CB Governor says bank deposit and lending rates need to come down

Aug 08, 2018 (LBO) – Sri Lanka’s Central Bank Governor Indrajit Coomaraswamy expressed concern on the current deposit and lending rates of the banks.

Speaking at a press briefing, Coomaraswamy said it is a matter of some concern because the deposit and lending rates are as rigid as they were in the past.

“In fact at the monthly meeting with bank CEOs, we did express this concern to them; we do think that bank deposit and lending rates now need to come down,” he said.

“So, we will monitor that and see how that develops.”

Coomaraswamy said that interest rates on lending would adjust downwards in the period ahead, reducing high real interest rates faced by borrowers at present.

The Central bank said the growth of credit extended to the private sector by commercial banks continued its gradual decline in June towards the desired levels.

Responding to prevailing surplus liquidity conditions in the domestic money market, short-term interest rates have begun to adjust downwards.

Yields on government securities in both primary and secondary markets have also declined recently.