B Mirror Report: Bangladesh Bank has issued a new guideline allowing commercial banks to provide digital or “e-loans” on a commercial basis, enabling all banks in the country to offer small-ticket loans through fully digital platforms.

The central bank said the initiative aims to bring marginalised people under formal banking services and promote a cashless society by reducing cash-based transactions.

Under the guideline issued on Monday afternoon, a customer will be able to take a maximum digital loan of Tk50,000 from a bank within a specified period. The loan tenure has been capped at 12 months.

Currently, customers of mobile financial service provider bKash can access similar digital loans, while Brac Bank, Prime Bank, Dhaka Bank and Bank Asia have been running pilot programmes. Following successful trial operations, Bangladesh Bank decided to formally introduce the service commercially.

According to the policy, any regular customer will be able to apply for e-loans through digital platforms. However, defaulters classified under the Bank Company Act will not be eligible.

Banks will be required to verify customers’ borrowing records from other banks and financial institutions before approving loans, though no fee can be charged to customers for such verification.

The entire process from application and approval to disbursement and recovery must be conducted through an end-to-end digital system, eliminating the need for customers to visit bank branches physically.

Customers will be able to access the loans through internet banking, mobile apps, e-wallets and mobile financial services. Instead of traditional signatures, banks will verify customer identity and obtain consent using digitally collected biometric information.

To strengthen security, banks must implement OTP-based and two-factor or multi-factor authentication systems. All customer data must also be stored in data warehouses located within Bangladesh.

Banks will be allowed to set market-based interest rates for digital loans under normal circumstances. However, if a bank receives Bangladesh Bank’s refinancing support, the maximum lending rate for customers will be capped at 9 percent.

Before launching the service commercially, banks must conduct at least six months of pilot operations. Commercial rollout will require approval from the respective boards based on the pilot results.

Bangladesh Bank also instructed banks to take necessary measures to improve financial literacy among customers.