Bangladesh Bank Approves 131 Firms to Value Bank Loan Collateral

🏦 Dhaka, Bangladesh — Bangladesh Bank has approved 131 firms to value bank loan collateral, issuing a circular on 7 September 2026 informing the managing directors and chief executives of all scheduled banks about the enlistment.

📊 The enlisted firms will assess mortgaged assets against loans, with 98 placed in Group A and 33 in Group B. According to the circular, the firms were enlisted as eligible under the Enlistment Policy for Collateral Valuation Firms or Companies, issued by Bangladesh Bank on 28 November 2023.

📋 How the Enlistment Works

📊 Key details of the enlistment:

• 👥 131 firms total — 98 in Group A, 33 in Group B
• 🏛 Scheduled banks advised to use enlisted firms for collateral assessment
• 📜 Banks instructed to follow valuation-related guidelines issued by Bangladesh Bank
• 📅 Enlistment valid for 3 years
• 📅 Renewal application at least 6 months before expiry
• 🚫 BB may cancel enlistment before 3 years if firm fails to comply with policy conditions
• 📅 Annual reports due to BB by 15 January every year

📊 Group A vs Group B Classification

📊 The classification of firms into two groups likely reflects differences in:

• 💰 Financial capacity — Group A firms may have higher capital/asset requirements
• 👥 Professional qualifications — Group A may require more certified valuers
• 🏭 Operational scope — Group A may handle larger/more complex valuations
• 📊 Experience track record — Group A may need more years of operation
• 📋 Geographic coverage — Group A may operate nationwide vs Group B regional

🌏 Strategic Context: Bangladesh Banking Sector NPL Crisis

📊 For Bangladesh’s banking sector, the collateral valuation enlistment comes at a critical moment:

• 💰 Tk 6.07 lakh crore in NPLs — 32.78% of total disbursed loans (June 2026)
• 💰 Tk 2.06 trillion stuck in 138,686 cases at 20 state-run banks and FIs
• 💰 Janata Bank alone has Tk 75,397 crore in NPLs
• 📊 80% of Janata Bank NPLs concentrated in top 20 defaulters
• 📊 Collateral recovery is critical for reducing NPL impact

💰 Why Proper Collateral Valuation Matters

📊 Proper collateral valuation is essential for several reasons:

• 💰 Accurate loan-to-value ratios — ensures banks don’t over-lend against inflated collateral
• 📊 NPL recovery — when borrowers default, collateral must be accurately valued for recovery
• 💰 Provisioning accuracy — banks need accurate collateral values for provisioning calculations
• 🏛 Regulatory compliance — BB requires banks to maintain proper collateral documentation
• 💰 Investor confidence — accurate valuation supports investor confidence in bank balance sheets
• 🚫 Fraud prevention — prevents inflated valuations that enable loan fraud

📊 Historical Context: Collateral Valuation Challenges

📊 Bangladesh’s banking sector has historically faced challenges with collateral valuation:

• ⚠ Inflated valuations — some valuers provided inflated property values to enable larger loans
• ⚠ Conflict of interest — valuers hired by borrowers had incentive to inflate values
• ⚠ Lack of standardisation — no consistent methodology across valuation firms
• ⚠ Property market opacity — limited transaction data makes valuation difficult
• ⚠ Political influence — some large loans approved despite inadequate collateral

🏛 BB's Banking Sector Reform Agenda

📊 The collateral valuation enlistment is part of BB’s broader banking sector reform agenda:

• 📊 NPL resolution — FID pushing for faster case settlement
• 📊 Capital adequacy — banks need accurate provisioning
• 📊 Governance reform — improving bank boards and management
• 📊 Sammilito Islami Bank — merger of 5 troubled Shariah banks
• 📊 State bank restructuring — addressing Tk 1.47T NPLs at 6 state banks
• 📊 Debt restructuring — BB extends policy support for large defaulters
• 📊 Collateral valuation — 131 firms enlisted for standardised assessment

💰 Implications for Banks and Borrowers

📊 For banks, the enlisted valuation firms offer several benefits:

• ✅ Standardised valuation — consistent methodology across enlisted firms
• ✅ Regulatory compliance — using BB-approved firms satisfies regulatory requirements
• ✅ Reduced fraud risk — BB oversight reduces inflated valuation risk
• ✅ Better NPL recovery — accurate valuations support collateral monetisation
• ✅ Improved provisioning — accurate collateral values enable better provisioning

📊 For borrowers, the implications are mixed:

• ✅ Transparency — standardised valuation reduces arbitrary assessment
• ⚠ Potentially lower valuations — stricter standards may result in lower collateral values
• ⚠ Additional cost — valuation fees add to borrowing costs
• ✅ Faster processing — enlisted firms may streamline valuation process

✅ For Bangladesh’s broader banking sector reform agenda, the collateral valuation enlistment represents a meaningful institutional improvement — creating a standardised, regulated framework for property valuation that should reduce the inflated collateral valuations that have contributed to the NPL crisis. With Tk 6.07 lakh crore in NPLs and Tk 2.06 trillion stuck in litigation, every improvement in collateral management and recovery processes contributes to the broader effort to stabilise Bangladesh’s banking sector.

🌏 For the real estate and property market, the standardised valuation framework could also contribute to greater price transparency — as enlisted firms apply consistent methodologies rather than the ad hoc approaches that have sometimes characterised the sector. Over time, this could support healthier property market development and reduce the speculative bubbles that have periodically affected Bangladesh’s urban real estate markets.