Bangladesh Bank is set to impose stricter inspection of large loans as part of its push to rein in irregularities linked to collateral valuation and mortgage documentation.
The move targets loans exceeding Tk 500 million, which have often been associated with inflated asset values and forged documents.
Governor Dr Ahsan H Mansur announced the measure on Monday, while unveiling the Monetary Policy Statement (MPS) for January-June period, underscoring the growing focus on loan quality and financial sector governance rather than rapid credit expansion.
"The collateral will be inspected by central bank teams, who will thoroughly scrutinise the assets pledged against loans," he said. The central bank is expected to issue a circular mandating such on-site checks for loans.
The inspections will focus on verifying the true value and authenticity of collateral to prevent the use of fake or overstated documentation.
He said the central bank is strengthening its institutional capacity to detect forged deeds and improve its understanding of land records and related documentation.
Dr Mansur noted that banks have already become more cautious in approving large loans, such as those of Tk 1.0 billion or Tk 2.0 billion, with greater emphasis now placed on improving loan quality instead of pursuing aggressive credit growth.
On broader legal reforms, the governor expressed disappointment that the interim government did not approve the proposed Bangladesh Bank Order, describing it as critical for strengthening governance and discipline in the financial sector.
He said the draft Bangladesh Bank Order 1972 would be resubmitted to the next elected government soon after it takes office.
"This is necessary to ensure good governance in the financial sector," he said, adding that amendments to the Bank Company Act also remain pending.
However, Dr Mansur said two key laws, including the bank resolution framework, have already been approved and are being implemented to support stability in the banking system.
"Implementing the Bangladesh Bank Order as a permanent safeguard is essential, as central banks around the world operate under such protection," he said.
Drawing a distinction between political and central banking priorities, Dr Mansur said policymakers often focus on short-term economic gains, while central banks are tasked with ensuring long-term stability and sustainable development.
"Politicians tend to prioritise short-term growth, whereas a central bank must safeguard sustainable economic discipline," he said.
The governor added that he had faced no pressure from the government or any other quarters while performing his duties during the tenure of the interim administration.
"During my time as governor under the interim government, there was full operational freedom and no interference whatsoever," he added.
jasimharoon@yahoo.com
