BB raises consumer loan limits; offers incentives for electric and hybrid vehicles

Bangladesh Bank (BB) has raised the ceilings for auto and personal loans in a move aimed at aligning credit policies with rising living costs and increased automobile prices, while also introducing special incentives to promote electric and hybrid vehicles.

In a directive issued by the Banking Regulation and Policy Department (BRPD) on Tuesday, the central bank has revised the Prudential Regulations for Consumer Financing with immediate effect.

The policy adjustment reflects the country’s steady economic growth, rising per capita income, and growing demand for consumer goods and durable products.

Under the revised framework, financing limits for automobiles have been significantly enhanced.

The new structure includes insurance costs and applies to the total exposure of an individual, covering facilities extended to dependent family members.

Bangladesh Bank has authorized banks to provide auto loans of up to Tk60 lakh per individual for standard vehicles, maintaining a maximum debt-equity ratio of 60:40.

In a move to encourage environmental friendly transport, the ceiling for electric and hybrid vehicles has been increased to Tk80 lakh per individual, along with a preferential debt-equity ratio of 80:20, allowing lower down payments for such vehicles.

The central bank has also revised regulations governing personal loans and consumer durables. Unsecured loans have been capped at Tk10 lakh, while secured loans may be extended at higher amounts depending on collateral, subject to an absolute ceiling of Tk40 lakh. However, loans backed by liquid securities will remain exempt from these restrictions.

Bangladesh Bank stated that the revised limits respond to rising market prices of automobiles and consumer goods, as well as increased consumer demand in the domestic economy. The enhanced financing facilities for electric and hybrid vehicles are intended to support a gradual transition toward energy-efficient and environmentally sustainable transportation.

To safeguard financial stability, the central bank has introduced a growth control mechanism requiring banks to ensure that the growth rate of their consumer financing portfolio does not exceed the growth rate of their total loan portfolio. This measure is designed to prevent excessive concentration in consumer credit and ensure balanced credit distribution across productive sectors.

The directive, issued under Section 45 of the Bank Company Act, 1991 (as amended), supersedes several previous circulars, including those issued in 2004, 2017, and 2024.