BRPD Circular Letter No. 09: Rationalization of rate of interest on deposit and lending

Ref: BRPD Circular Letter No. 09 Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka. 16 Jyestha, 1425 BRPD Circular Letter No. 09 Date: ----------------- 30 May, 2018

Managing Director / Chief Executive Officer All Scheduled Banks operating in Bangladesh.

Dear Sir,

Regarding Rationalization of rate of interest on deposit and lending.

Reference is invited to BRPD Circular Letter No. 13 dated November 19, 2015 and BRPD Circular Letter No. 14 dated December 28, 2015 on the subject cited above. Through the aforementioned two circular letters, you were instructed to limit the spread or difference between the weighted average interest rate on loans and deposits in sectors other than Micro Credit and Consumer Loans to a single digit (i.e., up to 5%).

However, it has been observed recently that banks are generally increasing the interest rates on various types of loans. The increase in loan interest rates is at an irrational level, which is concerning. In this context, to determine the rational range of interest rates on loans in various sectors including productive sectors, you are hereby instructed to limit the spread or difference between the weighted average interest rate on loans and deposits in sectors other than Micro Credit and Consumer Loans to 4%.

This instruction will be implemented immediately.

Yours faithfully,

(Abu Farah Md. Naser) General Manager Phone: 9530252