Debt money must invest at mentioned sector
Published: 09:26 PM, 2 September 2020 Updated: 10:14 PM, 2 September 2020
Bangladesh Bank has given strict instructions to ensure proper use of bank loans. It has been said that it is must to invest in the exact sector under which the loan has been taken or will be taken from the bank.
A notification in this regard has been issued by the Banking Regulation and Policy Department of Bangladesh Bank on Wednesday.
The notification said all commercial banks were advised to conduct regular monitoring to ensure proper use of the loan for the purpose for which the loan was or will be given to the customer.
In case of installment based project loan, the next installment has to be released after ensuring proper use of the previous installment. If the loan money is invested in a sector other than the one mentioned in the grant letter, the disbursing bank will have to disclose the reasons. At the same time, immediate action must be taken to prevent it.
The notification said that it has been noticed recently that the customer is repaying or adjusting the liability of his existing other loan or investment with the loan money which has been given to the customer, which is contrary to the loan discipline.
The circular, instructing proper observance of the Debt Risk Management Policy, states that no debt or investment liability can be repaid or adjusted in any way with a loan or investment money. The matter needs to be closely monitored in the internal audit of the bank.
The directive was issued under the powers conferred by Section 45 of the Banking Companies Act, 1991. This instruction will be effective immediately.