The High Court stayed Tuesday a special policy guideline of Bangladesh Bank, which offered loan rescheduling and "one time exit" facilities to defaulters, until June 23 next.
The central bank issued the guideline on May 16, allowing the borrowers to reschedule their defaulted loans making a 2.0 per cent down payment for a maximum of 10 years.
The errant borrowers also got the opportunity to avail "one time exit" facility by clearing all dues within 360 days provided the banks concerned approved this.
The decision to offer privileges to bad borrowers drew criticism from economists and bankers who warned of a possible disastrous outcome.
A High Court bench, comprising Justice F R M Nazmul Ahasan and Justice K M Kamrul Kader, put on hold the effect of the guideline until June 23, after a writ petition filed by Human Rights and Peace for Bangladesh.
Petitioner's lawyer Manzill Murshid told reporters that they had informed the court about the issuance of special circular for defaulters on May 16.
The central bank lawyer at that time argued that such a circular was not issued.
The court then asked the central bank to present a list of borrowers who defaulted on repayment of their loans by June 24.
But later on the day, the circular was published on the website of the central bank.
Mr Murshid said under the central bank's new circular, defaulters would be able to reschedule their troubled loans by paying only 2.0 per cent down payment.
Even the delinquent borrowers will be eligible to get new loans and plunder billions of taka from the banking system ruining the backbone of banks, he added.
The volume of soured loans jumped by over 26 per cent or Tk 196.08 billion to Tk 939.11 billion at the end of December 2018, up from Tk 743.03 billion over the same period a year earlier, according to available statistics.
In early February, having instructed by the government high-ups, the Bangladesh Bank ordered banks to write off loans up to Tk 0.20 million instead of the previous ceiling of Tk 50,000 without filing cases for recovery.
The policy also allowed the banks to write off such loans after three consecutive years of default instead of the previous five years.
In continuation, the banking watchdog issued another circular on April 22, revising the term-loan classification rules.
Under the new provision, if any instalment(s) or part of instalment(s) of a fixed-term loan is not repaid within the set expiry date, the amount of unpaid instalment(s) will be treated as past due/overdue after six months of the expiry date.
While issuing the order on Tuesday, the court noted that with the new loan rescheduling facility errant borrowers have been patronised while good borrowers were being deprived.
The facility has paved the way for swindling billions of taka from the country, the court said.
The country's banking system is not business-friendly, rather friendly to the unscrupulous people, it argued.
The court at one point expressed its resentment over the ineffectiveness of 'one digit interest rate' of bank loans as announced by the Prime Minister.
The court also asked the central bank lawyer M Moniruzzaman to explain why good borrowers were charged 14 to 15 per cent interest while the defaulters were given the chance to pay only 9.0 per cent interest.
Mr Moniruzzaman told the court that the circular was issued as part of a strategy to realise classified loans.
© 2024 - All Rights with The Financial Express
