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| BoT HQ in Dar |
Banks are now offering attractive interest rates on deposits
where in the last 12 months the market experienced sharp increase, thanks to
disequilibrium between demand and supply.
The deposits demand was mainly attributed to scarce
liquidity in the financial system, the entrant of new banks in the economy and
widening venue for portfolio investments.
The entrant of new banks pushed for deposits demand in the
economy, which was already gripped by liquidity scarceness thus pushing up
interest rates.
CRDB Bank's Director of Marketing, Research and Customer
Services, Ms Tully Esther Mwambapa said bankers were left with little choice
than to increase interest rates while others came up with promotion drives to
attract deposits.
"Competition for deposits pushed up interest rates in
the market," Ms Mwambapa said. In that vein, CRDB which is the largest
bank in terms of deposits and assets, started the year by offering competitive
rates after increasing interest, in average, for more than three times --
depending with tenor and amount.
CRDB Bank offered deposits' interest rate of up to 6.5 per
cent for less than 1.0bn/- that staying in the bank for three months upped from
an average of 1.5 per cent of previous rate. For the six and nine months, the
rates have also gone to up to 7.5 per cent and 7.75 per cent from an average of
2.5 per cent and 3.5 per cent respectively.
Whereas, for 12 and 24 months the rates has doubled to up to
8.5 per cent and 9.0 per cent respectively from an average of 3.5 per cent for
a less than 1.0bn/- deposit.
"Anything deposit above 1.0bn/- are subjected
to rate to be offered by dealing room, which in most cases offered higher
interest rates," Ms Mwambapa said.
She said deposit accounts are attractive places to park cash
for investors who want a safe vehicle for maintaining their principal while
earning a small amount of fixed interest.
The Tanzania Securities Chief Executive Officer, Mr Moremi
Marwa, was recently quoted as saying that money investors have a wider option
where to invest ranging from deposit that fetches yields of 8.0 per cent on
average, T-bills between 15 and 18 per cent and equity yields are above 10 per
cent.
"This is good for investors as banks and equities are
competing for funds. "Those with huge funds are the ones who benefit most
from the said banks' interest rates the like of pension funds and fund
managers, some ending negotiating a better deal of up to 18 per cent," Mr
Marwa said.
Last year, leading banks such as National Microfinance Bank
(NMB), and National Bank of Commerce (NBC) ran promotional draws, awarding a
number of prizes, in a bid to attract deposits.
While new entrant banks such as First National Bank of South
Africa, came up with competitive deposit interest rates of up to 12 per cent,
the increases in return reduced the spread between lending and deposit interest
rates.
According to BoT, overall time deposit rate increased to
8.56 per cent in June 2012 from 6.06 per cent recorded in June 2011, while DSE
lending rates for short-term loans of up to one year stands to an average rate
of 13.92 per cent.
"As a result, the spread between 12-months deposit rate
and one-year lending rate narrowed to 2.82 per cent from 6.82 per cent recorded
in June 2011," the last July Monthly Economic Review report said. On other
hand, World Bank report published in 2012 shows that the deposit interest rate
in the country was last reported at 6.57 per cent in 2010.
Source: The Daily News, dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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