SIBL targets low-cost deposits

Social Islami Bank has rolled out a new campaign to rope in more customers and widen the customer base by offering Tk 100 in instant cash bonus for opening any new accounts, in a move that can give a boost the central bank's financial inclusion agenda.

The campaign aims at pooling deposits from across the country, particularly in the rural areas, said Moniruzzaman Tipu, senior vice-president and head, branding and communication of the private commercial bank.

"We are targeting to add more accounts, whatever the size," he added.

The campaign named "100 for 1" will continue up to September 30 this year at SIBL's 161 branches, 130 agent banking booths and 33 sub-branches.

Clients will instantly get a debit card and internet banking facilities on the day the account is open.

SIBL has taken the initiative to raise the tendency of savings and reduce the cost among the people struck by the coronavirus pandemic, the bank said.

The offer would apply to savings, current and notice deposit accounts. These are low-cost accounts.

SIBL aims to add more low-cost deposits with a view to reducing the cost of funds and cutting its reliance on high-cost deposits such as fixed deposit receipt (FDR)and deposit pension schemes.

A good portion of low-cost deposits gives a reasonable spread to banks.

Banks would have to increasingly look for low-cost deposits after the central bank capped the interest rate on deposits at 6 per cent and lending rates at 9 per cent.

This has become even relevant at a time when banks saw a surge in fund withdrawal as in moments of crisis holding more physical cash tends to give some a sense of control over the situation.

However, long-term deposits are not available at 6 per cent, whereas banks can't lend at more than 9 per cent, said a private banker.

The banker said many people withdrew deposits from banks after the coronavirus pandemic hit the country as their incomes dropped and livelihoods lost because of the countrywide shutdown.

Most banks' operating profits declined 20 to 30 per cent in the first half of 2020 because of the paralysed economy.

Customers are gradually returning to banks but they are being frustrated when they are told about the new savings rate, he said.

There are people who don't want to keep their funds in banks at the current rate and some of them are moving to cooperatives, he said, on condition of anonymity.