Dhaka, Bangladesh (BBN)- The central bank of Bangladesh Bank has relaxed policy on car loan allowing the commercial banks to invest more in the automobile sector to meet the growing demand for consumers, officials said.
Under the relaxation, the banks are now allowed to provide loan for purchasing vehicles at a maximum debt-equity ratio of 50:50 instead of 30:70 earlier.
Besides, the banks are empowered to invest maximum BDT 4.0 million instead of BDT 2.0 million earlier per individual in purchasing vehicles.
“We’ve relaxed the policy on car loan consider the existing market price and consumer demand for vehicles,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
The central bank issued a circular in this connection on Wednesday and asked the chief executive officers and managing directors of all 56 scheduled banks to follow the restructured margin ratios while lending to car purchase.
“The banks shall not allow auto loan (including insurance) exceeding BDT 4.0 million per individual under this head. For the purpose of this regulation, auto facility to the dependent members of an individual shall also be treated as part of the exposure of that individual.
While allowing auto loans, the financing facility shall be provided at a maximum debt-equity ratio of 50:50,” the BB said in its circular.
Earlier on January 22, 2012, the central bank raised debt-equity ratio of 30:70 from 50:50 earlier aiming to discourage lending to ‘unproductive’ sectors.
BBN/SSR/AD-13Aug14-4:43 pm (BST)
