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Thanks to the BB directive, banks can now start verifying the financial statements of loan-seeking companies by using the DVS.

“As banks are required to assess the financial strength of an applicant, the DVS will be instrumental in finding out whether the statements are truly audited, and the information provided is correct,” said a senior official of the central bank.

“We have asked banks to improve credit discipline and reduce default loans.”

Banks will have to sign an understanding agreement with the ICAB to use the DVS and examine fabricated financial statements where profits and assets are shown inflated to avail loans by unruly firms, said bankers and chartered accountants.

The DVS was rolled out after the NBR found that the number of financial statements filed at the tax offices was outnumbered by the number of companies incorporated with the Registrar of Joint Stock Companies and Firms.

Last year, about 35,000 statements were submitted to the NBR, whereas the number of registered firms was 180,000.

Abul Kashem Md Shirin, managing director and CEO of Dutch-Bangla Bank Ltd, called the central bank move a milestone.

“This will allow us to verify financial statements that we have not been able to examine so far. Now, we will be able to assess the actual financial health of clients and provide the required amount of loans.”

“This will give a boost to good governance and bring significant improvement to the financial eco-structure of the country,” said ICAB President Mahmudul Hasan Khusru.

ICAB Council Member Muhammed Forkan Uddin, who was involved in developing the DVS, said the institute had been waiting for the BB to join it to eradicate the use of fake audited financial statements.

“ICAB members sign a large number of financial statements that are submitted along with the loan applications. Thanks to the DVS, the creation of several sets of financial statements will be eliminated, and the image of the auditors will brighten.”