Banks can't impose any fine on supervision charges: BB

Bangladesh Bank (BB) today directed banks to refrain from imposing any fine or interest on the supervision charge collected by them to bear their administrative costs of loans.

The central bank issued a guideline so that all banks follow the same method in collecting supervision charges on consumer loans and loans for cottage, micro and small and medium enterprises (CMSMEs).

The BB, in June 2023, allowed lenders to collect 1 percent supervision charge on personal and auto loans, and the funds given to the CMSMEs as administrative cost to monitor the loans is relatively higher.

At that time, it said the charge can be collected on yearly basis and no compound interest rate can be slapped.

The BB said recently it has been observed that in some cases higher amount of supervision charges are collected from clients as banks are following different methods to calculate the fee.

As such, the supervision charge on loans should be calculated based on its guideline, said central bank, adding that no supervision charge could be imposed on clients before June 2023.

In case of excess collection, the amount should be returned or adjusted, said the BB.