Borrowers can now lien treasury bond investment to take loans
The new instruction came as many banks are interested in taking treasury bonds as a lien for providing overdraft or term loans to their customers.
Commercial banks are now allowed to lend to their customers, taking treasury bonds as collateral.
Bangladesh Bank issued a circular today (11 March) instructing banks to lend up to 75% of the face value of treasury bonds held by customers.
However, the loan outstanding, including interest, cannot exceed the face value of treasury bonds, said the circular with immediate effect.
Keep updated, follow The Business Standard's Google news channel
The new instruction came as many banks are interested in taking treasury bonds as a lien for providing overdraft or term loans to their customers, according to the circular.
The tenure of loans will not exceed the tenure of the investment in the bond. Banks cannot provide loans with the objective of buying bonds from their customers, added the circular.
Banks were instructed to mark treasury bond investments as a lien in the Financial Market Infrastructure (FMI) system before lending.
