Bangladesh raises loan cap to Tk8 million for electric and hybrid cars

Bangladesh Bank has increased loan ceilings for electric and hybrid vehicles and doubled personal loan limits, aiming to support green transport adoption, rising consumer demand and higher market prices nationwide.

Bangladesh Bank has raised the maximum loan limit for customers buying electric and hybrid vehicles to Tk8 million, while also doubling the ceiling on personal loans for consumers to Tk4 million, according to a directive issued on Thursday.

The central bank said the revised limits were set to support the growing demand for environmentally friendly vehicles and to reflect higher market prices, as well as to encourage customers to buy electric and hybrid vehicles.

Demand and use of electric and hybrid vehicles in Bangladesh have been rising steadily because of their environmentally friendly and cost-saving features, the directive said. It added that recent energy shortages are also expected to increase demand for such vehicles.

Under the new rules, the maximum loan limit for vehicles other than electric and hybrid models has been fixed at Tk6 million, including insurance. For electric and hybrid vehicles, banks will now be allowed to provide auto loans of up to Tk8 million to a single customer.

The directive also said that if auto loans are provided to dependants of an individual, those loans will be counted as part of that person’s total borrowing exposure.

Bangladesh Bank said auto loans must generally be provided at a maximum loan-to-equity ratio of 60:40. But for hybrid and electric vehicles, financing may be extended at a maximum ratio of 80:20.

That means for a vehicle priced at Tk10 million, a bank can lend Tk6 million under the standard rule and the customer must provide the remaining Tk4 million. For a hybrid or electric vehicle of the same price, the bank can lend Tk8 million while the customer will need to pay Tk2 million.

Arup Haider, deputy managing director of City Bank, told  that banks had requested a higher loan ceiling in view of inflation and rising vehicle prices. He said the additional facility for electric vehicles had been introduced on environmental grounds.

“As a result, lending for environment-friendly vehicles will increase,” he said. “This will have a positive impact on the environment.”

The central bank has also raised the limit on personal loans, saying Bangladesh’s consumer goods market has expanded rapidly in recent years. It said rising per capita income and the country’s GDP growth had increased consumers’ spending capacity.

Taking into account prevailing market prices and the rising demand for consumer goods, banks will now be able to provide personal loans of up to Tk4 million, according to the directive. Loans granted against deposits held with banks will remain outside this ceiling. Previously, banks could provide personal loans of up to Tk2 million.

The directive also said banks must manage consumer finance in such a way that its growth rate does not, under any circumstances, exceed the growth rate of the bank’s total loan portfolio.

Bangladesh raises loan cap to Tk8 million for electric and hybrid cars

Bangladesh Bank has raised the maximum loan limit for customers buying electric and hybrid vehicles to Tk8 million, while also doubling the ceiling on personal loans for consumers to Tk4 million, according to a directive issued on Thursday.

The central bank said the revised limits were set to support the growing demand for environmentally friendly vehicles and to reflect higher market prices, as well as to encourage customers to buy electric and hybrid vehicles.

Demand and use of electric and hybrid vehicles in Bangladesh have been rising steadily because of their environmentally friendly and cost-saving features, the directive said. It added that recent energy shortages are also expected to increase demand for such vehicles.

Under the new rules, the maximum loan limit for vehicles other than electric and hybrid models has been fixed at Tk6 million, including insurance. For electric and hybrid vehicles, banks will now be allowed to provide auto loans of up to Tk8 million to a single customer.

The directive also said that if auto loans are provided to dependants of an individual, those loans will be counted as part of that person’s total borrowing exposure.

Bangladesh Bank said auto loans must generally be provided at a maximum loan-to-equity ratio of 60:40. But for hybrid and electric vehicles, financing may be extended at a maximum ratio of 80:20.

That means for a vehicle priced at Tk10 million, a bank can lend Tk6 million under the standard rule and the customer must provide the remaining Tk4 million. For a hybrid or electric vehicle of the same price, the bank can lend Tk8 million while the customer will need to pay Tk2 million.

Arup Haider, deputy managing director of City Bank, told  that banks had requested a higher loan ceiling in view of inflation and rising vehicle prices. He said the additional facility for electric vehicles had been introduced on environmental grounds.

“As a result, lending for environment-friendly vehicles will increase,” he said. “This will have a positive impact on the environment.”

The central bank has also raised the limit on personal loans, saying Bangladesh’s consumer goods market has expanded rapidly in recent years. It said rising per capita income and the country’s GDP growth had increased consumers’ spending capacity.

Taking into account prevailing market prices and the rising demand for consumer goods, banks will now be able to provide personal loans of up to Tk4 million, according to the directive. Loans granted against deposits held with banks will remain outside this ceiling. Previously, banks could provide personal loans of up to Tk2 million.

The directive also said banks must manage consumer finance in such a way that its growth rate does not, under any circumstances, exceed the growth rate of the bank’s total loan portfolio.