Restriction on Lending To Directors of Private Banks

1. Must be sanctioned by BOD. Total loan amount should not exceed 50% of the paid-up
value of the shares of that bank held in Director's own name.
2. If the total amount exceeds 50%, excess amount should be repaid and it cant be avoided.
3. Subject to compliance loan facilities in excess of Tk.10 lacs for funded loan and Tk.50
lacs can be extended subject to obtaining no-objection from Bangladesh Bank.
4. If any Director directs account, extends collateral security, he will be treated to have
interest in that organization/loan account.
5. Bank loan of any public limited company will be treated as liability of a Director of the
bank in proportion of the amount (percentage) of shares of that company held by him.
6. If any Director extends guarantee against any loan for any specific amount, his liability
will remain limited up to that specific amount.
7. In case of extending loan facilities in favor of the organization wherein the Director has
interest, all kinds of legal formalities have to be properly executed as per norms.
8. For the purpose of extending loan facilities, the explanation as given under Sub-section
27(2) of Bank Companies Act, 1991 will be applicable
9. If any loans availed in the names of the Directors or organizations wherein they have
interests, turn to defaulted ones, legal action has to be initiated instantly
10. The quarterly statement of liabilities of the Directors and Ex-Directors of the bank as
defined in the latest amendment of Bank Companies Act, 1991, will have to be submitted
to Bangladesh Bank in the format as enclosed with the BRPD Circular Letter No. 8 dated
19 June, 1997
11. Any change/cancellation/return of security, collateral security, and guarantee etc,
provided against the loan of any Director or Ex-Director of a bank will require prior
permission from Bangladesh Bank.
12. Any change of the conditions of any loans of any Director or Ex-Director of a bank will
require prior permission from Bangladesh Bank.
13. The above rule will also be applicable in case of those loans extended in favor of any
organizations wherein any Director/ex-Director of the bank has interest or he/she was
once proprietor, partner, director or guarantor thereof;
14. No remission facilities (including A/C blocking) to any loan accounts wherein bank's
Director or Ex-Director has interest can be allowed without prior permission from
Bangladesh Bank.
15. If re-scheduling is required, directors previous transaction history will be evaluated