Tk 166,887 cr stuck-up against 72,189 cases

Pending loan cases bring havoc in banking

Special Correspondent: On the one hand, defaulted loans are increasing, on the other hand, the court cases of financial loans are increasing. But there is no speed in the recovery of these money that are left out of the bank’s charter.
Due to legal obligations, cases for recovery of defaulted loans have increased but settlement is very low. At the end of 2022, Tk 1 lakh 66 thousand 887 crore of money is stuck in the court against 72,189 pending cases.
Over Tk 1 lakh 53 thousand 331 crore against 69,369 cases six months ago i.e. at the end of June last year. During this time, both the number of cases and the amount of money withheld increased. This information has come up in the latest report of Bangladesh Bank.
According to the report, in the last six months (July-December) the amount of money claimed by the bank in the case filed in the court has increased by Tk 19,187 crore. At the same time, cases increased by 8,344. But in a whole year (2022) cases have increased to 14,452 and the claimed amount has increased to Tk 35,449 crore. According to the report of Bangladesh Bank, at the end of 2022, the status of cases filed by various banks in the financial loan court stood at 222,348. Against this, the amount owed to the banks from various defaulters of the country is Tk 2 lakh 49 thousand 184 crore. However, against the demand of so much money, the amount collected in six months is very little. Only Tk 21,083 crore.
At present, the number of pending cases of private banks is the highest. Against 43,153 cases, Tk 88,858 crore. On the other hand, the number of pending cases of state-owned banks is 15,604. Against this, the amount owed is Tk 71,764 crore.
According to the bankers, earlier private banks gave loans after verifying the customer’s ability. As a result, their debt collection rate was also high. But in the case of state-owned banks, it was less.
Because, government banks often have political influence in giving and taking loans. Once these loans are not recovered, they become bad defaults. However, in recent times, the opposite picture is observed.
Because, now private banks have more lawsuits. Bankers also said that loans are not recovered at normal levels in most cases.
A case is filed against the customer in court. Due to reduced collection of loans, banks file lawsuits in other courts including the credit court. But due to lack of sufficient courts, the cases are settled slowly. This is how the mountain of cases related to defaulted loans continues to pile up.
As the reason for this, the managing director of a second-generation bank in the country said that since Bangladesh Bank has repeatedly given opportunities to defaulters, those who used to repay their loans regularly are now getting discouraged. As a result, defaulted loans are also increasing in private banks. And in the end, a case has to be filed in the court to recover the debt. On the one hand, the cost of handling the bank’s case is increasing, on the other hand, the money is getting stuck due to the non-dissolution of the case on time. As a result, the bank’s loan disbursement capacity is decreasing.
In this context, Association of Bankers Bangladesh (ABB) Chairman and Managing Director of BRAC Bank Salim RF Hossain said that due to the shortage of sufficient number of courts and judges, the cases are waiting for settlement for a long time.
Again, many debtors took a moratorium from the court. As a result, the bank incurs additional expenses. Valuable time is also wasted.
He said the country’s legal framework against defaulters is not as strong as other countries. He believes that powerful forces are active against the existing legal process.
Advocate Mujahidul Islam Shahin, an analyst on financial loans, said that after a certain period of time, the bank filed a case according to the law of the financial loan court to recover defaulted loans. The law provides for taking legal action against the concerned officers of the bank if the case is not filed within the specified time for recovery of defaulted loans.
He also said that there are money loan courts outside Dhaka, there are other cases besides money loan cases. Due to this, there is a long process in the settlement of financial loan cases. Besides, the lawyer advises the banks to be more careful in handling cases. He also suggested that the senior officers of the bank keep track of the cases regularly. A lawyer of the loan court, on condition of anonymity, said that some banks do not follow up after filing a case.
As the plaintiff and the accused were not present, the case continued for years. The hearing dates keep changing.
This year there was a precedent of not keeping the case report for 20 years. Several private and state-owned banks have done such work. He thinks that bank and customer may be behind this incident.