Bangladesh Bank has tightened operational requirements for banks seeking access to its Tk20,000 crore pre-finance scheme to revive closed and financially distressed industrial and service-sector enterprises, introducing stricter borrower screening, documentation and monitoring requirements.
In a circular issued on Tuesday, the central bank said scheduled banks must first sign participation agreements with its Banking Regulation and Policy Department-3 (BRPD-3) before accessing funds under the three-year revolving Closed Industry and Service Sector Facilitation Pre-finance Scheme.
The operational guidelines follow Bangladesh Bank’s 4 June circular that created the Tk20,000 crore fund to help fully or partially closed industries, particularly export-oriented enterprises facing capital shortages, resume operations.
Under the new instructions, banks must obtain board approval before sanctioning loans or investments and submit prescribed applications to Bangladesh Bank before disbursing funds to borrowers. All borrowing and repayment transactions under the scheme must be processed through banks’ head offices or principal offices.
The circular also directs banks to verify whether applicants are already receiving working capital support under any other Bangladesh Bank refinancing or pre-finance scheme before seeking funding from the new facility.
To strengthen safeguards, Bangladesh Bank has introduced additional documentation requirements. Banks must certify borrowers’ production or service capability where no certification is available from the relevant trade body and obtain declarations that applicants have not previously been involved in money laundering, forgery, fund diversion or misuse of loan funds.
Participating banks will also have to submit letters of authorisation, debit authority, continuity and a promissory note guaranteeing repayment of the pre-financing within the stipulated period.
The central bank has made post-disbursement monitoring mandatory. Banks must collect sales or revenue reports from beneficiary companies, conduct quarterly factory inspections and prepare inspection reports.
They must also certify that surplus liquidity has been channelled into productive sectors and confirm compliance with all conditions set out in the original 4 June circular.
In addition, participating banks have been instructed to submit quarterly reports on loan disbursement and recovery to BRPD-3 within 10 days after the end of each quarter.
