Interest rates capped for nonbanks

The Bangladesh Bank today imposed interest rate cap on non-bank financial institutions (NBFIs), asking them to mobilise deposit by offering a maximum of 7 per cent interest and give out loans at 11 per cent.

The instruction will come into effect from July 1 this year, according to a central bank notice.

Some NBFIs have recently offered high interest to clients for mobilising  deposits, playing a role in increasing their cost of fund, the BB 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 BB, however, said the instruction would not be applicable for deposits, which were collected before implementing the notice.