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Post office savings scheme interest rate face big cut

Post office savings scheme interest rate face big cut

The government has slashed interest rates on postal savings by half as part of its efforts to reduce interest rates on bank loans and deposits, and promote investment in private sector.

The Internal Resources Division of the Ministry of Finance on Thursday (Feb 13) issued a circular regarding this with immediate effect, local media reported.

The interest rate on one-year savings was reduced to 5 percent from 10.20 percent.

For two-year schemes, interest rate was cut to 5.50 percent from 10.70 percent while it was slashed to 6 percent from 11.28 percent for three-year schemes.

The depositors can withdraw profits from their postal savings after six months. In such case, interest rate would be 4 percent for one-year schemes, 4.50 percent for two-year schemes and 5 percent for three-year schemes, according to the circular.

Previously, the rates were 9 percent, 9.50 percent and 10 percent respectively.

The majority of banks have already implemented the decision to offer 6 percent interest rate on their Fixed Deposit Receipts (FDRs).

The banks are also expected to provide loans at 9 percent interest rate within a couple of months.

Last year, private banks agreed to set single-digit interest rate on their deposit and loan schemes.

On Jan 28 this year, the Association of Bankers, Bangladesh -- a forum of managing directors of banks -- decided to provide not more than 6 percent interest on FDRs from Feb 1.