BRAC Bank Offers Loan Transfers at 9 Percent Interest With No Extra Cost

BRAC Bank has announced it will take over personal loans and home loans held at other banks or financial institutions at a lower interest rate. Under the special offer, customers will pay 9 percent interest in the first year, and there will be no cost to transfer the loan.

BRAC Bank has taken the initiative mainly to increase its retail loan portfolio. The opportunity will remain available until December. Applications can be made at any branch or through the website by providing name and identity details, the bank said.

Banking sector sources said customers who have personal and home loans at high interest rates at other banks will be able to transfer them to BRAC Bank at 9 percent with no cost. As a result, their monthly instalment costs will fall considerably.

BRAC Bank's retail deposits stand at Tk 53,000 crore, although its total deposits have exceeded Tk 100,000 crore. Consumer loans, on the other hand, amount to about Tk 14,000 crore.

The bank said that through the takeover process, customers will be able to transfer an amount equal to their existing loan and, if needed, also apply for additional or top-up loans.

Earlier, Bank Asia also announced it would buy car and home loans at 9 percent interest in a similar way. Prime Bank, IFIC Bank and Dutch-Bangla Bank are also buying loans from other banks, increasing competition in this segment.

Currently, interest rates on personal and home loans range from 9 to 12 percent depending on the bank. Under BRAC Bank's special facility, loans will be available at a fixed 9 percent in the first year.

From the second year, however, the interest rate will be variable depending on the type of loan. In that case, the new rate will be determined by adding a 1 percent margin to the bank's base rate.

For personal loans, the rate will change every one year after the first year, and for home loans, every six months after the first year, it was also stated.

As an example, if a customer transfers a loan to BRAC Bank in November this year, the interest rate will remain fixed at 9 percent for the first year, that is until October 2027.

If BRAC Bank's base rate stands at 8.80 percent in October 2027, the customer's loan rate for the next period will be 9.80 percent, that is the 8.80 percent base rate plus a 1 percent margin.

According to those concerned, this opportunity to transfer high-interest loans to a lower rate could reduce the burden of monthly instalments and bring relief to many families, but it is important for customers to understand how the variable rate will apply from the second year before deciding.