Bangladesh Bank on Wednesday raised the ceiling of car loan to Tk 40 lakh from Tk 20 lakh to expedite the credit flow to the private sector, said officials of the central bank.
The loan would be allowed for purchasing cars for both personal and organisational use. The central bank also increased the equity-loan ratio for vehicles to 50:50 from 70:30 which had been set in 2012, according to a BB circular issued on the day.
The circular means the clients will now get 50 per cent loan instead of the previous 30 per cent of the price of a vehicle, a BB official told New Age.
He said that the central bank had taken the initiative to increase the credit flow to the private sector as the banks were now facing huge liquidity surplus amid sluggish business due to the political uncertainty.
The central bank squeezed the consumer financing including the car loans in January 2012 as the banks faced huge liquidity crisis at that time, he said.
But the scenario has changed much in recent months as the businesspeople has adopted a ‘wait and see’ approach to expand their business due to the political turbulence and uncertainty.
Against the backdrop, the surplus liquidity in the banking sector has been hovering around more than Tk 1,00,000 crore for the last few months.
The year-on-year credit growth in the private sector decreased to 11.39 per cent in May from 11.86 per cent in April of this year.
Against the backdrop, the central bank increased the ceiling of car loan to gear up the credit growth in the private sector, the BB official said.
He said that any business organisations would be able to enjoy the central bank’s relaxed auto loan policy if they want to purchase vehicles for using them for their office purpose.
But the business organisations will not be able to use the vehicles for running them commercially, he said.
-With New Age input
