Bangladesh Bank Expands Loan Limits

Bangladesh Bank has revised its consumer financing framework, increasing limits for auto and personal loans while adjusting financing conditions to support growing demand for consumer goods and to promote the use of electric and hybrid vehicles.

In a notification issued on Tuesday, the central bank announced that scheduled banks are now authorised to provide auto loans of up to Tk 8.0 million for the purchase of electric and hybrid vehicles. This is an increase from the previous ceiling of Tk 6.0 million, which was applicable to conventional automobile financing.

The central bank stated that the revision reflects both market developments and policy considerations related to sustainable transport. It noted that the use of electric and hybrid vehicles has been increasing steadily in Bangladesh due to their energy efficiency and environmentally friendly features.

Alongside the increase in loan ceilings, Bangladesh Bank has revised the applicable debt-to-equity ratios for vehicle financing. Under the updated rules, general auto loans will continue to follow a maximum debt-to-equity ratio of 60:40. However, for electric and hybrid vehicles, the ratio has been relaxed to 80:20, compared with the previous 70:30 requirement. This change is intended to provide greater financing flexibility for green vehicle purchases.

The central bank also revised Regulation-30 of the Prudential Regulations for Consumer Financing. It said the adjustment was made in consideration of rising consumer goods prices and the expansion of the consumer market, which has been supported by increased per capita income and sustained economic growth in recent years.

In addition to auto loan adjustments, Bangladesh Bank has increased personal loan limits. The ceiling for unsecured personal loans has been raised from Tk 0.50 million to Tk 1.0 million. Meanwhile, the limit for secured personal loans has been doubled from Tk 2.0 million to Tk 4.0 million.

The regulator has also introduced a precautionary measure to maintain overall credit discipline in the banking sector. It directed that the growth rate of total loans under the “Consumer Financing” category must not exceed the growth rate of a bank’s overall loan portfolio.

Updated Consumer Financing Limits

The revised framework reflects Bangladesh Bank’s ongoing regulatory adjustments aimed at aligning consumer financing rules with current market conditions, evolving borrowing needs, and the gradual expansion of environmentally focused transportation options in the country.