Banks can now fix credit cards' interest rates

The Bangladesh Bank on Sunday said that banks can now fix the interest rates of their credit cards.

The central bank said this after allowing the lenders to charge up to 12 per cent interest on consumer credit.

“There is no cap on credit card loans,” the central bank said in its monetary policy for the January-June period of FY23.

The monetary policy was revealed at the Bangladesh Bank's headquarters in Dhaka on Sunday.

The central bank said it will consider removing the lending rate cap in the presence of a “suitable economic condition.”

According to the Bangladesh Bank, considering the current market conditions, the lending rate cap for consumers' credit has been relaxed to vary up to 3 percentage points, along with the complete removal of the deposit floor rate.

It also said these relaxations on the lending rate cap and the complete removal of the deposit floor rate may help grow the overall deposit rate.

Banks have been following a 9 per cent cap on lending since April 2020 as per the instruction of the central bank to allow businesses to cut the cost of funds.