The Bangladesh Bank (BB) established an interest rate of 10.20% for loans from banks on 1st October 2023 using the “Smart” or “Six Months Moving Average Rate of Treasury Bills” formula. This new method for determining interest rates was introduced on July 1, 2023. Previously, since April 2020, the maximum interest rate on bank loans has been 9%. In October, large-scale industrial loans can now carry a maximum interest rate of 10.20%, while non-banking financial institutions (NBFIs) can add a margin, capping their interest rate at 12.20% for loans and 9.20% for deposits.
Importantly, the October interest rate cannot be changed for the next six months, resulting in a maximum interest rate of 9.14% for agricultural loans. Additionally, a 1% supervision charge can be imposed on CMSME, personal, and car purchase loans. This interest rate determination is based on the six-month average interest rate of 182-day treasury bills, following the International Monetary Fund’s recommendation to establish a market-based interest rate system.
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