Dhaka, Oct. 21 -- Banks are now required to maintain 2 percent general provision against unclassified loans under consumer financing other than house financing and loan to professionals, according to a circular issued on Tuesday.

The rate had been previously fixed at 5 percent.

The latest central bank circular also cited emergent demand for consumer loan as a reason behind its decision to lower the general provision against consumer loans.

When the central bank capped the interest rate at 9 percent for all loans other than credit card on Apr 1, the banks faced trouble in consumer financing, which ultimately affected consumption and thus many businesses.

Mashrur Arefin, CEO and managing director of City Bank, told bdnews24.com that the...