Bangladesh Bank (BB)'s expert panels are working to re-fix the advance and deposit rates amid growing inflation that touched 9 per cent in September, an official said.

Currently as per the Central Bank's policy the banks can lend money to clients at maximum 9 per cent rate of interest and pay its depositors maximum 6 per cent.

Unlike many western countries, Bangladesh is yet to increase deposit rates to match with the growing inflation as a result depositors are less interested to put their money in banks for which banks are not getting adequate deposits.

"The BB is concerned with the matter and an expert market policy devising team is already working on this issue", said Abul Kalam Azad the new spokesperson of the central bank.

He said as the depositor's are not getting benefits out of their deposits due to high inflation and some of the banks service charges that reduces deposits at the end calendar year.

If the deposit rate is raised then it should also be for advance rates. To solve the problem necessary assessment and discussions are going on among BB policy markers, he said.

A former banker said that as inflation is currently 300 basis points higher than the existing 6 per cent interest rate on deposits, depositors are less interested in keeping their money with banks.

As example he said that if a client deposits Tk1000 expects to get Tk1060 (at 6 per cent interests) at the end of the year and he gets the amount. But in reality his money value is reduced by Tk90 to Tk910 due to 9 per cent inflation.

The market value of his principal money of Tk1000 further comes below Tk910 at the end of the year as banks deduct different      service charges, he said. It means he is losing his deposited money, he said.

Though scheduled commercial banks are waiting for the BB's instructions and policy supports in re-fixing their rates of lending and deposits rates as the non banking financial institutions already increased their rates on deposits amid soaring liquidity crisis and inflation on the basis of verbal consent from the BB.
The verbal consent allows non baking financial institutions to raise deposit rates but not exceeding than 8 per cent. But many of them pay up over 8 per cent.

The BB's official instructions to non-banking financial institution (NBFI) are 7 per cent on deposits and 11 per cent on lending effective from last July.

A BB official said the decision of re-fixing the lending, deposit rates are expected to be affective in December.
The BB increased its repo rate by to 5.75 per cent from 5.05 per cent to tame inflations on Sunday, he said.  
A senior banker said, "Central banks around the globe are desperately trying to curb inflationary pressures amid supply chain disruption, driven by the Russia-Ukraine war."

He said, "The Federal Reserve of the US, hiked interest rates in September for the fifth consecutive time. Similarly, the European Central Bank raised interest rates in July and September."
He said the NBFIs are already offering higher interests on deposits.

He said in the coming monetary policy the re-fixing of lending and deposit rates would be done on basis of the current situation.