Enhancing Loan Repayment Oversight: Bangladesh Bank Calls for Dedicated Revenue Accounts for Project Financing

Under this circular, the Bangladesh Bank is directing financial institutions to establish revenue accounts in the name of funded projects to ensure effective loan repayment and proper monitoring. The impetus for this was that the Bangladesh Bank found that some borrowers were not depositing their project earnings or sales proceeds with their respective banks. This posed heightened risks for banks in terms of loan recovery, hindering proper loan monitoring.

Thus, banks are now mandated to open escrow or revenue accounts specifically designed to receive sales proceeds or project income, as outlined in the circular. In instances of syndicated financing, the lead bank will take charge of opening the account. The directive emphasizes the banks’ responsibility to ensure the timely deposit of project income or sales proceeds. Additionally, where project income or sales proceeds exceed the outstanding loan amount, banks are permitted to open a revenue account, where borrowers can retain the surplus earnings.