Bangladesh Bank's Banking Regulation and Policy Department recently issued a circular instructing banks to maintain a separate account for interests to be paid by the government – in the form of subsidies – against loans availed under the Covid-19 stimulus package for industries and the service sector.

Loans taken out by clients under the package come with a 9% interest rate where borrowers pay half the interest and the government subsidise the other half to banks.

According to the circular, ome banks were imposing the whole 9% interest on loans on clients, causing them to incur losses.

The circular said banks would charge clients the whole amount (9%) if they did not repay loans and interests within the stipulated time.