Get Up to 50,000 Taka "E-Loans" from Home
As a new initiative to expand digital financial services in the country, Bangladesh Bank has approved the commercial launch of "E-Loans" or "E-Rin" services. This will allow customers to borrow up to 50,000 Taka from home through internet banking, mobile apps, mobile financial services (MFS), and e-wallets.
In a circular issued on Monday, May 11, the central bank stated that this initiative aims to increase financial inclusion, expand digital transactions, and build a cashless society.
According to the circular, banks must include the word "E-Loan" in the name of this new service. A customer can borrow a maximum of 50,000 Taka at a time, and the loan term will be a maximum of 12 months. Banks will determine market-based interest rates. However, in the case of refinancing facilities, the maximum interest rate at the customer level will be 9 percent.
Bangladesh Bank has stated that the entire e-loan process must be conducted digitally. Customer selection, loan approval, disbursement, and collection will all be done online. Instead of traditional signatures, biometric information must be used to obtain customer consent for applications and approvals. However, this biometric information cannot be stored by any third party.
Verification of the customer's Credit Information Bureau (CIB) report is mandatory before loan approval. Defaulters will not be eligible for this facility.
Furthermore, customers must be clearly informed in advance of all information, including interest, fees, charges, late fees, or early loan repayment fees. The directive also states that no additional charges can be imposed without the customer's consent.
The circular further states that banks must conduct a pilot project for at least six months before commercially launching e-loans. Full service can be launched after evaluating the pilot program and obtaining approval from the Board of Directors.
Additionally, each bank has been instructed to formulate its own policies, ensure two-factor or multi-factor authentication, and store customer and loan-related information in a data warehouse located within the country.
DBTech/SI/EK
