Central bank fixes interest rates for non-bank financial institutions

Bangladesh Bank has asked all non-bank financial institutions (NBFIs) to fix a maximum 7 per cent interest rate on deposits and a maximum 9 per cent interest rate on loans.

The instruction will come into effect from July 1 this year, the central bank said in a circular issued on Monday.

“Some NBFIs have recently offered high interest to clients for mobilising deposits, playing a role in increasing their cost of fund,” the circular said.

The high-interest rate on deposits quoted by NBFIs has also fuelled the lending rate, leaving an adverse impact on the borrowers.

Against the backdrop, the repayment capability of the borrowers has eroded which has pushed default loans and left a negative impact on the entire economy.

The central bank, however, said the instruction would not be applicable for deposits, which were collected before implementing the notice.