CB limits maximum interest rates on pawning advances 

The Central Bank (CB), having observed that the current interest rates charged by licensed banks on pawning advances range from 12 - 17.5 per cent per annum, on Tuesday imposed 12 per cent as the maximum interest rate that could be levied on pawning advances.

Accordingly, an order under the Monetary Law Act was issued to the licensed banks requiring to fix the maximum rate of interest chargeable by them on the money lent on the security of personal articles made of gold accepted as a pledge for pawning to be 12 per cent per annum or 1 per cent per month if the pawning period is less than one year, with effect from April 27, the CB said in a public notice. 

This maximum interest rate will be applicable for all new pawning advances and existing pawning facilities that become due for renewal commencing from the date of the order.

“Further, it is expected that other institutions involved in pawning activities would also offer a lower interest rate to enable their customers to obtain urgent finances at affordable costs so that they could later on redeem their pawned gold jewellery,” it said.