The Bangladesh Bank (BB) on Wednesday instructed banks to dispose of pending cases in time with Artha Rin Adalat or money loan courts, especially given when banks are reportedly reeling from a liquidity crunch.
The Banking Regulations and Policy Department of the Bangladesh Bank issued a notification on the day with this direction.
In the notification, the central bank mentioned that a separate court has been formed for quick settlement of financial-loan cases through the Money Loan Court Act 2003.
There is a legal obligation to dispose of cases according to a time-bound procedure, the notification noted.
However, a recent review of judgments and orders on various loan cases has shown that the settlement of loan cases is taking much more time than expected.
"As a result, the interests of both depositors and scheduled banks are being undermined."
"It is further stated in the directive that behind the long process in settling the case, all the parties in the case, especially the plaintiff bank, are being observed to be negligent in handling the case efficiently, which is undesirable."
In this context, banks are asked to deal with the cases with maximum preparation by communicating with the respective lawyers on the scheduled dates of the cases in order to settle the pending cases in the commercial court in a timely manner.
According to a report of the Bangladesh Bank at the end of June 2023, there were 72,540 cases pending with Tk178,000 crore trapped.
Six months ago at the end of December, Tk167,000 crore was stuck in the money-loan court against 72,189 pending cases.
A year ago in June 2022, against 69,369 cases Tk153,000 crore worth of money was stuck in the court proceedings.
Non-performing loans (NPL) held by debtors hang out as one of staggering problems the country's banking sector suffers from, and development financiers, including the IMF, prod for a remedy through reforms.
Economists also relate grueling inflation and siphoning off money partly to lending flaws and willful repayment default.
