HC again stops central bank move to offer waivers to loan defaulters
The total monetary value for loan defaults in the country’s banking sector stood at Tk220,000 crore, according to a report Bangladesh Bank submitted to the High Court on Monday.
Of the total loan defaults, Tk110,000 crore is recoverable, Tk80,000 crore worth of loans are entangled in legal proceedings, while Tk30,000 crore has been written off, the report states.
The defaulters took out these huge loan amounts from different banks using 10,476 different accounts over the last 20 years.
On Monday, the central bank presented this information to the High Court bench of Justice FRM Nazmul Ahsan and Justice KM Kamrul Kader at a writ petition hearing. Attorney General Mahbubey Alam presented the sealed report.
The names of individuals or organizationscited in the report as defaulters, were not disclosed publicly.
The HC bench also extended its May 21 order issuing a status quo on the BB circular, allowing defaulters to reschedule their loans with a repayment period of up to 10 years and enabling them to get fresh loans. The extension of the status quo order will remain in force for the next two months.
Advocate Manzill Murshed appeared for the writ petitioner.
In May 21, the High Court ordered a halt to a Bangladesh Bank circular till June 24. The circular granted huge waivers to loan defaulters to expedite debt servicing in the banking sector.
The bench of Justice FRM Nazmul Ahasan and Justice KM Kamrul Kader issued the order after hearing a petition filed by lawyer Manzill Murshid on behalf of Human Rights and Peace for Bangladesh.
The High Court on May 16 also ordered Bangladesh Bank to submit by June 24, a list of borrowers with over Tk1 crore in loan defaults.
Earlier, on February 13, the court had also asked the authorities concerned to submit a list of loan defaulters and money launderers over the last 20 years.
It also issued a rule asking the authorities to explain why an order should not be given to form a powerful commission to identify past irregularities and corruption in the banking sector.
The non-performing loans (NPLs) of banks rose by a staggering Tk16,962 crore in three months till March this year, taking the amount of stress loans in the banking sector to Tk1,10,873.54crore. This amount, however, excludes the defaulted loans regarding which cases are underway and/or loans that have been written off.
As of March, all bad loans accounted for 11.87% of all disbursed loans, according to the latest Bangladesh Bank (BB) data.
Finance Minister AHM Mustafa Kamal revealed the names of the top 300 loan defaulters in parliament, and said loan defaults worth Tk50,942 crore were at banks as of June 22.
The minister also provided a list of 14,617 individuals and institutions who have outstanding loans of over Tk5 crore since 2009.
These individuals and institutions have sanction limits of Tk1,741,348 crore, outstanding loans of Tk784624 crore, classified amounts worth Tk110,541, and defaulted loans of Tk100,183 crore.
Experts have said that disclosing the top defaulters’ names would not do. Stricter measures have to be taken against loan defaulters.
World Bank lead economist in Dhaka, Dr Zahid Hussain, said all defaulters need to be listed. He also suggested segregating the defaulters into two categories : wilful defaulters and unintentional defaulters.
He is in favour of curtailing loan defaulters’ entitlements as citizens and taking legal action against them.