The lending rate in the banking sector crossed 13.55% this April, as the Bangladesh Bank (BB) raised the benchmark rate, known as the Six-Month Moving Average Rate of Treasury Bill (SMART) for March.
In January, the rate was 8.68%.

The benchmark interest rate at the end of March increased to 10.55% from February’s 9.61%. Banks are allowed to add 3% to the SMART rate to determine their lending interest.
Previously, banks were permitted to add 3.50%.

However, on Sunday, BB issued a circular to decrease the interest rate. The new rate will take effect from today.

The benchmark rate has increased 94 basis points in just one month, the highest in the past six months, making borrowing even costlier.
According to the BB data, during the first two months of the current fiscal year – July and August, the interest rate was at 7.10% and 7.14% respectively.

Then in September and October, the rate again increased to 7.20% and 7.43%. In November and December, it was further raised to 7.72% and 8.14%.
The central bank calculates the SMART rate by taking the six-month average of treasury bill interest rate into consideration. BB published the new rate on its website.

On the advice of the International Monetary Fund (IMF), the SMART rate corridor was introduced in July 2023, the first month of the current FY24 by lifting the 9% interest rate limit on bank loans.
As per the rules, the central bank reveals the SMART interest rate at the beginning of every month. This rate will apply to new loans to be disbursed in that month.

The interest rate will be effective for six months for customers taking loans in a specific month. The central bank is taking steps to check inflation by raising interest rates.
BB hopes that the rise in interest rates will make it easier to deal with inflation.

After the introduction of the new rules, many banks have started increasing the interest rates on deposits.
As per the policy, the interest rate on agricultural and rural loans will be 1% lower than general ones.

In that case, a maximum margin of 2% will be added to the SMART rate. The interest rate for loans in this sector will be a maximum of 12.55% for the next six months.

However, banks can add a 1% supervision charge in case of consumer loans like cottage, micro, small and medium enterprises (CMSME) sector, personal loans and car purchases.
BB published the six-month average interest rate of 182-day treasury bills from January last year.