Bangladesh Securities and Exchange Commission (BSEC) has set 12% as the maximum interest rate on margin loans.
The decision was made at the BSEC meeting on Wednesday.
In a press release, BSEC Executive Director (current charge) and Spokesperson Mohammad Rezaul Karim said stockbrokers and merchant banks that work as portfolio managers would be able to charge customers a maximum of an additional 3% spread along with the cost of funds against the loan.
But the margin loan interest rate, he said, would not be more than 12%.
Previously, there was no fixed interest rate on margin loans. Stockbrokers and merchant banks used to charge interest as they wished, causing it to rise to 14-18%.
As a result, investors were dissatisfied. Recently, a group of investors demanded that the interest rate be reduced.
The loans that investors take out from brokerage houses and merchant banks to invest in the stock market is known as a margin loan.
Besides their own funds, brokerage houses and merchant banks provide margin loans to stock market investors by taking out loans from various banks or financial institutions.
As per the provision of margin loans, at present, an investor will qualify for a margin loan amounting to a maximum of 50% (1:0.5) of his or her own investment.