NBFIs asked to preserve loan, investment docs properly
Non-bank financial institutions (NBFIs) have been asked to preserve the documents of loan, lease or investment properly, according to a Bangladesh Bank circular, as some recent investigations about financial irregularities found the papers missing.
As some financial institutions do not preserve the documents properly, numerous issues have been emerging while initiating legal action for loan recovery, and investigation about lending and investment anomalies, stated the circular issued on Sunday.
However, a central bank source said the central bank came up with the instruction in the backdrop of not getting loan documents when investigating the Bangladesh Industrial Finance Company (BIFC).
The authorities assume some other NBFIs too could have vanished loan their documents that are evidential for their financial misdeeds, said a senior executive of the Bangladesh Bank, adding the circular aims at bringing discipline in the non-bank financial sector.
The circular said a copy of the memorandum presented before the board meeting – which contains loan, lease and investment details, loan assessment reports, approval, renewal, rescheduling or restructuring and write-off – must be preserved along with a copy with the meeting decisions. But if the loan or investment is more than Tk50 crore, the documents will have to be stored at an alternative branch office or at the headquarters.
The central bank said the documents can also be stored digitally after ensuring cyber security and regular database update. Besides, each institution will have to form a cyber security management team to regularly report to the board of directors the overall status of ICT security and system backup.
On top of this, the central bank said the ledger must be updated at the end of each working day and the backup of the database must be stored properly.
According to the central bank, a report on preserving the document has to be submitted to the chief executive officer of the institution after carrying out an internal inspection once every three months.
If any irregularity is found in the internal inspection, the chief executive shall inform the Bangladesh Bank within seven working days of the report submission.
Another senior official of the Bangladesh Bank told The Business Standard that many NBFI managing directors often claim their previous high-ups did not preserve the documents properly.
"Due to unavailability of data, we do not get any comprehensive picture about the institutions. We think their document missing claim is to conceal the lending and investment data. The new circular will deter them from making such excuses," added the official.
