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2023-10-05

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BRPD Circular Letter No. 44: Interest/Profit Rate of Loan/Investment

The Bangladesh Bank mandates that scheduled banks increase the maximum margin added to the benchmark rate when determining interest or profit rates for loans and investments. Specifically, the maximum margin is raised to 3.5% for general loans and to 2.5% for pre-shipment export, agriculture, and fisheries loans. These revised rates apply to all new loans disbursed after the issuance of this directive, while other instructions from previous circulars remain unchanged.

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Bangladesh Bank Chief Executive Office Motijheel, Dhaka-1000 Bangladesh. Ref No.: BRPD Banking Regulation and Policy Department 05 October 2023 BRPD Circular Letter No. 44 Date: ------------------ 20 Ashwin 1430 Managing Director/Chief Executive Officer All Scheduled Banks operating in Bangladesh Dear Sir, Regarding the interest/profit rate of loan/investment.

  1. Reference is invited to your attention to BRPD Circular No. 09 dated 19 June 2023 and BRPD Circular Letter No. 27 dated 27 July 2023.

  2. You are hereby directed to follow the policy guidelines issued to implement the market-based interest rate system for bank loans distributed through the aforementioned circulars and circular letters.

  3. In the context of the current global and domestic situation, inflation is having a negative impact on the economy of Bangladesh. Now, in order to reduce the inflation rate, the following instructions must be complied with:

a) In determining the interest rate of loans, the interest rate shall be determined by adding a maximum margin of 3.5% instead of a maximum margin of 3% to the benchmark rate; and

b) In determining the interest rate of pre-shipment export loans and agriculture and fisheries loans, the interest rate shall be determined by adding a maximum margin of 2.5% instead of a maximum margin of 2% to the benchmark rate.

  1. The interest rates mentioned in clauses 3(a) and 3(b) shall apply to newly distributed loans from the date of issuance of these instructions.

  2. In addition, other instructions mentioned in BRPD Circular No. 09/2023 and BRPD Circular Letter No. 27/2023 shall remain unchanged.

  3. These instructions are issued under the powers conferred by Section 29(2)(c) of the Bank Company Act, 1991, and shall come into force immediately.

Yours faithfully, (Mohammad Shahriar Siddique) Director (BRPD) Phone: 9530252

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