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Bangladesh Bank has capped lending rates on all loans except credit cards at 9 percent



Bangladesh Bank, the central bank of the country has directed all the commercial banks to reduce interest rates for all types of bank loans by 9 percent except those on credit card. Banks can charge maximum 2 percent additional interest or penalty for loans that will turn non-performing after the new rates take effect. But, loans in the case of pre-shipment export will remain 7 percent. However, no obligation was made to collect the deposit, even though the loan interest rate was fixed.

A circular published on 24 February 2020  Bangladesh Bank instructed all the CEOs to comply with the circular from April 1 of this year. While explaining the present business scenario of the country BB identified bank loan interest is a major hindrance to the development of business and services sectors, including small, medium and large industries of the country. If the interest rate on bank loans is high, the production costs of industries, businesses, and service sectors increase and the products are deprived of competitive advantage in marketing.

As a result, businesses face difficult situations to meet the obligation of the banks and later become defaulters. This situation creates a disruption in the banking sector and hampers the economic growth of the country. The central bank has determined the interest rate on loans to achieve greater potential in the local and international markets, create an industrial and business environment, increase employment, enable repayment of debt and achieve desired GDP growth.



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