Submission of updated audited financial report a must for taking loans

In case of lending or renewing loans to government and non-government organisations, those organisations will have to submit their updated financial reports to the bank and banks have to save these financial reports in the loan file.

The Banking Regulation and Policy Department (BRPD) of the Bangladesh Bank on Monday issued a circular to this effect.

According to the circular, public and private entities as defined under Section 2 (8) of the Financial Reporting Act 2015 are submitting financial statements in the name of management audit reports, review reports, etc without giving an updated financial report while taking out or renewing bank loans.

In the interest of maintaining debt discipline and bringing greater transparency in the financial sector, these institutions are required to submit updated statutory audit reports and audited financial reports, audited by chartered accountants and prepared for the stakeholders.

In addition, in the case of lending or renewing loans, banks have to accept the audited financial statements of all other institutions and save them in the loan file accordingly, if they need those.

Asked about this, Nurul Amin, former chairman of the Association of Bankers (ABB), said such guidelines would help to maintain credit discipline if the instructions are implemented.

Noting that many of the companies that are submitting audited financial statements have defaulted on loans, he said the central bank needs to focus on a proper implementation of its guidelines.