BB plans to form 'mortgage property depository' system: Governor
When banks disburse loans of more than Tk50 crore, the central bank will be able to verify whether the mortgages are registered and whether loans have been taken from other banks using these mortgages
The Bangladesh Bank has plans to form a "mortgage property depository" system to prevent irregularities in the use of mortgaged assets, Governor Ahsan H Mansur said today (29 January).
"A mortgage cannot be shown to five banks. If it is used elsewhere, the bank must be informed that it has been shown to another. Accurate information about mortgages must be provided to bank, and every mortgage must be recorded in a register," he said while speaking at a press conference.
When banks disburse loans of more than Tk50 crore, the central bank will be able to verify whether the mortgages are registered and whether loans have been taken from other banks using these mortgages, Mansur said, stressing this would help stop the practice of securing multiple loans against a single mortgaged property.
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He added that banks will be required to check whether a property has already been mortgaged before accepting it. After a mortgage is created, Bangladesh Bank will independently verify whether the assessed value of the mortgaged asset declared by the borrower is accurate.
"This initiative will initially apply to large loans. It will take time to implement, but if we can do this, many of the weaknesses in the lending system can be addressed," Mansur said.
The governor also said the central bank's activities should not remain stagnant due to the upcoming national election.
He stressed that there is no government interference in Bangladesh Bank's operations, noting that the central bank is a public institution meant to serve citizens.
The governor noted that through various circulars, reforms and streamlined procedures, Bangladesh Bank has carried out more work over the past year than it may have done in the previous 24 years.
Mansur further emphasised the need to improve the foreign exchange market and the forward market, adding, "Moreover, we need to work with the capital account. We need to understand where the priorities are and work."
Regarding the appointment of a managing director at Sammilito Ismali Bank, the governor said the matter rests with the Ministry of Finance. "We have conducted interviews and sent the candidates to the Ministry of Finance. Bangladesh Bank will clear all policy support files," he said.
He added that the bank is currently under Bangladesh Bank's control, as during the resolution process, there is no owner or board in place.
"In such situations, the regulator takes control. However, we believe a managing director should be appointed as soon as possible," the governor said.
