Bangladesh Bank has issued a new circular allowing commercial banks to provide loans to customers using treasury bonds as collateral. Under the directive, banks can lend up to 75 percent of the face value of a customer's treasury bonds. However, the total outstanding loan amount, including interest, cannot exceed the bond’s nominal value. The circular was released on Wednesday from the central bank.

According to the circular, the decision was made as many banks expressed interest in accepting treasury bonds as lien for overdraft or term loans. Before granting such loans, banks must mark the bonds as lien in the Financial Market Infrastructure (FMI) system. The loan tenure must not exceed the maturity period of the treasury bond, and banks are prohibited from providing loans to customers for the purpose of purchasing bonds.

The directive aims to facilitate secured lending while maintaining risk control through strict compliance with bond valuation and tenure limits.