The Central Bank has issued a new directive that requires banks to change their loan interest rates on a monthly basis. This move aims to ensure that all customers receive equal benefits from changes in the interest rate, whether it’s an increase or a decrease.
Previously, banks would only change their interest rates based on the quarterly base rate, which often left customers at a disadvantage. But with this new system, all customers will receive equal benefits from changes in interest rates, regardless of when they took out their loan.
According to the Central Bank’s instructions, banks must change the loan interest rate monthly, up to the limit of the increase or decrease in the average base rate of the last three months. Banks are also required to maintain fixed interest rates in agreement with their borrowers.
The Central Bank has also made it clear that banks can reduce interest rates by more than the average base rate change of the last three months, but they cannot increase the interest rates under any circumstances.
When there is a change in the average base rate of the last three months, banks are required to provide mandatory information to borrowers regarding the change/non-change in the interest rate. Additionally, when variable interest rates are linked to the base rate, banks must automatically change the interest rate according to the change in the average base rate of the last three months through the core banking system of the licensed institution.
The Bank has also been directed to publish the monthly and average base rate for the last three months on bank’s website. This will provide transparency and ensure that customers are informed about the current interest rates.
In conclusion, the Central Bank’s new directive is a significant development that will benefit all customers. It will ensure that customers receive equal benefits from changes in interest rates, regardless of when they took out their loan, and provide transparency in the banking industry.