Bangladesh Bank yesterday hiked the interest on deposits with non-bank financial institutions (NBFIs) to 9.70 percent and the lending rate to 12.70 percent to help ease the country's inflationary pressure.

Average inflation rose to 9.63 percent in September, which is significantly higher than the government's target of 6 percent for the current fiscal year.

The central bank's decision to expand the interest margin in the NBFI sector follows a similar decision taken last week, when new lending rates were set for commercial banks.

As per the decision, NBFIs now can add a 2.5 percent margin with the reference rate, also known as SMART, which stands at 7.20 percent for collecting deposits.

As a result, the highest deposit rate will now be 9.70 percent.

Likewise, NBFIs can now add a 5.5 percent margin with the reference rate of 7.20 percent for lending.

As such, the highest lending rate will be 12.70 percent.

The previous interest margins were 2 percent for deposits and 5 percent for lending.

The six-month moving average rate of treasury bills, abbreviated as SMART, was 7.20 percent in September and the rate will be applicable for October.

In April last year, Bangladesh Bank had set the interest rate on deposits at 7 percent and loans at 11 percent for the NBFI sector, which came into effect from July 1.

Previously, some NBFIs offered a maximum of 15 percent interest against their deposit products.

On Wednesday, Bangladesh Bank had announced a hike in the policy rate -- which is used by the central bank to implement or signal its monetary policy stance -- by 75 basis points to 7.25 percent.

This made it costlier for banks to borrow from the central bank.