Banks commit to adopt BIAC programme

A discussion was held recently at the Bangladesh International Arbitration Centre (BIAC), bringing together key stakeholders, including senior officials from various banks, legal experts, and financial analysts.

The discussion centred on the implications of Bangladesh Bank's BRPD Circular No. 11, which advises all banks to utilise Alternative Dispute Resolution (ADR) methods, specifically with the assistance of BIAC, to recover bad debts, says a press release.

Muhammad A. (Rumee) Ali, Vice Chairman of BIAC, delivered the opening remarks, highlighting the importance of the BRPD Circular No. 11, issued on May 12, 2024. The circular encourages banks to seek BIAC's assistance in recovering non-performing loans (NPLs). He explained that BIAC had its own Mediation Rules 2019 and Arbitration Rules 2019, which establish a timeframe of 3 months to 388 days for case resolution.

He further emphasised that BIAC had a distinguished panel of arbitrators, including eminent former chief justices, renowned advocates, and jurists from both local and international backgrounds.

Additionally, he introduced BIAC's pilot initiative, in which BIAC has invited banks to submit 10 initial cases for resolution through mediation, aiming to demonstrate the effectiveness of ADR in handling bad debts.

Special Guest, Mohammed Forrukh Rahman, Barrister-at-Law, Advocate, Supreme Court of Bangladesh, shared his experiences of resolving cases using ADR within just six months, with many already in the execution stage.

He has pointed out that under the Arbitration Act 2001, it typically takes 6 months to 1 year to appoint an arbitrator, while BIAC can select an arbitrator within approximately 3 days due to its established panel.

Additionally, he has noted that mediators appointed by the Money Loan Court in Bangladesh are not certified, whereas BIAC offers a panel of certified mediators. As a result, Mr. Rahman has stressed that for efficient and expedited case resolution, BIAC offers unparalleled advantages.

Bank representatives raised concerns about the backlog of cases in the Artha Rin Courts, with some cases pending for over 10 years. They also mentioned that the timeframe under Section 22 of the Money Loan Court Act 2003 was often exploited by defaulters to delay proceedings, preventing banks from seeing timely resolution. They noted that, to date, no bank has been able to fully benefit from Section 22's provisions.

The event concluded with a commitment from the banks to adopt BIAC's pilot program. They agreed to submit 10 cases involving non-wilful defaulters for resolution under BIAC's mediation process. Additionally, participants recommended making mediation mandatory for both banks and customers before proceeding to court, and they emphasized the importance of ensuring that mediation awards are enforceable, to guarantee faster case resolution.

Shafayat Ullah, Barrister-at-Law, Unit Head MTB Group Legal Affairs Division, Mutual Trust Bank PLC, moderated the event while Ummay Habiba Sharmin, Head of Legal, City Bank PLC, and Rafat Ahmed Pavel, Head of Legal Operations, IFIC Bank PLC, shared their insights as speakers.