BB issues guidelines for appointing mediators to expedite defaulted loan recovery

Bangladesh Bank (BB) on Wednesday moved to de-clog the country's legal system by ordering scheduled banks to appoint competent mediators for 'Pre-Suit Mediation' to resolve defaulted loan disputes through Alternative Dispute Resolution (ADR) before litigation commences, reports BSS.

To this end, the central bank issued a circular.

The central bank's latest intervention is strategically designed to prevent the further expansion of the litigation backlog within the judiciary, specifically addressing cases that would otherwise fall under the Artha Rin Adalat Ain, 2003 (Money Loan Court Act) and the Bankruptcy

Act, 1997.

According to the circular, the central bank has established a rigorous performance mandate, requiring all scheduled banks to settle at least 1 percent of their total defaulted loans through ADR by June 30, 2026.