The Association of Bankers, Bangladesh (ABB) has proposed stricter measures against defaulters to control the increasing defaulted loans in the country's banking sector.
The organization has proposed a set of reforms, including imposing a ban on foreign travel for willful defaulters, revealing their identities and declaring them ineligible for elections to business organizations.
ABB recently outlined these proposals in a letter sent to the Governor of Bangladesh Bank. Earlier, on November 12, the organization discussed the defaulted loan situation and ways to overcome it in a meeting with the central bank.
The proposal says that it is necessary to take exemplary action against willful defaulters. For this, it has been recommended to publish their names and identities, impose a ban on foreign travel and declare them ineligible for participating in elections to various business organizations.
However, at the same time, ABB has also said that limited and time-bound assistance is needed for borrowers who are in real crisis. For those who are temporarily unable to repay their loans due to illness, death or natural disasters, a compassionate policy has been proposed following international standards.
To speed up the recovery of defaulted loans, the bankers' association has recommended tax and customs exemption on assets sold at bank auctions, income tax incentives for buyers and withdrawal of the obligation of court approval for the transfer of auctioned assets.
In addition, emphasis has been placed on strengthening coordination with land registry offices for the speedy transfer of mortgaged assets.
To make the Money Loan Court Act more effective, it has been proposed to reduce unnecessary delay in courts, speed up the execution of arrest warrants, limit long-term installment facilities and form separate debt recovery courts in districts with high defaulted loans.
To prevent the creation of new defaulters, ABB has recommended the formation of a central database of mortgaged land and assets under Bangladesh Bank. The organization believes that this will allow banks to easily verify the information and valuation of collateral.
The letter, signed by ABB Chairman and City Bank Managing Director Masrur Arefin, expressed hope that the central bank will take initiatives to quickly implement these proposals and through this, discipline and confidence will be restored in the banking sector.