New instructions for existing bank credit

Bangladesh Bank (BB) on Wednesday issued new instructions for banks to avoid the increasing trend of lending rate.

“Banks can’t increase the rate of interest if the rate is fixed. In case of flexible, variable or bbfloating interest rate, banks can increase the rate once in a year,” said a BB circular issued Wednesday.

For increasing the interest rate, the circular said, banks will have to issue notice to the borrowers at least three months ago. In case of term loans, banks can increase the lending rate by 0.50 percent each time.

But, in case of current capital and other loans, they can increase the rate up to one percent, the circular said.

In another circular, BB asked banks to keep the average intermediation spread rate at 4 percent for credit cards, consumer loans and deposits.