Bangladesh Bank Headquarters

Dhaka, Bangladesh (BBN)– The central bank of Bangladesh has started the process of developing a collateral database to prevent document forgery and corruption during sanctioning loans, officials said.

“Development of collateral database will prevent fraud, forgery and corruption arising from mortgaging unlawfully the same property against more than one loans sanctioned by banks and non-banking financial institutions (NBFIs),” the central bank said in a notification, issued on Thursday.

During sanctioning a loan, from collateral information system, it is mandatory for all banks and NBFIs to collect collateral report of the security which is supposed to be mortgaged, it added.

Initially, only information on immovable collaterals such as land, flat, building and capital machineries will be included in collateral database.

Talking to the BBN, a senior official of the Bangladesh Bank (BB) said the central bank has taken the moves to check corruption in the country’s banking system. “We’re now working to “go-live” the database by the end of this calendar year.”

Senior bankers, however, said dishonest people are using forged document and reusing collateral to get loans.
The banks could not recover the loan amount in many cases when the borrower defaults on loans or flees, they explained.

Meanwhile, the managing directors (MDs) and chief executive officers (CEO) of all scheduled banks and NBFIs to collect collateral report of the security which is supposed to be mortgaged during sanctioning a loan.

Without incorporating in the existing Credit Information Bureau (CIB) Online System, this database will be managed with a new system named as Collateral Information System.

The banks and NBFIs have been instructed to upload information on collaterals onto the system on quarterly basis.
However, March, 2018 ‘Collateral Batch Contribution’ has to be uploaded to the system on or before May 31 of this calendar year.

“From June, 2018 Collateral Batch Contribution and onwards, every Quarterly Collateral Batch Contribution has to be uploaded to the system on or before 20th of the quarter ending following month,” the BB added.

BBN/SSR/AD