Bangladesh Bank unveils SMART-derived interest rates for January

The consumer loan (retail loan) receivers have to pay the higher 13 per cent interest starting from the new year, while other borrowers have to pay almost 12 per cent, at 11.89 per cent, in interest to the banks.

Bangladesh Bank (BB) announced the interest rates for January in accordance with the ‘SMART’ method it introduced since July.

The method on which the loan interest rate is now determined is known as ‘SMART’ or ‘Six Month Moving Average Rate of Treasury Bills’. Bangladesh Bank informs this rate at the beginning of every month.

The six-month average interest rate (smart rate) on 182-day treasury bills was 7.10 per cent in July this year, 7.14 per cent in August 7.20 per cent in September, 7.43 per cent in October, 7.72 per cent in November, and lastly in December smart rate increased to 8.14 per cent.

According to the rules of the BB, banks can give loans in January by adding margin or interest at a maximum rate of 3.75 per cent with the ‘smart’ rate of December. On the other hand, non-banking financial institutions can add margin at the rate of 5.75 per cent.