DAR-ES-SALAAM, Tanzanian commercial banks have raised their 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).
The central bank's monthly economic review for March this year shows that the overall interest rate on time deposits rose to around 10.29 per cent compared with 8.99 per cent in the previous month and 9.14 per cent a year earlier. Lending rates rose to an average of 17.66 per cent compared with 16.01 per cent 16.43 per cent, respectively.
The rise in deposit rates is associated with the efforts of commercial banks to attract deposits in the wake of the transfer of public deposits to the BoT while the rise of lending rate is attributable to an increased risk premium following a rise in non-performing loans in recent months.
Consistent with the high demand for Treasury Bills, the overall weighted average yield fell to an average of 15.02 per cent in February 2017 from the 15.27 per cent in the same month of 2016. The yield was also lower than 18.52 per cent for the whole of last year.
The overnight inter-bank cash market rate fell to 7.93 per cent in February 2017 from 10.07 per cent in the preceding month.
Source: NAM NEWS NETWORK