Bangladesh Bank (BB) in a circular yesterday permitted the commercial banks to introduce the system under which the banks can charge interest rate 1.5 percentage point higher or lower than the declared mid rate.

The bankers said this will help them offer lower rate for good clients and higher rate for bad ones considering the comparative risk factors in various cases.

The existing provision does not permit banks to have a mid rate and the banks can fix rates for various clients with a difference of three percentage points.

The central bank took the decision on the basis of recommendation of the Association of Bankers Bangladesh (ABB), a forum of chief executives of commercial banks.

ABB Chairman M Aminu-zzaman, also managing director of National Credit and Commerce Bank Ltd, said the majority of borrowers would benefit from the new lending rate fixation system.

"At present a few clients especially the multinational companies benefit from the existing system. Now all good clients can get the opportunity," he told The Daily Star.

The central bank earlier sought ABB's opinion on the introduction of mid rate in banks' lending process and the ABB responded positively.

Banking sources said the new system would reduce the lending rates by at least 1.5 percentage point in certain cases. Chances are there that some good clients would bargain for even a lower than announced rate, they said.

The banks in many developed and developing countries around the world calculate their rates based on a mid-rate considering the risk factor. The system is also considered as a tool to stop unhealthy competition among banks.