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HC: Why is being lenient to loan defaulters not illegal?

  • Published at 08:19 pm July 23rd, 2019
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File photo of Bangladesh Supreme Court Dhaka Tribune

Bangladesh Bank and the government have 10 days to explain why May 16 circular should not be declared illegal

The High Court has issued a ruling questioning the legality of Bangladesh Bank's circularallowing loan defaulters to reschedule classified loans at 9% interest over 10 years with only a 2% down payment requirement.


The court issued a rule asking the authorities concerned of the Bangladesh Bank and the government to explain in 10 days why the circular issued on May 21 should not be declared illegal.

 The bench of Justice JBM Hassan and and Justice Md. Khairul Alam issued the ruling following a petition filed by Human Rights and Peace for Bangladesh (HRPB) on Tuesday,scheduling July 31 as the next hearing date.

Attorney General Mahbubey Alam stood for the Ministry of Finance and lawyer Manzill Morshed represented HRPB, lawyer Shah Monjurul Hoque the bank owners, and lawyer Moniruzzaman represented Bangladesh Bank.

On July 8, the Supreme Court,  had stayed for two months the High Court order that had extended its earlier ruling to freeze a Bangladesh Bank circular offering lenient terms to loan defaulters.

In the circular issued on May 16, the Bangladesh Bank sought to allow defaulters to regularize bad loans by paying a penalty   2% down payment only, instead of 10% to 50%, allowing them to  repay the loan at a 9% interest rate in another  10 years. 

On May 21, the High Court issued a status quo till June 24 on the central bank’s May 16 circular following a writ filed by the Human Rights and Peace for Bangladesh.

On June 24, the High Court extended the freeze order by two months, till August 24.