Banks told not to charge more than 4.5% interest on stimulus funds

The central bank has noticed that some banks are charging borrowers the full 9 per cent interest for taking funds from the several stimulus packages despite the government chipping in with 50 per cent of the interest payment

The Bangladesh Bank on Tuesday cautioned banks not to charge borrowers more than 4.5 per cent in interest for taking funds from the several stimulus packages.

The central bank has noticed that some banks are charging borrowers the full 9 per cent interest for taking funds from the several stimulus packages despite the government chipping in with 50 per cent of the interest payment, said the notice.

The borrowers are facing financial problems due to imposing the whole interest of the loans under the government announced stimulus packages.

The remaining 4.5 per cent interest should be kept separately.

Some banks have fixed the time to repay the loans and imposed a 9 per cent interest, which is creating a burden on clients, said a BB official.

If the borrowers are unable to repay the loans on time, banks can impose the whole interest on them and it will be treated as the clients’ liability.

The government has announced 19 stimulus packages in the form of low-cost loans to affected micro, small, medium and large industries and services, food security, social protection amounting to Tk 103,117 crore since it reported the country’s maiden cases of coronavirus infections on March 8.

The combined support accounted for 3.7 per cent of the country’s gross domestic product.

The largest of these packages is for the affected industries and services sector amounting to Tk 40,000 crore. The interest on this loan is 9 per cent, while the government will subsidise 4.5 per cent.

Some banks have fixed the time to repay the loans and imposed a 9 per cent interest, which is creating a burden on clients, said a BB official.

Source: https://www.dhakatribune.com/uncategorized/2021/01/13/banks-told-not-to-charge-more-than-4-5-interest-on-stimulus-funds

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