Circular No. 03 dated 07 August 2023 issued by the Department of Financial Institutions and Markets of the Bangladesh Bank on “Taking Thumbprints on Loan-Related Charge Documents”

Aiming to address emerging legal complexities in loan recovery procedures, the Bangladesh Bank has published a new circular that makes it compulsory for banks to take thumbprints to ensure the proper recovery of depositors’ money.

Individuals seeking loans from banks will now be obligated to furnish specific charge documents, contingent upon their borrower status, loan category, and collateral provided. These essential charge documents are  in the Guidelines on Credit Risk Management” provided by the Bangladesh Bank and must be submitted in the prescribed format.

The necessity for this directive arose following an observation by the High Court, which revealed that many recipients of loans and their guarantors were failing to affix their signatures on the pertinent charge documents linked to loan disbursement and guarantee issuance. The absence of these signatures posed significant legal hurdles in the loan recovery process.

To resolve this issue, the Bangladesh Bank has directed banks to ensure that these charge documents are read aloud to borrowers, guarantors, and other relevant parties. Concurrently, banks are required to obtain signatures on them, accompanied by the thumbprints of both the borrower and guarantor. Banks are also mandated to validate these thumbprints by cross-referencing them with the national identification number database.