Bangladesh Bank set Credit card interest rate limit – Bangladesh Bank Sets Maximum Interest Rate for Credit Card Loans at 25%. On Sunday, December 1, 2024, the Bangladesh Bank (BB) imposed a maximum interest rate of 25% on credit card loans. The central bank issued a circular on the same day to implement this decision.
Previously, on January 15, 2023, the BB lifted the interest rate cap on credit card loans, allowing banks to determine their own interest rates. Before that, on September 24, 2020, the central bank had set a 20% interest rate cap on credit card loans.
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❏ Bangladesh Bank Circular
In its latest circular, the BB stated that the maximum interest rate on credit cards was revised to 25% to promote prudent loan risk management and align with the increasing policy interest rate and funding costs faced by banks.
Banks are now permitted to set interest rates on credit cards within this limit, based on loan demand and the availability of funds. Islamic Shariah-based banks will adjust their profit rates on investments in line with these revised guidelines, as specified in the circular.
This decision follows reports of banks charging excessively high interest rates on credit cards, in violation of the guidelines for credit card operations issued in 2017. According to these guidelines, banks were allowed to charge up to 5% above the highest interest rate for consumer loans on credit cards.
Additionally, credit cardholders can withdraw up to 50% of their credit limit in cash, as per the guidelines. However, banks were reportedly charging interest on credit card dues from the very first day of a transaction and imposing late fees at progressive rates on unpaid bills, leading to concerns over compliance and fairness.
