Bangladesh Bank has allowed banks to commercially launch ‘e-loan’ services of up to Tk 50,000 through a fully digital process, marking the country’s first comprehensive regulatory framework for small online lending.
Under a circular issued on Monday, borrowers will be able to take short-term loans digitally without visiting bank branches or signing physical documents.
The maximum loan amount has been fixed at Tk 50,000 with a repayment tenure of up to 12 months.
The central bank said that all activities related to e-loans, from customer onboarding and identity verification to disbursement, repayment and recovery, must be completed through an end-to-end digital process.
Banks have been instructed to verify customers using biometric data, one-time passwords and multi-factor authentication instead of physical signatures.
The move comes as Bangladesh’s banking sector is rapidly expanding digital financial services amid wider internet and smartphone use.
Banks will be allowed to set market-based interest rates for e-loans.
However, if refinancing facilities under an earlier Bangladesh Bank scheme are used, the interest rate cannot exceed 9 per cent.
Existing rules on loan classification, provisioning, penal interest and disclosure requirements will also apply.
To reduce risks, the central bank instructed banks not to lend to defaulted borrowers and to collect information on customers’ liabilities from other banks, financial institutions and mobile financial services providers before disbursing loans.
Although real-time Credit Information Bureau inquiries have been temporarily relaxed until a fully automated 24/7 system becomes operational, banks must collect and preserve CIB reports immediately after disbursement.
Banks have also been directed to store customer and loan-related data within Bangladesh and comply with cybersecurity, data protection and anti-money laundering laws.
Before launching the products commercially, banks must conduct pilot operations for at least six months and obtain approval from their boards based on the pilot results.
However, bankers warned that weak borrower assessment and aggressive digital lending practices could increase default risks if monitoring remains inadequate.
