Bangladesh Bank launches two new reference rates for interest calculation

The central bank has taken an initiative to introduce two new reference rates for determining interest rates to ensure transparency and international standards in the country's financial sector.

In a circular issued on Monday, April 13, the central bank said the two rates would be determined and published daily for the money market.

The new rates are the Bangladesh Overnight Financing Rate and the Dhaka Overnight Money Market Rate.

The Bangladesh Bank said there has long been a need for an acceptable, market-based benchmark for determining interest rates in various areas including loan agreements, bonds and floating rate-based financial products. This initiative will help fill that gap.

These two rates will be determined based on actual interbank transaction data, taking into account both risk-free and unsecured transactions.

The central bank has announced that these rates will be published on its website every working day from April 15.

Experts believe that the introduction of new reference rates will make the country's interest rate determination process more transparent, reliable and aligned with international standards.