The backlog of default loan cases continues to grow in the Artho Rin Adalat. According to the data of the Bangladesh Bank, at the end of last March, the total number of cases in the financial loan courts of 60 banks of the country stood at 207,593. Around Tk 236,489 crore is stuck in these cases.
Three months ago in December last year, the number of cases was 206,584, against which the amount involved was Tk 226,292 crore. As a result, the number of cases increased by about 1,009 in the three months of this year. And the amount of money involved has increased to Tk 10,197 crores. This information was revealed in a report of Bangladesh Bank's (BB) legal department.
The report was presented at the bankers meeting held by the central bank on Wednesday with the chief executives of the banks. In the meeting, the BB Governor gave necessary instructions to the banks to speed up the debt recovery process by quickly settling the cases of defaulted loans.
Mainly due to slow down in disposal of previous cases and increasing filing of new cases, the pile of cases is not decreasing. Those concerned said that the banks are not able to recover the loans taken out through various financial irregularities and frauds. The defaulters are not returning these loans despite repeated benefits and concessions. Due to legal complications, the settlement of these debts cases are very low even though there are a huge number of debts cases in the Artho Rin Adalat.
Bankers say that the number of loan courts is less than required and the less number of judges and insufficient time for legal opinion and insufficient documents of supporting collateral to the bank's lawyers lead to long delays in settling cases in the loan courts.
In this regard, a former chairman of Association of Bankers Bangladesh (ABB) said that due to various reasons, including the legal process, there is snail's pace in the settlement of cases in the financial loan court. Sometimes judges are on leave or transferred suddenly. In addition, there is a shortage of experienced lawyers. Another problem is that when the case is filed, the debtors take a writ against it and take a moratorium.
It is known that the action plan-G part of the legal department of the Bangladesh Bank's strategic plan 2020-2024 related to objective 9.4 (b) includes the issue of monitoring default loans under litigation of banks and financial institutions. As part of the implementation of that goal of the strategic plan of the central bank, it was decided to carry out regular supervision by the legal department in December 2021 with the aim of reducing the default loans of banks and financial institutions, with the aim of quickly settling the loans under litigation.
Accordingly, with the aim of speedy settlement of the related cases, the legal department is providing regular instructions, advice and various assistance to the banks. The legal department of the central bank has been preparing the monitoring report on the cases of default loans every quarter and presenting them in the regular bankers meeting.
According to the report presented in this regard, in the first three months of this year, 7,703 cases have been settled in the financial debt court. Against this, the banks have recovered Tk 1,168 crore. Some 8,369 cases were settled in the last three months of 2023. Against this, Tk 1,954 crore was collected. That is, compared to the previous three months, the number of case settlements and recovery has decreased in the three months of this year.
The report also shows that the number of cases has increased in the first three months of this year but has decreased over the year. In March last year, the number of cases in the financial loan court was 214,821. Against this, Tk 207,361 crore was blocked. According to this, the number of cases has decreased by about 7,228 in the last one year. However, despite the decrease in the number of cases, the amount of money involved has increased by about Tk 29,128 crore over the year.
Recently, Bangladesh Bank has ordered to strengthen the legal team of banks to recover default loans. The new guidelines also deal with the appointment of officers and panel lawyers in the legal team and how to conduct their annual evaluation. In this regard, the central bank's circular issued last month said that the role of the bank's legal department or legal team is very important in coordinating collection activities in the overall debt management. A significant portion of defaulted loans existing in the banking sector are under litigation in the money-loan courts.
Many loan borrowers have filed writ petitions in the High Court Division or Appellate Division of the Supreme Court seeking remedy. If legal team of the bank is strengthened to take appropriate legal action, the pending cases can be disposed off quickly. As a result, the default loans of the bank will be recovered, and the financial capacity of the bank will increase.
Apart from this, the central bank has been emphasizing on recovery of defaulted loans under alternative dispute resolution (ADR) system outside the court. As part of this, several instructions have been given to banks to increase the use of ADR system, including inclusion of mediation offer in the debt collection notice itself before suing the customer, giving some concessions on a case-to-case basis if there is a possibility of quick debt collection.
