COMMERCIAL banks have increased interest rates on time deposits in a bid to fill the gap of acute shortage of liquidity affecting most financial institutions.
According to the Bank of Tanzania (BoT)
monthly economic review for March this year shows that the overall
interest rate on time deposits rose to around 10.29 percent compared
with 8.99 percent in the previous month and 9.14 percent in
corresponding period 2016.
Lending rate rose to an average of 17.66 percent compared with 16.01 and percent 16.43 percent, respectively.
The rise in deposit interest rates is
associated with the efforts of commercial banks to attract deposits in
the wake of transfer of public deposits to the BoT whilst that of
lending rate is attributable to an increased risk of premium following a
rise in non-performing loans in the recent months.
Consistent with the high demand for
treasury bills, the overall weighted average yield fell to an average of
15.02 percent in February 2017 from the 15.27 percent in the
corresponding period in 2016. The yield was also lower than 18.52
percent last year.
The overnight inter-bank cash market rate decreased to 7.93 percent in February 2017 from 10.07 percent in the preceding month.
The overall inter- bank cash market rate fell to 8.68 percent from 10.50 percent.
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