BB asks NBFIs to maintain loan, lease docs

Bangladesh Bank (BB) has asked the non-bank financial institutions (NBFIs) to maintain loan and lease investment documents to prevent debt irregularities from the sector.

The directives came at a time when some NBFIs were creating various problems due to improper maintenance of loan documents.

Besides, the central bank temporarily suspended foreign trips of the NBFIs officials to attend training, study tour, meeting or seminar on the government instruction to save foreign exchange reserve.

However, the officials can get permission for personal foreign trips with his/her own fund, Hajj, emergency treatment, foreigner who works in NBFIs of Bangladesh and the meeting or seminar funded by the foreign organisers.

The Department of Financial Institutes and Markets (DFIM) of the central bank issued the two different circulars in this regard on Sunday.

The central bank’s circular stated that loan applications, evaluation of loan proposal, renewal, rescheduling, restructuring, writing-off and interest waiver of a loan etc and accounts of loan presented at the board meeting should be preserved till the loan is recovered.

In case of Tk50 lakh or above, the loan documents should be kept in an alternative branch or main branch along with the disbursement branch.

To maintain loan documents NBFIs can use the digital medium. However in this case, non-bank financial companies should maintain a proper backup mentioned in a guideline and circular issued by the DFIM.

Documents of disbursed loan should be audited every three months to ensure that it is properly maintained in accordance with the following policy. The audit report must be submitted to the CEO of the organization.

If any irregularity is found in the audit report, the CEO will inform Bangladesh Bank within seven working days of the submission of the report.

The circular also directed the financial institutions to convene a special meeting of the board of directors to implement the policy. The meeting has to determine the process of implementing the policy. At the same time, the progress of the implementation should be informed to DFIM within three months.

There are 32 NBFIs in Bangladesh. Among them, at least four companies are in the worst situation because of PK Halder loan scam. Apart from them, another dozen companies are also not in better position.

The amount of loan default of the NBFIs reached Tk 1,3016 crore at the end of December last year, accounting for 19.33 per cent of the sector’s total outstanding loans of Tk 6,7354 crore.