Defaulters cannot get any fresh loan from banks: HC

The High Court today extended its earlier order which ruled that the defaulters, who have taken the opportunity for rescheduling their bank loans by two per cent down payment, cannot get any fresh loan facilities from the banks.

The extension order will remain in force for a month or till disposal of the rule issued by the HC on this issue, the court said.

The HC bench of Justice JBM Hassan and Justice Md Khairul Alam passed the order during hearing the rule over the issue as its earlier order expired today.

The bench fixed today for resuming the hearing on the rule.

Bangladesh Bank on May 16 this year issued a circular that allows defaulters to reschedule their defaulted loans for a period of 10 years upon a down payment of just two per cent of the total loan amount, and to get further loans.

Following a writ petition filed by Human Rights and Peace for Bangladesh (HRPB), the HC on May 21 issued a status quo till June 24 on the central bank’s circular. The same court on June 24 extended the order for the next two months. 

During the hearing on the writ petition, the HC on May 21 had observed that the country’s banking sector was no longer business-friendly, rather banks have become organisations of usurers.

“Another Tk 100,000 crore may be laundered from the country if the big loan defaulters are given further opportunity to get bank loans in line with Bangladesh Bank’s May 16 circular,” the HC said.

The HC also said, “The central bank, on the one hand, is patronising the big loan defaulters by giving them various facilities. And on the other hand, it is harassing small loan defaulters by filing cases related to loans and bank cheques. It is like punishing the good and favouring the bad.”

On July 8, the Appellate Division of the SC also expressed dissatisfaction at Bangladesh Bank for issuing the same circular.

If the circular remains in effect, loan defaulters will get a chance to borrow more from different banks and this will benefit the influential people, the apex court said.

After holding a hearing on a petition filed by the finance ministry on July 8, the SC stayed for two months the HC’s order of status quo with a condition that the banks can allow defaulters to reschedule loans on depositing two per cent down payment, but cannot give them any fresh loan.

The SC also asked the HC bench led by Justice JBM Hassan to hear and dispose of the writ petition filed in this regard in the next two months.

During hearing the rule, the HC bench of Justice JBM Hassan and Justice Md Khairul Alam on August 29 passed an order saying that the loan defaulters who have taken the opportunity of two percent down payment for rescheduling their bank loans cannot get any fresh loan facilities from any bank. The August 29 order expired today.

Advocate Manzill Murshid appeared for the writ petitioner, while Barrister Shamim Khaled and Barrister Muniruzzaman argued for Bangladesh Bank.

After the HRPB filed the petition, the HC in February this year issued a rule asking the authorities to explain why their failure or inaction to stop various irregularities and corruption in sanctioning loans and offering waiver of interest payments against bank loans in the last 20 years should not be declared illegal.

Those made respondents to the rule were secretaries to the Cabinet Division, the Prime Minister’s Office, the finance ministry, the financial institution's division and the law ministry, the BB governor, and the chairmen of the National Board of Revenue and the Anti-Corruption Commission.