Gone are the days when you could buy a car paying half the price and the bank loaning you the rest of the money. A Bangladesh Bank decision on Sunday reined in consumer loans such as car loans in the unproductive sector.

A circular issued by the central bank said the margin ratio for car loans and all other unproductive loans had been raised to 30:70, which means 70 per cent of the expense must be borne by the consumer and bank loans will only provide for the remaining 30 per cent.

The margin to loan ratio was 50:50 before this decision. This means consumers can only take loans for cars and other consumer goods if they can pay for 70 per cent of it out of their own pockets.

The ratio in housing finance loans on the other hand have been changed to 70:30 from 80:20, which is a smaller change of proportions.

The circular entailing the measures, signed by central bank’s Banking Regulation and Policy Department head K M Abdul Wadud, took effect immediately.

The Daily Independent/Bangladesh/ 24th Jan 2012