Bangladesh Bank approves 131 firms to value bank loan collateral
Bangladesh Bank Finalizes Roster of 131 Approved Valuation Firms for Bank Collateral Assessment
Bdbusinessdaily.com – The country's central bank has moved to formalize a standardized pipeline of independent appraisers tasked with pricing the assets that back corporate and retail lending across Bangladesh's scheduled banking system. On 7 September, Bangladesh Bank circulated a directive to the managing directors and chief executive officers of every scheduled bank, announcing that 131 valuation firms and companies have been cleared to conduct collateral and mortgaged-asset appraisals tied to existing or prospective loan facilities.
The move closes a regulatory loop that had been building since the central bank first published its Enlistment Policy for Collateral Valuation Firms or Companies on 28 November 2023. That policy laid out eligibility criteria, reporting obligations, and supervisory expectations for firms wishing to participate in the formal collateral-valuation ecosystem. The September circular translates the policy into operational reality by naming the specific entities now authorized to perform appraisals on behalf of banks.
Two-Tier Classification of Approved Firms
The 131 approved entities are not treated as a single undifferentiated pool. Bangladesh Bank has stratified them into two categories: 98 firms fall under Group A, while the remaining 33 are assigned to Group B. The bifurcation reflects differences in scope, geographic coverage, asset-class expertise, or institutional capacity that the central bank deemed material when calibrating which firms may appraise which categories of collateral. Banks are expected to match the tier of the valuation firm to the nature and scale of the asset being pledged, ensuring that a small-town agricultural mortgage is not appraised by a firm whose mandate is limited to large industrial real estate, for example.
Operational Mandate for Scheduled Banks
The circular instructs all scheduled banks to channel their collateral-valuation requirements exclusively through the enlisted firms. In practice, this means that when a borrower approaches a bank seeking a term loan, working-capital facility, or project finance package secured by real property, machinery, inventory, or other tangible assets, the bank must commission an appraisal from a firm on the approved list rather than relying on in-house estimates or unvetted third-party valuations.
Banks have additionally been reminded that they remain bound by any valuation-related guidelines Bangladesh Bank issues from time to time. The central bank retains the authority to amend appraisal standards, update acceptable methodologies, or tighten documentation requirements without needing to re-issue the entire enlistment framework. This preserves regulatory flexibility while keeping the approved-firm roster stable.
Three-Year Validity, Renewal, and Revocation
Each firm's enlistment carries a fixed shelf life of three years from the date of approval. To continue operating within the framework, a firm must lodge a renewal application with Bangladesh Bank no later than six months before its current enlistment lapses. The central bank will review the application against updated compliance criteria before granting or denying continuation.
The approval is not unconditional. Bangladesh Bank reserves the right to cancel any firm's enlistment before the three-year window closes if the firm fails to meet the conditions embedded in the policy. Grounds for early revocation could include methodological lapses, conflicts of interest, failure to maintain required professional indemnity coverage, or non-submission of mandated reporting. A revoked firm loses its standing immediately and cannot resume appraisal work for scheduled banks until it re-applies and clears a fresh eligibility review.
Annual Reporting Obligation
Every enlisted firm must file an annual report with Bangladesh Bank by 15 January of each year. The report is expected to detail the volume and nature of appraisals performed during the preceding calendar year, any material changes in ownership or management, and compliance with ongoing policy conditions. Timely submission is itself a condition of continued enlistment; repeated defaults would trigger supervisory scrutiny and potential revocation.
Why Standardized Collateral Valuation Matters
Collateral valuation sits at the intersection of credit risk management and borrower protection. An inflated appraisal can leave a bank exposed when the asset is eventually liquidated, while an undervalued appraisal can deny a legitimate borrower access to financing on reasonable terms. By concentrating appraisal authority in a vetted, centrally monitored cohort of firms, Bangladesh Bank aims to reduce valuation arbitrage, curb disputes between lenders and borrowers over asset worth, and create a transparent audit trail that supports both prudential supervision and dispute resolution.
For borrowers—particularly small and medium enterprises that rely on asset-backed credit to fund inventory, equipment, or expansion—the approved-firm framework introduces a predictable, rule-based process. Knowing in advance which firms are cleared, what tier applies, and what documentation the central bank expects reduces transaction friction and shortens the time between loan application and disbursement.
The broader implication is one of financial-system resilience. Bangladesh's banking sector has faced periodic pressure from non-performing loans, and a disciplined, externally verified collateral-valuation regime strengthens the loss-given-default assumptions that underpin provisioning and capital adequacy. By anchoring appraisal to a regulated cohort rather than ad hoc arrangements, the central bank tightens the evidentiary base for every secured loan on the books of the scheduled-banking system.
The three-year enlistment cycle, coupled with mid-cycle revocation authority and annual reporting, gives Bangladesh Bank a continuous supervisory hook into the valuation ecosystem without micromanaging individual transactions. Firms that wish to remain in good standing must treat compliance not as a one-time certification exercise but as an ongoing operational discipline, with the January reporting deadline serving as the annual checkpoint.
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