The Bangladesh Bank on Sunday asked non-bank financial institutions to send compliance reports on the NBFIs’ financing in the housing and real estate sector within
June 30 to its Department of Financial Institutions and Markets.
To this end, the BB issued a circular to managing directors and chief executive officers of all the NBFIs saying that they would have to submit the compliance reports that will say whether their clients had followed the regulations set by the government and the central bank.
The circular said before financing the clients the NBFIs would have to ensure that they followed the laws and regulations while developing the land, setting up residential or commercial buildings or purchasing building, floor and apartments.
The BB in a separate circular on April 28 had asked the scheduled banks to take necessary measures to this end and send compliance reports by June 30.
A BB official told New Age on Sunday that the central bank had observed some banks and NBFIs had been disbursing loans to private ventures for developing lands or constructing buildings that do not have the approval of the authorities concerned.
Under the circumstances, the country experienced tragedies like the collapse of Rana Plaza in Savar on April 24, which killed more than 1000 garment workers and injured hundreds of others, he said.
The BB issued the circular in a bid to ensure that the NBFIs’ clients take prior approval from the authorities concerned while setting up their establishments.
He said the BB would take action against the NBFIs should they fail to follow the compliance rules.
The central bank circular said that the NBFIs will only disburse loans if the clients follow the laws and regulations, including Building Construction Act-1952, Bangladesh National Building Code-2006, Bangladesh Environment Conservation Act-1995, Environment Conservation Rules-1997, Fire Protection and Prevention Act-2003 and Private Housing Project Land Development Rules-2004.
The BB asked the NBFIs to ensure that their clients take prior approval from the National Housing Authority, Rajdhani Unnayan Kartripakkha and development authorities of the city corporation concerned.
Apart from the city corporation, the clients will have to take prior approval from the respective municipalities, it said.
After financing the projects, the NBFIs will also have to ensure that their clients are following the laws and regulations, the circular said.
The BB said that the NBFIs may not release a mortgaged asset before realising the full amount of loan if the loan was disbursed against an unauthorised residential project.
The NBFIs will have to check whether the land developer had used the loan in the mortgaged land by visiting the spot.
-With New Age input
