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Bangladesh - December 14, 2023

Burnt foreheads of small depositors

Staff Correspondent: Market-based interest rates have burned the foreheads of small and public-private sector workers. Bangladesh Bank has withdrawn the provision to protect small depositors from inflation. As a result, henceforth the interest rate will be determined on the market basis against the joint deposits of individuals and public-private sector workers.
Earlier it was a provision of the central bank that individuals and public and private employees can’t be paid interest less than the average rate of inflation against the deposits of various funds. The interest rate will be higher than the average rate of inflation. As a result, earlier small depositors used to earn more interest than inflation. Now you won’t get more interest than inflation due to market based interest rates. Get less interest.
In this regard, the central bank issued a circular on Tuesday and sent it to the chief executives of commercial banks.
According to sources, the central bank issued a circular on August 8, 2021 to prevent the imbalance between the liabilities and assets of the banks as the rate of inflation continued to rise. It is said that any amount deposited in the fund formed for the purpose of paying various dues including individual deposits of 3 months and more and provident fund of various government and private officers-employees, post-retirement dues will not be less than the average rate of inflation. That means more interest will be paid on them than the average inflation rate. Until now, banks have been paying interest rates higher than the rate of inflation. A new circular was issued on Tuesday, withdrawing the previous circular. As a result, banks will be able to pay interest at their own discretion from now on.
From July 1, interest rates on loans were market-based under IMF terms. As a result, no interest can be paid against the deposit. Now the interest will be given as per the market basis thus the deposit interest rate will decrease. Because banks are now taking deposits at a maximum of 9 percent interest. Inflation rate has exceeded 9 percent.

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