Bangladesh’s central bank has lifted the ceiling on housing loans to Tk 4 crore, tying how much banks can lend to the quality of their existing mortgage portfolios as it seeks to balance support for the property market with financial discipline.

Bangladesh Bank said in a circular issued on Wednesday that it has amended Rule 23 of the Prudential Regulations for Consumer Financing with immediate effect, citing higher construction costs and changing market conditions.

Under the revised framework, banks with non-performing loans (NPLs) of 5% or less in their housing loan portfolios will be allowed to extend home loans of up to Tk 4 crore to individual borrowers.

Lenders with NPLs between 5% and 10% can offer a maximum of Tk 3 crore, while those with NPLs above 10% will be capped at Tk 2 crore per borrower.

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Despite the higher loan limits, the central bank left the debt-equity ratio unchanged at 70:30, meaning borrowers must still fund at least 30% of a property’s value from their own resources, with banks financing the remainder.

The regulator also instructed commercial banks to strictly verify that borrowers have sufficient net cash income to service monthly instalments before approving loans, reinforcing its focus on repayment capacity amid elevated credit risks.

Issued under Section 45 of the Bank Company Act, 1991, the new policy replaces earlier directives from 2004 and 2019. Bangladesh Bank said all other existing rules on consumer financing will continue to apply.

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Industry observers say the move could provide a timely boost to the real estate sector, which has been under pressure from rising material prices, while offering some relief to middle-income households grappling with the increasing cost of homeownership.