Bangladesh Bank Raises Loan Ceilings

Bangladesh Bank has revised consumer financing rules, increasing limits for auto and personal loans in an effort to respond to rising consumer demand and to encourage the use of environmentally friendly vehicles, including electric and hybrid models.

In a notification issued on Tuesday, the central bank stated that scheduled banks are now permitted to extend auto loans of up to Tk 8.0 million for the purchase of electric and hybrid vehicles. This represents an increase from the previous ceiling of Tk 6.0 million, which applied to conventional automobile financing.

Alongside the higher loan ceiling, the central bank has introduced adjustments to financing conditions, particularly the equity contribution required from borrowers. It has also revised personal loan limits, citing changes in market prices and overall consumer demand.

Bangladesh Bank noted that the demand for electric and hybrid vehicles has been rising steadily in the country, attributing this trend to their energy-efficient and environmentally friendly features. The regulator also pointed to broader developments in the consumer goods market, which has expanded in recent years in line with increasing per capita income and sustained economic growth.

Under the updated framework, auto loans will generally be subject to a maximum debt-to-equity ratio of 60:40. However, for hybrid and electric vehicles, the requirement has been relaxed further to 80:20, compared with the earlier ratio of 70:30. This adjustment is intended to make financing conditions more flexible for green vehicle purchases.

The central bank has also revised Regulation-30 of the Prudential Regulations for Consumer Financing to reflect current market conditions. It stated that the changes were made considering both the prevailing prices of consumer goods and the growing demand in the sector.

In terms of personal lending, the ceiling for unsecured personal loans has been doubled from Tk 0.50 million to Tk 1.0 million. Meanwhile, the limit for secured personal loans has been increased from Tk 2.0 million to Tk 4.0 million.

Bangladesh Bank has additionally issued a directive to ensure broader credit discipline within the banking sector. It instructed that the growth rate of total loans under the “Consumer Financing” category must, in all cases, remain below or equal to the growth rate of a bank’s total loan portfolio.

Revised Consumer Financing Framework

The revised policy framework reflects Bangladesh Bank’s ongoing adjustments to consumer credit regulations in response to changing economic conditions, evolving consumption patterns, and the gradual expansion of environmentally conscious transport options in the domestic market.