Loan Process
[Link] Check:
Before proceeding, the bank checks whether the borrower meets basic eligibility
criteria, which typically include age between 21 and 60 years, a steady source of
income (from employment or business), minimum monthly income threshold, and
Bangladeshi nationality. Employment stability and creditworthiness are also
important factors. If the applicant does not meet the criteria, the application is
usually rejected early.
[Link] and Document Submission:
• A valid trade license is essential for businesses to prove legal operation,
while for general individuals, proof of lawful employment or occupation
may be required instead. This shows the lender that the applicant is
legitimately engaged in their profession or business.
• An up-to-date TIN (Taxpayer Identification Number) certificate is required
for businesses to confirm tax registration and compliance. For individuals,
submitting a TIN or tax return documents (if applicable) demonstrates
financial responsibility and transparency to the bank.
• KYC (Know Your Customer) documents such as National ID cards,
passports, and recent photographs are mandatory for all applicants. These
verify the identity of the borrower and help prevent fraud.
• Regulatory papers, like VAT registration or business registration certificates,
are needed for business loans to ensure that the business complies with
government regulations. For individual borrowers, documents like
employment letters, salary slips, or employer identification might be
required instead.
• Bank statements from the last 6 to 12 months are important for all
borrowers. They show the lender the financial activity, income consistency,
and cash flow, helping assess repayment capacity.
• Proof of ongoing business operations for business borrowers includes
financial statements or invoices. For individuals, this translates to proof of
steady income through salary slips, employment contracts, or pension
statements.
• When the loan is secured, collateral documents such as property deeds,
vehicle registrations, or fixed deposit certificates must be submitted by both
business and individual borrowers. This collateral protects the lender’s
interests in case of default.
3. CIB (Credit Information Bureau) Report Check:
The bank then requests a credit report from the Credit Information Bureau under
Bangladesh Bank to assess the borrower’s financial history. This report shows
existing loans, repayment patterns, any defaults or write-offs, and the total
outstanding liabilities. A clean CIB report is essential for loan approval. If negative
history is found, the loan may be rejected or delayed.
4. Loan Assessment and Risk Analysis:
Once the documents are submitted and the CIB report is clear, the bank proceeds to
assess the applicant’s financial condition and risk profile. For personal loans, this
involves analyzing the borrower’s income, expenses, existing debts, and debt-to-
income ratio. In the case of business loans, the assessment is more detailed. The
bank reviews the business experience of the borrower, including how long the
business has been operating, past performance, industry knowledge, and
management capability. The stability of the business is examined through income
statements, cash flow records, and past sales trends. Furthermore, banks assess the
future viability of the business by analyzing market conditions, competitive
environment, product demand, and business plans. A feasibility study or projected
income report may be required. For new or small businesses, banks may be more
cautious and may demand collateral or personal guarantees. In most cases, the
bank also conducts a site visit to verify the business location, operational setup,
and employee activity. This overall assessment helps the bank determine whether
the borrower is financially capable of repaying the loan and whether the business is
likely to generate consistent cash flows.
5. Loan Approval and Sanction Letter:
If the bank is satisfied with all verifications and financial evaluations, it approves
the loan and issues a sanction letter. This letter mentions the loan amount, interest
rate (flat or reducing), total repayment period (tenure), EMI schedule, fees and
charges, insurance requirements, and terms for prepayment or penalties. The
borrower must accept and sign this sanction letter to proceed further.
6. Signing of Agreement and Legal Documentation:
After accepting the loan offer, the borrower signs a formal loan agreement, which
is a legal contract binding both parties.
7. Loan payment:
Once all documentation is complete, the bank disburses the loan. This can be in a
lump sum or in installments, depending on the type of loan. Disbursement is done
through direct bank transfer to the borrower's account or to a third party (such as a
property seller or educational institution) in specific cases.
8. Repayment of Loan:
The borrower starts repaying the loan through monthly EMIs as per the repayment
schedule. Each EMI includes a portion of the principal and interest. Payment can
be made via auto-debit from a bank account, post-dated cheques, branch deposits,
or mobile banking services like bKash or Nagad. Timely repayment is critical, as
delays result in penalties and damage to the borrower's credit record.
9. Loan Closure and Certificate Issuance:
After full repayment of the loan, the bank issues a loan closure certificate or No
Objection Certificate (NOC). In the case of secured loans, any legal charge over
the collateral (like property or vehicle) is lifted and ownership is fully restored to
the borrower. It is recommended to collect all final statements and release
documents for future reference.