Bangladesh Bank raises benchmark rate for lending to 10.55% for Apr

The benchmark rate serves as the reference point for determining the maximum interest rate banks can charge on loans.

Banks are allowed to add 3 per cent to the SMART rate to determine their lending interest, the central bank said. This takes the total lending rate to 13.55 per cent—up from 13.11 per cent in March.

In case of consumer loans, however, the lending rate will be 14.55 per cent as banks can add up to 4 per cent interest to the benchmark rate, domestic media outlets reported.

Businesses in the country are worried over the novel way to determine loan interest rates, saying the method leads to monthly rises in borrowing costs, putting pressure on borrowers.

SMART is rising due to the increase in the interest rate of treasury bill bonds, Bangladesh Bank executive director and spokesperson Mohammad Mezbaul Haque said.

During the first two months of the current fiscal, i.e., July and August last year, the interest rate was at 7.10 per cent and 7.14 per cent respectively.

In September and October, the rates again increased to 7.20 per cent and 7.43 per cent respectively. In November and December, it further rose to 7.72 per cent and 8.14 per cent respectively.

Fibre2Fashion News Desk (DS)