Reduce spread of SME loans to 4%: BB

Bangla Tribune Report
Published : 19:35, Jun 12, 2018 | Updated : 19:39, Jun 12, 2018

Logo of Bangladesh BankBangladesh Bank has asked all banks to bring down the rate for small and medium enterprises (SMEs), clarifying ambiguity over inclusion of SME loan in its previous order on reducing the spread to 4 percent.
The recent upward trend in interest rate had left the central bank concerned with lending rate in some of the banks went up to 9.55 per cent and borrowing rates as high as 15 to 22 per cent.
On May 30, the central bank issued a circular asking all bank chiefs to bring down the spread to 4 percent, except for consumer loans and credit cards.
Spread is the difference between interest rates charged for loans and paid against deposits.
The circular did not address the SMEs leading to confusion among banks and their clients.
Amid this situation, the central bank issued a new circular on Tuesday.
“Bangladesh Bank has learned that an ambiguity has arisen among the bankers over inclusion of loan in SME sector while counting spread,” it reads.
Clarifying ambiguity, the circular says, “The spread for all but consumer and credit card loans has to be reduced to 4 percent that includes the loan for SME sector too.”

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