After the “Central” decision, how do banks move to calculate the interest on the month?

01:44 PM

Friday 29 October 2021

I wrote – Manal Al-Masry:

The Central Bank’s meeting, to set interest rates on deposits and lending, sent questions about the fate of interest rates on certificates and deposits in banks, as well as the cost of borrowing.

Bankers, whom Masrawy spoke to, said, against the background of the Central Bank’s decision to fix interest rates yesterday, Thursday, that the banks will maintain the same rate of return applied to them on customer savings unchanged to comply with the same decision of the Central Bank.

The Monetary Policy Committee of the Central Bank of Egypt decided in its meeting yesterday, Thursday, to keep the interest rate unchanged for the eighth time in a row, so that the average interest rate of the Central Bank, known as the “corridor”, remains at 8.25% for deposit, 9.25% for lending, and 8.75% for the rate of lending. Credit and debit.

Bankers added that the interest rates currently applied in banks on savings certificates, deposits, savings accounts and loans are appropriate, as customers receive an attractive return of up to 11% of the monthly return, which is the highest real return in the region and does not need to be raised or lowered.

The real rate of return is determined by subtracting the current inflation rate in cities 6.6% from the interest on the certificates 11%, so the real rate of return becomes 4.4% that the customer gets a profit on his investments.

Bankers stressed that determining interest rates on deposits in banks is subject to many analyzes and market studies, and varies from one bank to another according to the interest rate established in competing banks, and the extent to which it needs high liquidity rates, as well as the quality of its target customers, in addition to the Central Bank’s vision of the current rates of return that Reflected at every meeting of the Monetary Policy Committee.

The banking sources pointed out that the stability of the interest rate on deposits is offset by the same stability in the interest rate on lending or vice versa, stressing that the stability of the return for long periods reflects economic stability, which is a very positive matter, which shows the success of the Monetary Policy Committee’s vision in controlling the exchange market and supporting growth rates.

Banks still give an annual interest of 11% on savings certificates such as Al-Ahly, Egypt, Cairo, Egyptian agricultural and real estate, and Arab investment with a monthly exchange cycle, which are acceptable rates for customers who do not prefer to risk investing their savings in other sectors such as real estate or gold.