STAR BUSINESS REPORT

The Bangladesh Bank (BB) has revised its prudential regulations on consumer financing, raising the ceiling for auto and personal loans and introducing incentives to promote electric and hybrid vehicles.

The central bank issued a circular in this regard yesterday, stating that banks will now be allowed to provide auto loans of up to Tk 80 lakh per individual, including insurance coverage, for purchasing electric and hybrid vehicles.

Previously, banks could provide auto loans of up to Tk60 lakh per individual for conventional vehicles, with no separate ceiling for electric and hybrid vehicles.

The BB said it set the new limit for purchasing electric and hybrid vehicles to encourage environmentally friendly transport.

The regulator also eased equity requirements for such vehicles. While conventional auto loans must maintain a maximum debt-equity ratio of 60:40, loans for electric and hybrid cars can now be extended at a more relaxed ratio of 80:20.

The BB said the changes were made in consideration of rising automobile prices and the growing demand for cleaner and more energy-efficient vehicles in the country.

The regulator also revised limits on personal loans, including those for consumer durables. Under the new rules, individuals can take out unsecured personal loans of up to Tk 10 lakh, up from the previous limit of Tk 5 lakh.

Banks may lend higher amounts if backed by proper securities, but the total loan in such cases cannot exceed Tk 40 lakh. Earlier, this limit was Tk 20 lakh.

Loans secured against liquid assets will remain outside this cap, as per the circular.

The regulator noted that Bangladesh’s consumer market has expanded significantly in recent years, driven by rising per capita income and steady economic growth.

As per the circular, the BB imposed a prudential safeguard, directing banks to ensure that growth in consumer loans does not exceed the overall loan growth of the respective bank.

The latest instructions supersede previous circulars issued in 2004, 2017, and 2024 on consumer financing. The directive, issued under the Bank Companies Act, 1991, took effect immediately.