Loan interest increased from Feb, interest ceiling 13pc

Staff Reporter :
Ordinary people are in severe trouble due to the increase in the price of daily commodities.

In such a situation, Bangladesh Bank has taken the initiative to reduce the money supply in the market to deal with uncontrolled inflation. And interest rates are continuously increasing.

In February, the second month of the year, the interest rate on large loans will be 12.43 percent. However, the interest rate on consumer loans will be around 13 and a half percent.

In January, the interest rate on these large loans was 11.89 percent and on consumer loans was 12.89 percent.

The rate, derived from the Six-month Moving Average of Rate of Treasury bill or SMART method, will be 8.68 percent in February, with banks allowed to add 3.75 percentage points on top of it for consumer loans.

This means customers could be charged a maximum of 12.43 percent interest on loans, up from 11.89 percent last month.

Previously, the biggest one-month surge in the SMART rate was 42 basis points, reaching 8.14 percent in December.

The uptick follows an increase in the key policy rate, known as repo rate, by 25 basis points to 6 percent in a bid to contain inflation.

The central bank introduced the SMART rate in July 2023 to modernise monetary policy, curb inflation, and transition to a market-based interest rate system in line with the conditions set by the IMF. The rate is announced at the beginning of every month.