Bangladesh Bank removes lending cap on consumer loans to boost spending

The limit of consumer loans taken at the individual level remains unchanged

Bangladesh Bank has lifted the annual limit on the amount of loans banks can extend to individuals to boost consumer spending.

The banking regulator announced the decision on Thursday, saying banks will have no limits on lending to the consumer sector from now on.

The limit had been set in 2017, mandating that the growth rate of consumer loans cannot be higher than that of the bank's total loans.

However, there has been no change in the limit of consumer loans taken at the individual level.

The tenure of consumer loans will not exceed eight years in any case.

Previously, the period was five years.

The tenure of this loan is longer in the housing and home construction sectors.

To encourage the purchase of electric vehicles, Bangladesh Bank increased the individual loan limit for purchasing electric and hybrid vehicles on May 5.

The maximum loan amount for the purchase of electric and hybrid vehicles had then seen a four-fold rise to Tk 8 million.

The loan-investment ratio in the electric and hybrid vehicle sector had been set at 80:20 percent, up from 60:40 percent.