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Bank & Finance - Corporate - October 23, 2022

Bad loan stuck up

Industry Desk: Bad loans stuck in legalities kept piling up as over Tk153,000 crore were reportedly in limbo with the Artha Rin Adalat (money loan court) as of June this year.
Bad governance, poor capacity, insufficient money loan courts, protracted case proceedings and stay orders were on a long list of drawbacks are the reason for all these unsettled cases.
Bangladesh Bank data obtained until June 2022 show the number of cases pending with Artha Rin Adalats (money loan courts) as 69,369 against huge dues, as claimed by banks, amounting to Tk153,000 crore.
Earlier, until December 31, 2021, the central bank data had shown the number of cases pending with the money loan courts at 68,271 against the dues claimed by banks at Tk143,000 crore.
According to the BB statistics, the number of cases pending with such courts was 36,772 until December 2009, while the amount claimed by different banks stood at Tk22,024 crore.
The country’s banking system is suffering from a grave setback with the outrageous rise in defaulted loans as it fails to recover such bad debts in time through prolonged legal battles, economists and analysts said.
They suggested that the government take prompt policy actions, fix legal loopholes and do required judicial reforms to accelerate loan recovery and ensure exemplary punishment for bad debtors.
All parties concerned should work in unison to popularize arbitration or alternative dispute resolution to smoothly settle the disputes, they also suggested.
The loan courts, which were set up in 2003 to help expedite resolution of disputes between banks and their clients over loan repayment, are overburdened and seem to be losing gear.
Among the pending cases, a total of Tk4,610 crore had been realized by different courts across the country until December 2021.
As of December 2021, after the formation of the money loan court, a total of 207,896 cases were filed with the court against the amount claimed being over Tk213,000 crore.
Of the total cases, 139,625 were settled and Tk19,703 crore was recovered by different courts across the country as of December 2021, while the amount claimed by the banks was Tk70,041 crore back then.
After the establishment of the money loan court, the six state-owned commercial banks lodged 82,030 cases with the money loan courts and had funds worth over Tk105,000 crore stuck up in toils of the law.
The specialized banks had filed 36,558 lawsuits involving funds estimated to be more than Tk5,172 crore as of December 2021.
The private banks filed 79,418 cases with the courts, involving an amount of over Tk100,000 crore as of December 2021.

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