The Central Bank this week said they believe deposit rates, which plunged in 2020, have now bottomed-out, in a potential assurance to those live on interest on bank deposits.
The Central Bank in November expressed doubts about the pace of the decline in deposit rates in comparison to lending rates, though the latter has come down faster than the former.
The Central Bank said they would take up the matter with the banks to ensure that the reduction in deposit rates doesn’t happen disproportionately and unfairly.
The latest data showed that through December 2020, Average Weighted Deposit Rate of the licensed commercial banking sector declined by 240 basis points or 2.40 percent in the twelve months from 8.20 percent in January to 5.80 percent in December.
Meanwhile the Average Weighted Fixed Deposit Rate fell by 2.91 percent during the twelve months to 7.14 percent by December-end from 10.05 percent in January 2020.
Further, the Average Weighted New Deposit Rate and the Average Weighted New Fixed Deposit Rate through November end, which capture the rates offered by the banks in the nearest few months, have declined by 3.93 percent and 4.10 percent respectively, to 4.96 percent and 5.07 percent.
Nevertheless the lending rates declined much faster than the deposit rates, the data showed.
For instance, the weekly Average Weighted Prime Lending Rate and the monthly Average Prime Lending Rate, which capture the short-term loans to prime customers of banks dropped by 3.86 percent and 4.26 percent respectively to 5.88 percent and 5.74 percent.
Meanwhile, the Average Weighted Lending Rate and the Average Weighted New Lending Rate declined by 3.04 percent and 4.09 percent respectively, to 10.55 percent and 8.71 percent by November end.