There is no longer a 9 per cent cap on bank loan interest rates, allowing banks to define such rates based on the market in order to tackle skyrocketing inflation and reduce money flow.
The Bangladesh Bank announced this decision on Sunday, as part of its monetary policy for the first half of FY24.
Back in April 2020, the bank loan interest rate was capped at 9 per cent. After that, the interest rate on deposits was also capped at 6 per cent, but it was later decided that the deposit rates will be adjusted in line with inflation.
The government expects inflation to remain at 6 per cent in FY24 to achieve its GDP growth target of 7.5 per cent.
For this purpose, in the new monetary policy, the policy rate has been increased by 0.5 basis points to 6.5 per cent to tackle inflation. Meanwhile, the private sector credit growth target has been set at 11 per cent for FY24.
The government sector credit flow has also been reduced by 30 per cent. This rate is projected to be 40 per cent by the end of June this FY.
