The global economy is facing a crisis due to the corona virus. Many banks are paying less interest on deposits to customers. Meanwhile, according to a report, the Bank of England can charge interest from depositors instead of paying interest on deposits. In this context, the Central Bank of Britain has indicated that it can reduce the interest rate on deposits. It is known that in 2008 it used to pay five percent interest on bank deposits, which has now come down to 0.10 percent. According to experts, the negative interest rate affects banks’ earnings. According to a BBC report, the Central Bank of Britain has made such a gesture that it can reduce the interest rate on deposits. All the governments of the world are taking measures to get the Corona crisis affected economy back on track. In view of this, this step can be taken up.
The bank believes that by taking interest on deposits, people will reduce and spend money depositing in the bank. This will increase market demand. The Bank of England has aggressively lowered the interest rate on deposits for the last 10 years. In 2008, the Bank of England’s interest rate on deposits was more than five per cent. The Central Bank sharply reduced interest rates after the 2008 recession. Now the interest rate of this central bank is 0.10 percent. That is almost equal to no.
This will directly affect the earnings of the banks. Also, due to low deposit, banks have to face the problem of giving cash.