Expeditious disposal of bank loan cases

That the government is lately attaching due importance to the expeditious recovery of a huge amount of defaulted bank loans stuck in court cases is a piece of good news. The move initiated by the Financial Institution Division (FID) of the Ministry of Finance has been long overdue. It also coincides with the Supreme Court's formal request to the Ministry of Law to create specialised commercial courts to help speedy disposal of cases involving trade and finance issues. At a recent meeting, the FID reportedly discussed ways to expedite lawsuits long pending with Money Loan Courts (MLCs) filed by lenders and followed it up by initiating a coordinated drive to speedily settle 100 such cases involving around Tk 380 billion.

Now, with the defaulters filing writ petitions with higher courts, the lenders often fail to recover the loans even after getting order from MLCs. When the banks, for instance, take steps to sell mortgaged properties against the defaulted loans, the habitual defaulters, many of whom being basically financial criminals, file fresh cases in the lower or higher courts to stop the sale or transfer of the mortgaged property forcing the lending banks or other financial institutions to wait for years to recover their loans. Small wonder that staggering sums of unrecovered loans are held up in tens of thousands of lawsuits with different courts including MLCs in the country. In this connection, a task force on economic reforms reported in early 2025 that more than Tk1.78 trillion was held up in over 72,500 court cases as of February 2024. The report further said that backlogs under the Money Loan Court Act and Bankruptcy Act remain a major obstacle to loan recovery. Structural flaws in the Money Loan Court Act 2003, low judge-to-population ratio, insufficient courtroom facilities, etc., come in the way of resolving NPL-related cases, the report added.

In this connection, of special concern are the multiple writ petitions filed by loan defaulters to stymie auction procedures called 'auction publication in newspapers'. But there are reports of delinquent borrowers who approach the higher court for judicial review of the auction publication of properties. The delinquent defaulting borrowers by such practices escape legal action by banks to realise bad loans. Interestingly, even the arrest warrants issued by MLCs are also often found to remain unenforced. Clearly, a criminal nexus is at work to help the fraudulent bank defaulters. So, the situation calls for required support from higher authorities in the home department so the arrest warrants issued from the MLCs are duly executed. So, for the latest move by the finance ministry to recover default loans to succeed, supports from all quarters including ministries, the attorney general's office as well as deputy commissioners to deal particularly with land-related cases will be required. In fact, as suggested during the deliberations at the FID meeting, when the court proceedings of cases are ongoing, presence of a representative of the lender that filed the case including from banks or other institutions in question, would be a useful part of monitoring to ensure that lawyers dealing with the cases of the lending institutions duly attend the court hearings.

Hopefully, the present novel approach adopted by the FID, particularly where multiple departments of the government would be simultaneously engaged to recover bad loans, might be able to make some headway in recovering a significant portion of the defaulted loans. Given the staggering sum of the non-performing loans (NPLs), the challenge before the FID is no doubt enormous. Admittedly, many default loan cases could not be settled and money recovered in time due to different factors including lack of proper monitoring. So, more proactive role on the part of all concerned will be necessary to meet the challenge of holding the notorious loan defaulters accountable to the law.