Sri Lankan banks cut deposit rates
By Tania Madies
Apr 29, 2019 15:13 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka's listed private banks have reduced deposit rates after the Central Bank directed banks and finance companies to cut deposit rates, officials said.
The reduced rates were compared with annual effective rates published by Frontier Research on 19 April.
Sampath Bank has reduced its 12-month fixed deposit rate to 10.50 percent, down by 150 basis points from 12 percent, but its three-month rate was up 16 basis points to 10 percent from an annual effective rate of 9.84 percent.
Commercial Bank cut its 12-month FD rate by 50 basis points to 10.50 percent, and the three-month rate was reduced to 9.50 percent, down 88 basis points from 10.38 percent at maturity.
Hatton National Bank had not yet reduced its 12-month fixed deposit rate which is 11 percent, but the three month rate was cut by 38 basis points to 10 percent.
State banks, Bank of Ceylon and People's Bank, were yet to revise their rates. The 12-month fixed deposit rate for both banks was 10.75 percent, and the three-month rate was 10.65 percent at maturity.
Sri Lanka's Central Bank had directed banks and finance companies to cut deposit rates to reduce excessive cost of funds borne by the financial sector.
It expects the lending rates to reduce by around 200 basis points to small busineses in the near term, as a result of the deposit rate cuts.
Deposits of three months or less will be linked to the standing deposit facility rate of the Central Bank which is now at 8.00 percent, and longer term rates to the 12-month Treasury bill yield.
"The reduction in SRR by 250 basis points in two steps in November 2018 and March 2019 has already reduced cost of funds and is expected to result in a narrower margin between deposit and lending rates," the central bank said.
Commercial Banks may offer additional interest of up to 50 basis points for children's savings and for fixed deposits of 12 months or more. (COLOMBO, 29 April 2019-SB)