Bangladesh Bank Extends Personal Loan Tenure to 8 Years, Eases Credit Cap

Bangladesh Bank has extended the maximum repayment tenure for personal loans from five to eight years and removed a major restriction on consumer credit growth to boost retail lending.

In a circular issued Thursday, the central bank allowed commercial banks to grow their consumer financing portfolios faster than their overall loan growth rate a practice previously prohibited. Additionally, the maximum auto loan limit has been raised to Tk80 lakh for electric, hybrid and locally assembled vehicles.

Bankers welcomed the relaxed regulations, noting that the longer repayment period will significantly reduce monthly installments and making personal loans more affordable for the expanding middle class.

HM Mostafizur Rahaman, Head of Retail Business at Dhaka Bank called it a timely decision that frees banks to meet genuine market demand. "Broader consumer access to credit boosts spending and contributes to overall economic growth," he stated.

However, industry insiders cautioned that banks must carefully manage these extended loan tenures to prevent potential credit risks.