The Bangladesh Bank on Sunday imposed the maximum interest rate for credit card loans, setting it at 25 per cent.
The central bank issued a circular in this regard on the day.
On January 15, 2023, the BB lifted interest rate cap on credit card loans allowing banks to set interest rate of their credit cards.
Earlier on September 24, 2020, the central bank imposed 20 per cent interest rate cap on credit card loans.
The BB鈥檚 circular on Sunday said that the maximum interest rate on credit cards was revised to 25 per cent to ensure prudent loan risk management and to align with the rising policy interest rate and funding costs for banks.
Banks may set credit card interest rates within this limit based on loan demand and the availability of funds, it said.
Islamic Shariah-based banks will adjust their profit rates on investments following these revised guidelines, the circular said.
The Bangladesh Bank came up with the interest rate ceiling against the backdrop of charging a high interest rate by banks, violating the guidelines on credit card operations issued in 2017.
According to the guidelines, for credit card loans, banks can charge the highest interest rate of consumer loans plus 5 per cent.
At the same time, credit card customers are allowed to withdraw 50 per cent of their credit limit in cash.
Moreover, banks used to charge interest on credit card dues from the first day of a transaction and charge a late fee at a progressive rate on unpaid bills.