Regulatory Alerts2017-02-12
Added · Updated
FICSD Circular Letter No. 01: Amendment to Guidelines for Customer Services and Complaint Management
The document amends the 'Guidelines for Customer Services and Complaint Management' by requiring banks to provide one month's notice with a new repayment schedule when increasing interest or profit rates on variable-term loans, while prohibiting any early settlement fees for demand loans. It caps late fees, penalties, or compensation for genuinely distressed borrowers on term loans at the applicable interest or profit rate plus 2%, and advises against accepting empty cheques as security for loans or investments due to rising fraud in the MICR cheque system.
Finance and Integrity and Customer Services Department Bangladesh Bank Head Office Dhaka.
FICSD Circular Letter No. 01 February 12, 2017 Date: -------------- Magh 30, 1423
Managing Director / Chief Executive All Scheduled Banks operating in Bangladesh.
Subject: Regarding the policy guideline titled 'Guidelines for Customer Services and Complaint Management'.
Dear Sir,
Reference is made to the 'Guidelines for Customer Services and Complaint Management' 2014, issued vide Circular Letter No. 01/2014 dated July 13, 2014, under Section 45(1) of the Bank Company Act, 1991 (amended up to 2013). In order to protect customer rights and enhance bank accountability, it is advised to add the following instructions to Section 2.09.01 of the aforementioned guidelines and to ensure their proper compliance:
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In the case of term loans where the interest rate (in the terminology of Islamic banks, the profit rate on investment) is variable, if the interest or profit rate is to be increased, a notice must be provided to the customer for one month, highlighting the justification for the increase. Along with the notice, the customer must be provided with the updated liability and the new repayment schedule (Amortization Schedule), and the notice must be provided to the customer via e-mail or letter. This matter must also be included in the terms and conditions of the sanction letter. If the customer wishes to terminate the contract by repaying the loan or investment amount within one month due to the increase in interest or profit rate, they shall be given the opportunity to repay without any 'Early Settlement Fee' or any additional charges.
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In the case of running loans or demand loans (such investments in the terminology of Islamic banks), no 'Early Settlement Fee' shall be charged.
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In the case of collecting late fees/penalty interest/compensation for delay in installment payment of term loans (similar investments for Islamic banks), the matter of those customers who are genuinely facing difficulties should be considered and decided in light of their own guidelines, and in no case shall such late fees/penalty interest/compensation exceed the applicable interest/profit rate for that loan or investment + 2%.
Furthermore, it is also advised not to accept empty cheques as security against loans or investments, given the recent increase in fraud and forgery in the case of MICR cheques.
Yours faithfully,
(Md. Zulkar Nayan) Deputy General Manager Phone: 9530137