IT IS a little surprising that the financial loans court is just sitting on the bank of Tk 55,000 crore in defaulted loan in public banks only and two lakh similar cases of different other banks and financial institutions. This makes a case for demands of the banks to set up a separate bench in the High Court for speedy trial.
Pertinently, a posting on the social media has drawn attention of many — on January 13, Barrister Chowdhury Tanzim Karim, chairman of a financial institution, personally appealed to the Bangladesh Bank with some specific proposals such as increasing the number of financial loans courts, the formation of a bench in the High Court Division for a quick disposal of disputed writs, considering the misrepresenting of information in court as a crime and forming a special monitoring cell for the execution of warrants for arrest. He expects the Bangladesh Bank to hold discussions with the relevant ministries on loan recovery so that financial institutions get a better result.
Coincidentally, on January 30, many national daily newspapers outlined that the banking regulation and policy department of the central bank had a consultation meeting on February 6 to amend the Bank Company Act to maintain a control on the circumstances arising out of loan default. To this end, the meeting took place among high officials of the central bank, CEOs of all scheduled banks, the Law Commission and the Bangladesh International Arbitration Centre; and detailed discussions were made from different angles.
All agreed on putting social pressure on defaulters such as restrictions on the admission of defaulters’ child to reputed public and private educational institutions, buying cars and getting them registered in the name of defaulters, restrictions on enjoying luxury amenities, ie, boycotting defaulters socially as it is done in Malaysia, China and Nepal. Amendments to the laws and regulations were also discussed. China has blacklisted defaulter’s passports and identity. Sri Lanka has expedited the legal process. Nepal and Bhutan empowered regulators. India has enacted a law called the Fugitive Economic Offenders Act, under which, assets of any debtors having left the country would be seized.
As per the central bank statistics, the volume of non-performing loans soared by about 34 per cent, or Tk 250.67 billion, to Tk 993.70 billion as of September 30, 2018 from Tk 743.03 billion as of December 31, 2017. Concurrently, loans worth more than Tk 380 billion has been written off during this time. If this is taken into account, the amount of defaulted loans in the banking system will be Tk 1.38 lakh crore, which is a fourth of the national budget outlay.
The prime minister at her first meeting after assuming office expressed her strong view against corruption. And the finance minister also talked about his tough position on loan default after taking oath on the first day. So the message is very clear.
On February 6, the finance minister at a meeting with Rupali Bank urged bankers to be alert to loan default crime. He also advised bailout programmes for unintentional loan defaulters, who are victims of the situation. The finance minister also warned that the action would be taken against the bankers who have assisted the defaulters and every bank would be audited. ’This audit will not be aimed to put you (bankers) in danger but to ease your pressure’, the minister said. This is a fact that many middle- and lower-ranking bankers are in danger without fault. They are unable to allow a big amount at their discretion.
Some of the owners and some high-ups are doing bad things and they remain out of touch with the money earned through dishonesty. An in-depth understanding of the issue is required to maintain a healthy trend in society. The protection must be ensured for loan officials who are getting involved in loan processes against their will. Because, one may not be able to leave job right now under pressure. The faces of children, family and parents come to mind when one thinks of quitting job under pressure. The issues should be considered by regulators and all involved in the process of investigation. Effective tools should be undertaken to protect innocent people, instead of putting emphasis on only one signature given under pressure.
Considering this grave situation, the High Court on February 13 ordered the authorities concerned to prepare a list of loan defaulters and money launderers of the past to decades with detailed reasoning and possible ways out and submit the list to the court.
In consideration of all the facts, the Bangladesh Bank in consultation with all relevant stakeholders may soon send recommendations to the finance ministry to end the culture of loan default. The central bank has already started ground work to amend the Bankruptcy Act 1997, the Money Laundering Court Act 2013 and the Negotiated Instrument Act 1881.
In fact, loan default culture is more of a socio-cultural problem than a legal issue or legal governance problem. Keeping this in mind, action needs to be taken. A social movement could do a lot in this regard. The bank’s loan, which is public money, should be repaid in due course. If not, the borrower should at least leave the instruction for their family so that the family should not hesitate a bit to repay the bank loan.