Banks asked to open revenue account against projects

The central bank yesterday instructed banks to ensure the opening of revenue accounts under the name of the projects they fund in order to ensure smooth repayment of loans and their proper monitoring.

An escrow account or revenue account needs to be open to repay loans or make instalments from the incomes or sales proceeds of projects financed by banks.

But it is being noticed that some borrowers are not depositing incomes or sales proceeds with their respective banks, the central bank said in a notice yesterday.

On the one hand, this is increasing risks for banks in realising loans. On the other hand, banks are not being able to monitor loans properly, it said.

Now, banks will have to open an escrow account or revenue account to collect sales proceeds or incomes from projects, the Bangladesh Bank said.

In the case of syndicated financing, the lead bank will open the account.

The notice said banks will have to ensure the deposits of income from projects or sales proceeds.

If the income from projects or sales proceeds are higher than the loan or the outstanding loan amount, banks can open the revenue account where borrowers will keep the additional earnings.