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The banking sector is facing difficulties in recovering a huge amount of default loans as the debtors resort to legal shelter to shield them against delinquency status.
Sources said a total of Tk 1,35,851 crore is stuck in money loan courts (Artha Rin Adalat) against 65,437 pending cases.
According to bankers, a large number of cases stay unsettled for years due to some loopholes in the existing laws, lack of required number of judges, courtrooms and various other intricacies relating to cases.
Founded in 2003 the money loan courts aimed for dispute resolution readily concerning loan repayment by the clients to their respective banks, but the tribunal is overwhelmed with financial litigations.
As of June this year, a total of 65,437 cases involving Tk 135851.48-crore loan were awaiting disposal in the money loan courts across the country, as per the latest data from the Bangladesh Bank.
A frequent writ by defaulters slows down the loan recovery process and a huge backlog of cases remains unresolved for years due to such petitions, said Jamuna Bank Managing Director and CEO Mirza Elias Uddin Ahmed.
“We usually file lawsuit with the lower court to recover defaulted loans but the borrowers file writs with the High Court against the trial court verdicts,” added the seasoned banker.
The writ takes time to be settled, and the financial litigation continues to linger. In addition, the writ petitioners obtain stay order in their favour – a tactic they use to shy away from making immediate payment to the lenders.
“If the High Court hands down its verdict soon considering the merits of the writs, the pending cases will be disposed of quickly,” opined Elias.
As of June 30 this year, the state-owned six commercial banks had 17,013 pending cases with the money loan courts involving a Tk 60,969.78 crore.
Similarly, the state-run specialised banks had 5,913 cases with a fund of Tk 1975.67 crore, according to the BB data.
The private commercial banks filed 34,715 cases against Tk 69956.56 crore default loans while the foreign banks 7,796 cases against Tk 2949.47 crore till June this year.
The central bank data shows the banks, however, could manage to recover Tk 4,156.10 crore from the default loans stuck in the cases.
A total of 2,43,515 cases are awaiting trial in all the courts including the money loan courts, bankruptcy courts, certificate courts while the amount involved in these cases amount to Tk 2,00232.24 crore till June.
Contacted, Mohammed Nurul Amin, former president of the Association of Bankers, Bangladesh (ABB), told The Business Post that this is an age-old issue that the financial cases are not disposed of expeditiously.
Echoing Mirza Elias, Nurul Amin asserted that the money loan court act, 2003 is a good law, but the number of the courts is relatively few and so is the number of judges which are the reasons behind the delay in case settlements.
In addition, writs by defaulters against the lower court verdicts are another reason for it, he pointed out, suggesting that the financial institutions have also to be proactive to file cases with the designated courts and arrange proper documents to support their litigations.
The former managing director and CEO of Meghna Bank called for steps to ostracize the habitual defaulters politically and socially while their civil amenities must also be revoked, if need be.
However, advocate Monjil Morshed ran counter to the statements made by the bankers.
He said the courts are not responsible for the procrastination; rather banks should be blamed for the pending cases.
“The cases in such court of law are on the rise owing to the increasing trend of irregularities and scams in the country’s banking sector,” he held out the reason.
“Banks are not able to realise loans from borrowers because they provide credit to bad creditors.”
The legal expert observed that there is no quick solution to the pending cases, thereby advocating for loan disposal after verifying the details of the loan applicants.
“If it is done, the cases with the money loan courts will come down, and if the banks disburse loan under political pressure, the cases will rise,” added the lawyer straightaway.
