Bangladesh Bank plans collateral audits in fraud crackdown

Bangladesh Bank plans to take the unprecedented step of directly inspecting properties offered as collateral for loans exceeding Tk 50 crore as Governor Ahsan H Mansur intensifies efforts to root out fraud and restore discipline to the crisis-hit banking sector.

In a move that signals a significant tightening of oversight for high-value exposures, the Bangladesh Bank will no longer rely solely on commercial banks' internal valuations.

Instead, central bank teams will verify the existence and value of lands or properties pledged as security.

The initiative aims to dismantle governance failures in the financial system, where politically connected borrowers have historically secured inflated loans against non-existent or grossly overvalued assets.

“Properties or lands used as collateral will be inspected by a central bank team, so that lending can be disciplined,” Ahsan H. Mansur, governor of the Bangladesh Bank, said at a press conference on monetary policy in Dhaka today. "Those properties must be registered with Bangladesh Bank for scrutiny."

The directive targets the upper tier of corporate borrowing, a segment rife with non-performing loans.