B Mirror Report: Bangladesh Bank has extended the repayment period for personal loans from five years to eight years to encourage the growth of retail lending and make loans more accessible to ordinary customers.

In a circular issued on Thursday, the central bank also withdrew the previous rule that required banks to explain to Bangladesh Bank if the growth of consumer loans exceeded their overall loan growth.

Bankers believe that the longer repayment period will reduce borrowers’ monthly installments, making personal loans more affordable and easier to obtain.

Earlier this month, Bangladesh Bank increased the maximum limit for consumer loans from Tk 20 lakh to Tk 40 lakh, excluding loans secured against bank deposits.

The central bank has also expanded its auto loan policy. Banks are now allowed to provide loans of up to Tk 80 lakh for purchasing electric, hybrid, and locally manufactured vehicles. However, the maximum loan for fossil fuel-powered vehicles remains Tk 60 lakh.

According to the new guidelines, banks may finance up to 60% of the price of conventional vehicles, with customers paying the remaining 40%. For electric, hybrid, and locally produced vehicles, banks can finance up to 80% of the purchase price, while customers need to contribute only 20%.

Bangladesh Bank said these measures are intended to improve access to consumer credit while promoting environmentally friendly and locally manufactured vehicles.