Tk 4 lakh crore default loans stuck in lawsuits

More than Tk 4 lakh
crore in defaulted loans remain locked in over 2.22 lakh cases in money-loan
courts, putting further strain on the already fragile banking sector and
dragging on the wider economy.
Bangladesh Bank data
show that as of June, 222,341 cases involving Tk 407,435 crore were pending
across the courts.
Recently, a growing
number of banks have filed cases in money-loan courts against major loan
defaulters, including S Alam Group, Beximco Group, and Nassa Group.
Over just the last
three months, the number of lawsuits rose by 2,708, while the amount tied up in
litigation surged by Tk 86,674 crore, the data show.
At the end of March,
pending cases stood at 219,633 with Tk 320,761 crore under dispute, according
to figures compiled by the central bank's Law Department.
Despite the surge in
lawsuits, central bank officials say the strategy has yielded limited success
as case disposal rates remain far lower than the pace at which new cases are
being filed.
Between April and June,
courts disposed of 11,944 cases, enabling banks to recover Tk 2,910 crore.
During the same period, lenders filed 14,652 new cases involving Tk 96,904
crore.
In the January-March
quarter of this year, banks disposed of 10,064 cases and recovered Tk 1,833
crore.
Bankers and industry
insiders say many of the disputed loans involve irregularities or fraud, and
that repeated waivers and rescheduling schemes have failed to bring defaulters
back to repayment. Although banks are legally required to file cases to pursue
recovery, progress remains slow due to systemic bottlenecks.
The number of
money-loan courts is insufficient, they said, and delays are compounded by
shortages of judges and by banks not providing lawyers with timely
documentation, including collateral papers.
The consequences are
mounting. A central bank report warned that the vast sums trapped in litigation
are inflicting heavy losses on lenders and weighing on the overall economy.
Md Omar Faruk Khan,
managing director of Islami Bank Bangladesh, recently said the bank would adopt
a tougher stance against major defaulters, including S Alam Group, noting that
its own stock of bad loans has approached Tk 100,000 crore.
The bank has already
filed several cases in this regard.
To accelerate
recoveries, the Bangladesh Bank has instructed lenders to act under Section
12(3) of the Money Loan Court Act 2003, including issuing auction notices and
seeking expedited hearings to vacate High Court stay orders.
Banks have also been
advised to file civil miscellaneous petitions with the Appellate Division's
Chamber Judge to lift such stays and clear the way for resolution.
















