Real deposit rate becomes 1.97% negative in May

The real deposit rate has been in the negative territory for some time, hurting the depositors to some extent, said the BB in its monetary policy stance for FY23 announced on Thursday.

“The negative real deposit rate discourages depositors adversely impacting the deposit growth as noticed recently,” it said.

According to BB data, the weighted average real deposit rate stood 1.97 percent negative at the end of May 2022.

However, considering the depositors’ interest, BB imposed a floor on the nominal deposit rate, which is not less than the average of the last 3-months average inflation rate, effective from August 2021.

As the inflation was on an uptrend, crossing the 7 percent mark on a point-to-point basis in May, bankers were urging the central bank to review the cap on the lending rate. But the BB did not pay heed to the bankers’ call.