Non-bank financial institutions (NBFIs) in Bangladesh are still operating under the SMART-driven interest rate regime, despite the Bangladesh Bank’s decision to abolish the SMART reference rate nearly two months ago. This decision, aimed at transitioning towards a market-based interest rate system, has been implemented by commercial banks following a directive from the monetary policy committee. However, NBFIs await similar official guidance from the central bank.
Officials and market players have noted confusion among financial institutions regarding interest rate setting in the absence of clear instructions for NBFIs. While banks have adjusted to market-driven rates, NBFIs continue to adhere to their pre-SMART interest rates. The central bank plans to issue comprehensive guidelines soon to ensure a smooth transition, fearing potential distortions if NBFIs exploit market-rate advantages. Until then, NBFIs remain cautious about making any changes to their current lending and deposit rates.
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