Govt moves to expedite Tk 38,000cr bad loan cases
The interim government has moved to expedite long-pending lawsuits filed by 10 institutions, including state-owned banks and a non-bank financial institution (NBFI), against loan defaulters, in a bid to speed up the recovery of defaulted loans.
The decision came at a meeting between the Ministry of Finance and senior officials from the plaintiff firms, according to officials familiar with the matter.
For all latest news, follow The Daily Star's Google News channel. As part of the initiative, 100 lawsuits involving Tk 38,000 crore in bad loans have been identified. Many of these cases have been stuck in courts for years, preventing lenders from taking action against defaulters.
"We will write to the Ministry of Law, the Attorney General's office, and deputy commissioners to accelerate the legal process of these cases," Nazma Mubarak, secretary of the Financial Institutions Division (FID) under the Ministry of Finance, said after the meeting.
She added that deputy commissioners would be tasked with handling certificate cases.
The institutions involved include Janata Bank, Sonali Bank, Agrani Bank, Bangladesh Krishi Bank, Rupali Bank, the Investment Corporation of Bangladesh, BASIC Bank, Bangladesh Development Bank, Rajshahi Krishi Unnayan Bank, and the Bangladesh Securities and Exchange Commission.
The meeting agreed that each institution would submit a list of its ten biggest pending cases to the FID, which will coordinate efforts to fast-track their resolution.
The firms will also appoint dedicated officials to monitor the lawsuits properly, while a senior executive must hold monthly review meetings and report progress to the FID. The goal is to resolve cases quickly so that lenders can sell off defaulters' assets and recover funds.
The amounts tied up in litigation are staggering. Janata Bank alone has Tk 15,151 crore locked in its ten biggest cases, followed by Sonali Bank with Tk 5,676 crore, Agrani Bank with Tk 3,979 crore, and Rupali Bank with Tk 3,747 crore.
The backlog is part of a larger crisis. The banking sector is struggling with a huge amount of non-performing loans, with the lenders failing to take proper action against many defaulters because of the slow legal system.
Even when the banks step forward to sell assets, defaulters file fresh cases in lower or higher courts to stop the transfer, forcing banks to wait for years to recover the loans.
Distressed loans across the banking sector hit a record Tk 756,526 crore in 2024, according to Bangladesh Bank. This included Tk 345,765 crore in defaults, Tk 348,461 crore in rescheduled loans, and Tk 62,300 crore in written-off loans.
A task force on economic reforms reported earlier this year that Tk 178,277 crore was stuck in 72,543 cases as of February 2024.
It said backlogs under the Money Loan Court Act and the Bankruptcy Act remain a major obstacle to loan recovery.
The report also flagged structural flaws in the Money Loan Court Act, 2003, which allows mediation only after litigation begins, making settlements difficult once disputes escalate.
A low judge-to-population ratio and insufficient courtroom facilities have created a bottleneck in resolving NPL-related cases, the report also said.
Comments