NBFIs can now also raise interest rates

After the banks, now the central bank has given an opportunity to increase the interest rate of the loans for the financial institutions.

Now Non Bank Financial Institutions (NBFI) can charge additional .5% interest from customers compared to earlier.

The central bank has also given an opportunity to increase the deposit interest rate at the same rate.

Bangladesh Bank has issued a circular in this regard on Sunday.

After raising the policy interest rate of the central bank last Thursday, instructions were given to increase the bank interest rate by .5%. Now there is an opportunity to increase the interest rate on deposits along with the loan or investment interest rate of financial institutions.

According to the notification of Bangladesh Bank, in determining the interest rate of the loan, the interest rate must be determined by adding a maximum margin of 5.5%  with the SMART rate (currently smart is 7.20%). Earlier this margin was 5%. In that, the maximum limit for determining the interest rate of financial institutions will be 12.7%.

In terms of interest rate on deposits, margin will be added to 2.5% with the current SMART 7.20%. The deposit interest rate will be capped at 9.7%.

The method by which banks and financial institutions are now determining interest rates is known as SMART or Six Months Moving Average Rate of 182 days Treasury Bills. Bangladesh Bank informs this rate at the beginning of every month. Smart rate was 7.10% in July, which increased to 7.20% in September.

No changes have been made in this new notification except the interest rate. Accordingly, other terms and conditions of its earlier notification shall remain unchanged.