BB acting against lending on forged docs

Dhaka,  Tue,  26 September 2017
Published : 16 Aug 2017, 00:31:20 | Updated : 16 Aug 2017, 11:31:16
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Bangladesh Bank developing collateral database to stop lending on forged documents

Syful Islam
The central bank is developing a collateral information system incorporating data on immovable properties which are used for getting loans aiming to prevent document forgery, officials said.

The Bangladesh Bank has taken the initiative as dishonest people nowadays increasingly use forged documents and re-use collateral to get loans.

In many cases, the banks later could not recover the loan amount when the borrower defaults loans or flees, they added.

The information on moveable properties will also be included in the database, when such properties like goods, documents of title, security, instrument, money or any other intangible assets including goodwill will be recognised as collateral of loans.

The government recently drafted a law in this regard.

Presently, only immovable properties like houses or flats and land property are accepted by banks and financial institutions as collateral against loans.

Neighbouring India launched such a database namely 'Mortgage Check' back in 2010 to make available required information about borrowers and their security documents.    

The credit information bureau (CIB) of the Bangladesh Bank, at present, is working out 'business requirement' of the information to be needed for inclusion in the database.

Sources said already input structure of collateral database, output structure of collateral report, template for online searching, and fixation of matching rule have been completed.

The CIB also has collated sample data from different banks and reviewed those. After developing the required software, all the banks will be asked to provide inputs for completing the database.

Contacted over telephone Monday, former governor of the Bangladesh Bank Dr Salehuddin Ahmed welcomed the initiative for developing the collateral database.

"It's a good start. But we need modernisation of documentation process," he told the FE.

He said as the land record system is not digitised until now, checking documents online is difficult.

"The officials also have to be careful in scrutinising collaterals," Mr Ahmed noted.

Officials said in the recent years, it was found that one security document was used against taking several loans.

Even in some cases, forged documents were provided for getting loans which were not scrutinised properly.

A banker said such forgery and re-use of collateral are happening very often. These need to be prevented to ensure recovery of loan amount through sale of those properties once the borrower becomes a defaulter.

In this case, he referred to massive document forgery in Hallmark-Sonali Bank loan scam and granting of a number of loans in Basic Bank without having necessary collaterals and their re-use against several loans.  

General manager of Bangladesh Bank Abu Farah Md Nasser told the FE earlier that currently there is no option for preservation of 'dag', 'khatian' numbers, and quantity of properties/lands used as mortgage against loans in the CIB.

As a result, he said, borrowers again can show the same mortgaged properties while taking new loans from other banks.

     syful-islam@outlook.com 
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