The central bank has instructed banks to fix a maximum 9.0 per cent interest rate on all loans except credit cards as part of the government initiative to bring down the lending rate to a single digit.
The new instruction will come into effect from April 01, 2020, according to a notification, issued by the Bangladesh Bank (BB) on Sunday night.
Borrowers will have to pay an additional 2.0 per cent as panel interest along with the new rate if they become defaulters despite getting the facility, it added.
The BB, however, kept unchanged the interest rate at 7.0 per cent for exporters.
From the current year, banks will not be allowed to disburse loans to the industrial sectors less than their average outstanding credit in the last three years.
The circular said the present high bank interest rates are impeding the growth of the country’s small, medium and large business, and services sector.
Such high lending rates are not only pushing their cost of production, but also affecting the country’s competitive advantage in the global market, it added.
As a result, the businesses, sometimes, are unable to repay their bank loan on time, which affects the discipline of the bank loans and hampers the country’s overall economic development, the BB added.
On December 30 last year, finance minister AHM Mustafa Kamal told reporters that the single digit interest rate on all loans, excepting credit cards, will take effect from April 01.
Earlier on the day, he sat with chairmen and managing directors of private commercial banks to discuss the matter.
Besides, the seven-member committee, led by the BB Deputy Governor S M Moniruzzaman, was formed on December 01 to find ways to cut down ending rates to single-digit from the existing level to facilitate achieving higher economic growth.