Following Bangladesh Bank’s decision to let the market dictate loan interest rates, banks have begun to raise interest rates on deposits and loans. Some banks are even offering deposits with the condition of returning double the money in five years, pushing loan interest rates above 15%. Until June last year, interest rates on bank deposits and loans remained between 6-9%. The sudden increase has caused difficulties for customers and medium to large-scale businessmen who have taken loans for cars and houses. Bankers are uncertain about where interest rates will head next, as they grapple with liquidity crises and fears of further increases. Bangladesh Bank’s move to a market-based interest rate system has replaced the previous SMART method, aiming to manage inflation while adjusting to market conditions.
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