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Deposit rates and loan rates of different Banks of Bangladesh including Islamic ones

March 18, 2016

rate of deposit and loan of different Banks of Bangladesh said to be updated regularly could be found here:

Deposit rates of different banks of Bangladesh including Islamic ones

savings deposit and loan interest rates of few Bangladeshi banks and option to compare with world rates

In 2014, Bangladesh named as the third highest interest paying country in the world

The five highest bank interest rates in emerging markets

Deposit interest rate of different countries of the world compiled by world bank

Lending rate rate of different countries of the world compiled by world bank

Declining deposit rates in Bangladesh as reported by The Daily Star

Fixed deposit rates have come down to as low as 4 percent on the back of low demand for loans, bankers said.

The country’s inflation is at 6.2 percent but banks offer 4-4.5 percent for deposits of 3-12 months, meaning a depositor’s earning will become negative.

In addition, interest rate earned on bank deposits is subject to tax of 10-15 percent. After paying the tax, a depositor’s net earnings will be negative by around 2 percentage points.

Industry analysts found that interest rates on deposits were 7 percent to 9 percent for most of the time in 2014 and 2015, down from 11-12 percent in 2013.

The average loan-deposit ratio of banks stood at 70 percent at the end of December, although they could have lent at least Tk 80 against every Tk 100 deposit, according to Bangladesh Bank data. Treasury officials at different banks are in a fix on how to handle their money as the demand for credit has been waning since 2013.

Briefing on grameen bank including interest rate and ownership

Through a set of incentives, the bank encourages its borrowers to save 5% of the loan amount, plus one taka (3 cents) per week. The accumulated saving of the borrowers, one of the indicators the bank uses to gauge its impact on poverty eradication, have grown from nothing in 1983 to 108 million US dollars today.

Owned by the poor

From the very outset, Professor Yunus designed the bank such that its ownership and control should remain in the hands of the very people it lends to. As soon as a borrower accumulates sufficient saving, she buys one (and only one) share in the Bank, which costs $3. Today 92% of the Bank is owned by its borrowers. (Bangladeshi government owns the remaining 8% of the shares). The shareholder-borrowers elect 9 directors from their midst. (Another 3 directors are appointed by the Bangladeshi government). Only the borrowers can buy shares in the bank.

Interest Rate

The board sets the interest rate such that after paying all expenses, including the cost of its growth, the bank makes a modest profit. The profit is returned to the shareholder-borrowers in the form of dividends. The current rate of interest on ‘working capital’ loan is 20% and on home loans is 8% (Home loans are cross-subsidised by the working capital loans). Last year the bank made a profit of US$ 680,000. Thus the Grameen Bank is an example of a totally self-reliant poverty-eradication initiative which does not need a handout to sustain itself or its growth. The poor own and run the bank and pay for their “development”.

Sophia Khatoon, a 22 years old skilled furniture-maker in the tiny village of Jobra in Bangladesh, worked 7 long days a week, looked twice her age, and lived in abject poverty. She made stools and chairs out of bamboo, which she had to sell to a money-lender who provided the credit to buy the raw material. The price she received barely covered the costs.

Dr. Yunus, Professor of Economics at the University in the Southern port city of Chittagong who later founded the Grameen Bank – calculated that effectively Sophia was paying interest at the rate of 10% a day, more than 3,000% a year. Yunus could not reconcile the fact that a woman with such skill who worked so hard, produced such beautiful bamboo furniture and created wealth at such high rate was earning so little.

In fact the poor all over the world are trapped in such exploitation. While they work extremely hard and create enormous wealth, the middle-men, money-lenders and employers keep the fruits of their labour. The poor have no access to “institutional credit”, which you and I have, because they can not provide a collateral. The system keeps them firmly trapped in debt, poverty and exploitation.

With a loan of 50 taka (a few dollars), it took Sophia only a few months to establish her own little self-employment, increase her income seven folds and repay the loan.

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