Lending rate on bank loans goes past 12%

The interest rate on bank loans in Bangladesh has gone past 12 percent as the reference rate has seen an increase, central bank data showed.

The Six-months Moving Average Rate of Treasury bill (SMART), which is used to price the interest rate of loans, stood at 8.68 percent in January and it would be applied to fix the lending rates in February. 

As a result, customers may see an interest rate of as high as 12.43 percent since banks can add 3.75 percentage points to the reference rate while disbursing loans. The highest interest rate was 11.89 percent in January.

The interest rate was capped at 9 percent between April 2020 and June 2023 before the ceiling was withdrawn to make loans expensive as part of the central bank's fight against the runaway inflation.