Partner with insurers having sound credit ratings

The central bank yesterday asked banks to consider insurance papers of the insurers, who have sound credit ratings, while giving loans.

Allegations have recently surfaced that some banks have imposed several conditions stipulating that businesses have to avail insurance coverage from select companies the lenders have listed, according to a circular issued by Bangladesh Bank.

Businesses face difficulties in availing loans from the banks if they do not settle on insurance from those select companies as per the instructions of the lenders, said an official of a commercial bank.

The insurance companies are usually forced to keep their deposits with the corresponding banks in exchange of the facility given by the lenders.

In some cases, directors of different banks have close business links with insurance companies. This also helps insurance companies widen their business unethically, said the official.

Against this backdrop, the central bank asked banks to consider partnering with insurance companies whose credit ratings are satisfactory.