The Bangladesh Bank on Tuesday asked banks to form a unit to identify willful loan defaulters as per the central bank guideline by April 9.
The Bangladesh Bank issued a circular titled “Identification and finalization of willful defaulters and measures to be taken against them” on the day.
According to the circular, once a customer turns into a loan defaulter, the bank's unit must identify whether the client was a willful loan defaulter or not within 30 days.
Bank borrowers will be willful defaulters if they fail to repay a loan or investment or any other financial facility taken in favour of them or their family members, related companies or financial institutions, despite having the capacity to repay.
By intimidation or by providing false information, if a person takes loans in favour of the individual or his/her family member and his/her related company, he/she will be identified as a willful loan defaulter.
If the individual uses the loans in purposes other than those for which the loan was received and if collateral used for taking loans was transferred without the prior approval of the bank, he/she will be identified as willful defaulter, the circular said.
The Bangladesh Bank will send the list of willful defaulters to the respective government agencies to impose restrictions on foreign travel, getting trade licence and registration for a company.
The willful defaulters will not receive government’s award or recognition.
The central bank will also send the list to car, land, home and flat registration authorities to take necessary actions, it said.
The willful defaulters cannot be a director in any financial institutions in the country and his/her directorship will be announced vacant.
If the willful defaulter fails to pay loans in two months of getting notice from the bank concerned, the bank must file a criminal case against the borrower.
If a bank doesn’t comply with these instructions, the central bank will impose Tk 50 lakh to Tk 1 crore fine on the bank.
The banks will report to the Bangladesh Bank ’s credit information bureau department after identifying and finalizing the willful loan defaulters and the CIB will display them in their database as WD.
The instructions will be effective from July 1, 2024.
