Bangladesh Bank Headquarters

Dhaka, Bangladesh (BBN)– The central bank of Bangladesh has reminded the commercial banks to ensure proper utilisation of their disbursed loans through regular monitoring, officials said.

The banks have also been directed to ensure that their disbursed loans are not diverted to other sectors than the proposed ones, they added.

“If such kind of anomaly is detected by the banks concerned, they (the banks) have to take remedial action immediately,” a senior official of the Bangladesh Bank (BB) told the BBN in Dhaka.

The BB has advised the banks to release next instalment of the loans, particularly in case of the term loans, after ensuring proper use of the previous instalments.

The banks have been advised to follow the amended credit risk management guidelines in this regard.

The central bank issued a directive in this connection on Tuesday and asked the chief executives and managing directors of all the scheduled banks to comply with the instructions properly.

If any type of anomaly in loan disbursement process or collaboration is detected during the BB supervisions, strict actions will be taken against the involved person(s) in line with the Banking Companies Act, 1991, it added.

The central banker also said all types of loans will be scrutinised by the banks concerned in line with the latest instructions.

Trade financing, particularly the import-related ones, will also come under such monitoring, he hinted.
On March 13, 2017, the central bank of Bangladesh issued a similar circular, and asked the banks to comply with the instructions as mentioned in the BB guidelines, issued earlier.

“In disbursing a loan, it is imperative that the borrower understands and acknowledges the purpose of the loan,” the guideline said.

“It is also imperative for the bank to design and implement checks, such as the submission of invoices, to ensure that the proceeds are spent on the designated purpose and for no other purposes,” it added.