Central Bank has withdrawn the directive issued to Licensed Banks to reduce maximum interest rates on deposits to accelerate monetary policy transmission through the financial sector, enabling lower rates on lending products in general, and to SMEs in particular, thereby enhancing credit flow to the real economy.
The move follows after the Central Bank, observing very low interest rates, offered on-deposit products by licensed commercial banks and licensed specialised banks (licensed banks) and Non-Bank Financial Institutions (NBFIs).
Central Bank said through these measures, that would reduce excessive cost of funds borne by the financial sector, it expects the lending rates to reduce by around 200 basis points to SMEs in the near term.
The Central Bank said it will closely monitor the behaviour of interest rates of licensed banks and NBFIs on both deposits and loans and take further measures as appropriate in future.
(LI)