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Tuesday, November 2, 2010

Private banks need more deposit?

There is a news that a few private banks are going to rise interest rates in deposits with unchanged lending rates due to meeting growing demand for cash.

Obviously if it happens, the interest rate spread will decline, which will fulfill one of the expected long-term economic outcomes.

Yet, the question is why suddenly demand for cash in the private banks grows. The August 2010 data shows that excess liquidity in the private banks (including Islamic banks) stood up Tk.13,708 crore. What are the possible areas of lending by private banks? Stock market? No way!!!

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