Dhaka, Bangladesh (BBN)– Bangladesh’s commercial banks are barred from receiving blank cheques as collateral from their clients against loan or investment to check fraud and forgery.
The Bangladesh Bank (BB), the country’s central bank, issued a directive in this connection on Sunday and asked the managing directors and chief executive officers of all of the scheduled banks not to entertain Non-Magnetic Ink Character Recognition (MICR) cheque as security.
The central bank of Bangladesh has taken the latest measure in the wake of a rising trend in fraud and forgery through use of the MICR cheque, according to the instruction.
Talking to BBN, a BB senior official said cheque never be used as security against loan. “It’s is a negotiable instrument as per law.”
The central bank also asked the banks not to impose any ‘early settlement fee’ for adjustment of current loan or demanded one.
“The banks will have to issue a one-month notice to their clients if they (banks) want to increase interest rates on term loans,” it noted.
However, the banks are allowed to impose maximum 2.0 per cent extra fee along with other charges for settlement of late installment payment against term loans.
The central bank has included the instructions in the Amendment to Guidelines for Customer Services and Complaint Management considering customers’ complaints against the commercial banks, according to BB officials.