DHAKA, Aug 19 (Reuters) - To stop bank executives from splashing out on luxury cars in one of the world's poorest countries, Bangladesh has placed curbs on the amount banks can spend on automobiles.
Bangladesh Bank, the country's central bank, has set a limit of 2.5 million taka ($42,800) for a motor car and 3.5 million taka ($59,921) for a jeep with immediate effect, a senior bank official said on Tuesday.
"It has been a matter of concern that scheduled bank executives are not maintaining rationality in spending on procuring vehicles despite Bangladesh being one of the world's poorest countries," said the official, who declined to be identified.
The bank has also ordered that cars should only be replaced every five years in a country where annual per capita income is just $368 and aid is three percent of GDP of $47.3 billion.
Executives of the banks covered by the order -- 36 private, four state-run and two specialised commercial banks -- were not immediately available for comment.
A leading economist hailed the move as pragmatic and timely.
"Cutting spending (on vehicles) will increase incomes and profits of the banks and help them reduce interest rates on lending as well as various charges and fees to be competitive," Debapriya Bhattacharya told Reuters.
($1=58.41 taka)