Dhaka, Bangladesh (BBN)– Bangladesh’s commercial banks are now allowed to receive repayment cheques against disbursed loans from their clients by maintaining three procedures.
The central bank of Bangladesh has revised its prudential guidelines for consumer financing and small-enterprise financing by adding a new regulation related to procedures of loan repayment.
Firstly, the banks will have to take authority for debiting money from their clients’ accounts as per loan agreement.
Under the second procedural condition, a memorandum of deposit of cheque (MDC) has to be taken from the clients concerned.
Lastly, fully prepared and valid signed postdated cheques have to be taken for each installment by stipulating amount and date as per repayment schedule.
The Bangladesh Bank (BB) has already issued a circular and asked the chief executive officers (CEOs) and managing directors (MDs) of all scheduled banks to incorporate the new regulation into loan agreements with the clients.
Talking to BBN, a BB senior official said the central bank has included the new regulation in our guidelines to avoid legal complexity for making repayment against disbursed loans by cheques.
“We’ve taken the latest measures to protect the interests of both banks and borrowers,” the central banker explained.
The central bank earlier had imposed a bar on the banks from receiving blank cheques as security from their clients against loan or investment to check fraud and forgery.
Besides, the CEOs and MDs of the banks had been asked not to entertain Non-Magnetic Ink Character Recognition (MICR) cheque as security.
“There is no scope to receive blank cheques as security against disbursed loans,” another BB said while replying to a query.
He also said the central bank has issued the new regulation in line with the existing negotiable instrument act.
“We’ve withdrawn our earlier regulation in this connection to avoid legal complexity,” the central banker noted.
As per earlier regulation, the banks were allowed to receive post dated cheques for each installment and one undated cheque for full loan value including full interest.