The Bangladesh Bank has officially issued a directive to all scheduled banks to implement a fully online-based credit facility, designated as “e-loan” or electronic lending. This initiative is designed to streamline and accelerate digital banking services within the country. Under this new regulatory framework, customers will be empowered to apply for, receive approval for, and access loan disbursements via mobile applications or web-based platforms, entirely eliminating the requirement for physical attendance at a banking branch.
On Monday, 11 May, the Banking Regulation and Policy Department (BRPD) of the central bank disseminated a circular to the chief executives of all scheduled banks operating in Bangladesh. The communiqué underscores the necessity for financial institutions to adopt technology-driven financial services that are more user-centric and accessible. The introduction of e-loans is viewed as a pivotal step in the digitisation of the domestic financial sector, aligning it with global fintech trends.
According to the specific guidelines outlined in the circular, an individual borrower is entitled to a maximum e-loan amount of 50,000 Bangladeshi Taka. The repayment period for these digital credits is restricted to a maximum duration of 12 months. This ceiling suggests that the product is primarily intended to meet short-term liquidity requirements and micro-credit needs for the general populace.
Regarding the cost of borrowing, the central bank has stipulated that interest rates for e-loans should generally be determined by the banks based on market conditions. However, a significant caveat remains for facilities that utilise refinancing schemes provided by the central bank; in such instances, the maximum interest rate applicable to the end-user must not exceed 9 per cent per annum. All processes, including the disbursement of the principal amount and the collection of subsequent instalments, must be executed through digital channels to ensure a paperless ecosystem.
To maintain the security and integrity of the lending process, the Bangladesh Bank has mandated the use of rigorous digital verification methods. Banks are required to authenticate applicants using National Identity (NID) cards, biometric data, and other established digital verification systems. Furthermore, a mandatory review of the Credit Information Bureau (CIB) report is required before any loan approval is granted. Individuals classified as loan defaulters are strictly prohibited from accessing these digital credit facilities, thereby ensuring that credit quality is maintained despite the speed of the transaction.
The directive also emphasises transparency and consumer protection. Financial institutions must explicitly inform potential borrowers of all associated costs, including interest rates, processing fees, service charges, late payment penalties, or early settlement fees, prior to the finalisation of the agreement. The circular explicitly forbids the imposition of any additional or hidden charges without the express, informed consent of the customer.
In light of the inherent risks associated with online financial transactions, the central bank has placed a high priority on cyber security. Scheduled banks are directed to implement robust security protocols, including Two-Factor Authentication (2FA), Multi-Factor Authentication (MFA), and One-Time Password (OTP) mechanisms for all e-loan activities. Additionally, banks must adhere strictly to existing laws and policies regarding the protection of customer data and privacy.
Before the formal launch of e-loan products, each banking institution is required to formulate its own internal policy, which must be formally approved by its respective Board of Directors. Furthermore, the central bank has stated that banks must demonstrate adequate information technology risk management capabilities. This ensures that the infrastructure of each lender is sufficiently resilient to handle the demands of digital lending while mitigating the potential for fraud or systemic failure. By introducing these digital loans, the Bangladesh Bank aims to foster greater financial inclusion and modernize the banking experience for the contemporary consumer.