manusath-derana

Interest rates can be lowered further, Central Bank warns banks

June, 18, 2014

The Central Bank’s Monetary Board has decided to keep its interest rates that decide the interest rates of commercial banks unchanged in June as well.

Accordingly, while further maintaining the Central Bank’s policy rates unchanged from 6.5 to 8.0 percent in June as well, the Central Bank has urged commercial banks to further reduce their lending interest rates.

While Sri Lanka is considered a country with a higher interest margin or the difference in interest rates between bank lending and deposit interest rates, this continues to be an obstacle against speedy development.

While Sri Lanka’s interest margin is over 04 percent, in countries like Hong Kong it is less that 02 percent.

Economic analysts point out that due to Sri Lankan banks maintaining a higher interest margin to gain more profits economic activities from borrowings have decreased.

Hence, they say it is important that the commercial banks too lower their interest rates while following the Central Bank.

The Central Bank of Sri Lanka has said that commercial banks now have the opportunity to further lower their interest rates.