During an event, experts discussed the implications of Bangladesh Bank's BRPD Circular no 11, which advises all banks to utilize alternative dispute resolution (ADR) methods, specifically with the assistance of BIAC, to recover bad debts.
They said these things during a roundtable discussion at the Bangladesh International Arbitration Centre (BIAC), bringing together key stakeholders, including senior officials from various banks, legal experts, and financial analysts.
Muhammad A Ali, vice chairman of BIAC, delivered the opening remarks, highlighting the importance of the BRPD Circular no 11, issued on May 12, 2024.
The circular encourages banks to seek BIAC's assistance in recovering non-performing loans (NPLs).
He explained that BIAC has its own Mediation Rules 2019 and Arbitration Rules 2019, which establish a time frame of three months to 388 days for case resolution.
He further emphasized that BIAC has a distinguished panel of arbitrators, including eminent former chief justices, renowned advocates, and jurists from both local and international backgrounds.
Additionally, he introduced BIAC's pilot initiative, in which BIAC has invited banks to submit an initial 10 cases for resolution through mediation, aiming to demonstrate the effectiveness of ADR in handling bad debts.
Mohammed Forrukh Rahman, barrister-at-law and advocate at the Supreme Court of Bangladesh, shared his experiences of resolving cases using ADR within just six months, with many already in the execution stage.
He pointed out that under the Arbitration Act 2001, it typically takes six months to one year to appoint an arbitrator, while BIAC can select an arbitrator within approximately three days due to its established panel.
Additionally, he noted that mediators appointed by the Money Loan Court in Bangladesh are not certified, whereas BIAC offers a panel of certified mediators. As a result, Forrukh stressed that for efficient and expedited case resolution, BIAC offers unparalleled advantages.
Bank representatives raised concerns about the backlog of cases in the Artha Rin Courts, with some cases pending for over 10 years. They also mentioned that the time frame under Section 22 of the Money Loan Court Act 2003 is often exploited by defaulters to delay proceedings, preventing banks from seeing timely resolution.
They noted that, to date, no bank has been able to fully benefit from Section 22's provisions.
The event concluded with a commitment from the banks to adopt BIAC's pilot program. They agreed to submit 10 cases involving non-willful defaulters for resolution under BIAC's mediation process.
Additionally, participants recommended making mediation mandatory for both banks and customers before proceeding to court, and they emphasized the importance of ensuring that mediation awards are enforceable, to guarantee faster case resolution.
Shafayat Ullah, barrister-at-law and unit head of MTB Group Legal Affairs Division, Mutual Trust Bank PLC, moderated the event, while Ummay Habiba Sharmin, head of Legal at City Bank PLC, and Rafat Ahmed Pavel, head of Legal Operations at IFIC Bank PLC, shared their insights as speakers.