Private sector foreign loans will now come under central monitoring as Bangladesh Bank has instructed banks to report all such borrowings to its Credit Information Bureau (CIB) database.
In a circular issued on Monday, the central bank said that private entrepreneurs must provide information on any loans they have taken from overseas lenders, including suppliers鈥� credit.
The details must cover the quality of the loans, the country and currency in which they were taken, and the approving authority.
Starting from November 1, banks will have to submit data every month based on the previous month鈥檚 transactions.
The directive explained that the step was taken to address risks linked to foreign borrowings, increase accountability, and safeguard the stability of the financial sector.
Officials said that currently these loans are not reflected in the CIB database, which means a borrower鈥檚 full liabilities are not visible.
As a result, even if a borrower defaults on repayments abroad, they may still obtain fresh loans from local banks.
The central bank believes that by including foreign loans in the CIB system, banks will have a clearer picture of their clients鈥� overall financial obligations, enabling them to make more prudent lending decisions.
Banks have been instructed to report not only the borrower鈥檚 details but also related parties, such as directors, guarantors, and major shareholders, as well as the name, address, and country of the foreign lender.
Any new loans, settlements, or changes in loan classification must be updated immediately in the CIB database.
Any submission of false or incomplete information will lead to penalties for the reporting banks under existing CIB rules.
The initiative would also enhance the country鈥檚 credibility to foreign investors and could improve Bangladesh鈥檚 international credit rating, BB officials said.
Private sector external debt surged to $19.78 billion at the end of June this year.
