Bangladesh Bank on Tuesday scrapped the minimum interest rate it had imposed for deposits.

From now on, banks will be able to set interest rates in line with their business interests and collect deposits accordingly.

The central bank announced the decision through a circular today (Tuesday). The Banking Regulations and Policy Department of BB issued this notification on Tuesday and sent it to the top executives of the scheduled banks for immediate execution.

The notification stated that the minimum interest rate for deposits was fixed. According to that directive, the central bank instructed all the scheduled banks of the country not to keep the interest rate of fixed deposits below inflation.

At that time the maximum interest rate for disbursement of loans was 9 percent. But now there is no such limit in terms of loans. The market-based interest rate system for loans was introduced in July this year, reports UNB.

Hence, there is no need for a minimum interest rate on deposits as well. Due to this, the instruction of August 8, 2021, was canceled, the BB notification added.