd, told The Daily Star.
According to a BB report placed in the Monday's meeting between the governor and directors of banks, BRAC Bank has the highest spread with 13.47 percentage points. The bank's average interest rate on deposit is 6.51 percent and lending 19.98 percent.
Standard Chartered Bank follows BRAC'Bank'with'a spread of 11.60 percentage points. Its average interest rate on deposit is 3.31 percent and that on lending 14.91 percent. The average spread of commercial banks is 6.16 percentage points, whereas it is between 4 and 5 percentage points in other
countries.
The spread is 5.88 percentage points for the government-owned commercial banks, while it is 6.17 and 8.98 percentage points in private and foreign commercial banks respectively. The spread of the Islami Bank Bangladesh, an Islami Shariah bank, is 7.29 percentagepoints.
The government, Bangladesh Bank and the businesspeople have long been pursuing the banks, especially the private commercial banks, to work on reducing the spread between the interest rates on deposit and lending.
Even the chief adviser's office has recently sent a letter to the Bangladesh Bank governor asking him to keep the difference between deposit and lending interest rates of banks at a lower level. The finance adviser himself raises the issue quite’frequently.
But there were no effective changes so far in this regard, according to BB officials.
Now the central bank resumes its persuasion of the banks to reduce the spread. The BB has given the banks two weeks time to
help BB to address the issue.
“The spread is quite high here, no doubt," economist Zaid Bakht, research director of Bangladesh Institute of Development Studies, toldThe Daily Star.
"Private banks should limit the spread within 5 percentage points for the sake of the economy," SM Aminur Rahman, managing director and CEO of the newly corporatised NCB Janata Bank, said.
"Higher interest rate is eroding our competitiveness,” BGMEA President Anwar UI Alam Chowdhury Parvez said.
Many give their views on spread partially without analysing the entire picture, said Nazrul Islam Majumder, chairman of the Bangladesh Association of Banks.
Majumder defended the current rates saying that higher expenses are required in running private confmeFcfarbanks, as"thdse need to offer high pay to skilled staff.
“The reason why the banks' spread is too high has to be sorted out,” Zaid Bakht said.
“Private banks' cost of fund is more than that of the state-owned
commercial banks," Bakht said.
Besides cost of fund. Janata Bank CEO said, their (PCBs) administrative and decoration of office costs are also too high. •
The BIDS director also blamed ineffectiveness of the state-owned commercial banks for making monopoly business by the PCBs.
He suggested the government and the central bank make sure that the NCBs provide wide range of quality services to its clients.
Zaid Bakht, however, said there is no alternative to reducing the spread, which is crucial for encouraging savings and investment as well.
“The central bank can't do it by pressurising commercial banks, rather some incentives (reduction in taxes) may be given to the banks to reduce the spread,” he added.
The BAB president said. “It will be difficult for us to reduce the lending rates unless the interest on savings certificates and treasury bonds are slashed "
The central bank authority is supposed to sit with the chief executive officers of commercial banks today on the issue, BB sources said.