Evading loan repayment through court injunctions or stays is becoming much harder for defaulters. Filing a writ petition will no longer be straightforward, and borrowers may now have to bear extra costs ranging from 6 to 30 percent of the loan amount.
If a borrower wants to file a writ by depositing up to 30 percent of the approved loan amount as a down payment, it would become very expensive. Currently, a borrower can avoid being classified as a defaulter by spending just a few lakh taka. With the new regulations, this option will no longer be available. The Ministry of Finance has already started working on the issue, in consultation with Bangladesh Bank.
According to sources in the Ministry of Finance, a recent special meeting of the Financial Institutions Division discussed this matter in detail. Attendees included the Secretary of the Financial Institutions Division, the Finance Advisor, Executive Directors of Bangladesh Bank, and Managing Directors (MDs) and Chief Financial Officers (CFOs) of six state-owned banks.
A senior official from the Ministry of Finance stated that many influential businesspeople in the country have been using legal loopholes to avoid repaying loans. To prevent such misuse of the law, the government is considering effective measures.
He said, “Defaulters try various means to evade responsibility. A legal framework will now be established so that they cannot escape in any way.”
Under the Bank Company Act, a loan is considered non-performing if it is not repaid within six months. Once a loan is classified as non-performing, the borrower cannot take new loans, open LCs for import-export, or participate in elections. However, due to court injunctions, such borrowers are not shown as defaulters in the CIB database.
As a result, the law has effectively become ineffective because these borrowers continue to enjoy all the benefits.
According to Bangladesh Bank, by June 2025, there were a total of 253,091 court cases regarding defaulted loans. Against these cases, banks and financial institutions were owed Tk 3,43,242 crore. Of this, approximately Tk 2,30,440 crore is stuck in ongoing court cases. Yet, only Tk 6,673 crore has been recovered, which is merely 3 percent of the total receivables.
Meanwhile, due to court injunctions, 1,086 borrowers with Tk 1,63,150 crore in defaulted loans are being shown as regular loans. The average loan per borrower is nearly Tk 150 crore.
Sources in the Ministry of Finance indicated that over the last 8 to 10 years, there has been massive looting in the banking sector. Many officials have received immunity after retirement. The government wants to create regulations so that both active and retired officials involved in irregularities are punished, and even provisions to cancel their service benefits are being considered.
An MD of a state-owned bank said, “Many officials wait for retirement while being involved in loan fraud. To prevent anyone from escaping in the future, a proposal to amend the law has been made.”
Discussion has also taken place on reopening bank accounts for businessmen whose accounts were frozen due to various complaints. Bangladesh Bank has made recommendations on this matter. Currently, banks facing liquidity shortages are raising deposits at high interest rates, which could create financial risks in the future. Finance Adviser Dr. Salehuddin Ahmed has instructed the central bank to reduce reliance on high-interest deposits.
According to the meeting, the Finance Advisor said, “A chairman or board member cannot loot alone. The management and officials must also be involved. For example, in the case of Janata Bank, it was not just Abul Barkat, but also those who assisted him, who must be held accountable.”
The meeting emphasized ensuring good governance in state-owned and private banks, taking strict measures to prevent loan fraud, and legal reforms to prevent future irregularities. The government wants to create an environment in the banking sector where neither borrowers nor officials can escape wrongdoing.
Dr. Moinul Islam, former professor of economics at Chittagong University, said that many intentional defaulters have laundered money abroad. Thus, only strict measures by the central bank will not be sufficient. Defaulters know that cases can be delayed for years. They are bribing to postpone proceedings. To break this cycle, defaulted loans should be handled by a dedicated tribunal or a specialized bench of the Supreme Court to bring them under punishment.
Syed Mahbubur Rahman, Managing Director of Mutual Trust Bank, said that it has become harder now to show loans as regular using court injunctions compared to before. Although the amount of such loans may have increased with prior injunctions, the courts are no longer granting as much time as before.
Source: Kalerkantho
Bd-pratidin English/ ANI
