DFIM Circular No. 09: Taking thumb impression on loan related charge documents

Department of Financial Institutions and Markets Bangladesh Bank Head Office Dhaka. Ref No.: DFIM-Circular-09

To All Chief Executive/Managing Directors All Financial Institutions operating in Bangladesh.

Dear Sir,

Subject: Regarding taking thumb impression on loan related charge documents.

2. Reference is invited to the "Guidelines for Recovery of Non-Performing Loans" issued vide AFID Circular No. 10, dated: 18 September 2005, on the subject matter mentioned above. Paragraphs 3.2.1 and 3.2.2 of the aforementioned guidelines contain instructions regarding the execution of loan contracts prior to loan disbursement, execution of charge documentation related to guarantees, execution of the process of creation of charge/creation of secondary security on collateral, and execution of all documentation processes. Furthermore, Annex 3.2.1 of the aforementioned guidelines provides the "Format for Acknowledgement of Receipt", which mentions the taking and verification of signatures of the borrower and guarantor(s).

3. In accordance with the observations of the Honorable High Court, several writ petitions have recently been filed in the court where borrowers and guarantors of loans have alleged that they did not sign the documents related to loan taking and guarantee provision, respectively. Consequently, the legal process of loan recovery is being hindered as it becomes necessary to rely on the signatures of the borrower and guarantor to verify the authenticity of the relevant charge documents.

4. In this context, to resolve the legal complexities arising in the field of loan recovery, it is hereby directed that the contents of the charge documents taken/being taken for the purpose of loan disbursement must be read out and explained to the borrower, guarantor, and relevant third parties/parts involved, and in addition to the signature on the said documents (where applicable), the thumb impression of both hands of the borrower and guarantor must be taken after verifying their authenticity from the reserved database of the National ID (NID).

5. This directive is issued under the powers conferred by Section 18(c) of the Financial Institutions Act, 1993, and shall come into force immediately.

Yours faithfully,

23 Srabon 1430 Date: 07 August 2023

Draft Circular Letter

(Md. Amir Uddin) Director (DFIM) Phone: 9530178