The government has moved to enact a new law with the objective of expediting the recovery of non-performing loans (NPLs) of banks, officials said.
The proposed new law will have provisions that would strengthen central bank's inspection work.
The other provisions will aim at strengthening Artha Rin Adalat and reforming the boards of directors of the state-owned commercial banks.
To push the move forward, the banking division, which is under the ministry of finance (MoF), has asked the Bangladesh Bank (BB) to prepare a draft law.
"The Ministry of Finance (MoF) asked the BB to prepare a draft law on recovery of non-performing loans. We think, the central bank will do it by utilising its experiences and by holding consultations with commercial banks and other stakeholders," additional secretary (Bank and Financial Institution Division) of the MoF Gokul Chand Das told the FE.
The default loan in the banking sector is growing unabatedly because of failure of the banks to recover the same.
The country's businessmen have long been calling for recovery of NPLs since it has been hindering industrial growth.
Finance Minister AMA Muhith on June 7, 2016 admitted in the parliament that there were some irregularities in the banking sector and these were in massive scale at times.
He also disclosed in the parliament on Thursday that the amount of NPLs in the state-run six and two specialised banks stood at Tk 285.41 billion until March 31, 2016.
He said NPLs of Agrani Bank stood at Tk 45.88 billion until March 31, 2016 while that of Bangladesh Development Bank Ltd (BDBL) were Tk 6.30 billion, BASIC bank Tk 63.01 billion, Janata Bank Tk 28.31 billion, Rupali Bank Ltd Tk 15.48 billion, Sonali Bank Tk 79.80 billion, Bangladesh Krishi Bank Tk 38.61 billion and Rajshahi Krishi Unnayan Bank Tk 8.02 billion.
He, however, said Sonali, Rupali and Agrani made a profit of Tk 1.50 billion until December 31, 2015.
The volume of non-performing/ classified loans rose to Tk 594.11 billion during the January-March period of this calendar year from Tk 513.71 billion in the preceding quarter, according to the latest BB statistics.
Mr Muhith also said recently that the government would sit with the bankers after national budget (FY2016-17) for recovering the NPLs.
The delinquent borrowers do often file writ petitions and block the recovery of overdue loans.
Since 1972, over 35,000 law suits were filed in the Artha Rin Adalat.
In most cases, the banks won the lawsuits most, but the execution of verdicts were stayed by the High Court following filing of writ petitions by borrowers concerned. A total of 21,029 loan recovery cases awaited court decision as of late 2010.
Former finance adviser to the caretaker government Dr AB Mirza Azizul Islam suggested proper enforcement of the existing laws for recovery of bad loans.
Asked when they expect to receive the draft law from the BB, Mr Das said, "We hope, the BB will complete preparing the draft soon".
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