Rescheduling with HC order, 21,48 debtors get away with defaulted loans
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
  • Epaper
  • More
    • Subscribe
    • COVID-19
    • Bangladesh
    • Splash
    • Videos
    • Games
    • Long Read
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard

Tuesday
August 09, 2022

Sign In
Subscribe
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
  • Epaper
  • More
    • Subscribe
    • COVID-19
    • Bangladesh
    • Splash
    • Videos
    • Games
    • Long Read
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
TUESDAY, AUGUST 09, 2022
Rescheduling with HC order, 21,48 debtors get away with defaulted loans

Court

Rezaul Karim
19 June, 2021, 11:45 am
Last modified: 19 June, 2021, 11:44 am

Related News

  • New loan rescheduling policy will bring banks under accountability: Bankers
  • Betting on self-regulation?
  • Bond defaulters needed to report in CIB
  • Government says the time is critical in letter to IMF
  • $4.5 billion dollar IMF loan: The pros and cons

Rescheduling with HC order, 21,48 debtors get away with defaulted loans

In between January 2015 and December 2019, a total of 21,480 companies and individuals rescheduled loans with directives from the High Court

Rezaul Karim
19 June, 2021, 11:45 am
Last modified: 19 June, 2021, 11:44 am
Rescheduling with HC order, 21,48 debtors get away with defaulted loans

Mahmud Fabrics and Finishing Limited in Chattogram's Double Mooring area has been named among the top defaulters on the Bangladesh Bank's Credit Information Bureau (CIB) list. It owes Tk388 crore in default loans to six banks.

As part of special benefits announced by the banks on different occasions, it availed loan rescheduling facilities three times. But after 2013, it could no longer enjoy those benefits. The banks did not accept loan rescheduling applications anymore.

In 2014, the company filed a writ petition with the High Court, seeking directives to reschedule loans with a claim that its business was down. The court directed the banks to reschedule the loans for six months. After the advantage period ended, the company again petitioned for extending the facility for another six months.

As of 2018, the company had applied to the High Court six times for an extension to the loan rescheduling order and the court granted it. In November that year, the Appellate Division stayed the sixth order of the High Court following an appeal from the banks.

In between January 2015 and December 2019, a total of 21,480 companies and individuals had rescheduled loans with directives from the High Court, according to an investigation of The Business Standard.

During the period, the court also issued rules on related matters. About 9,600 rules are awaiting final hearing, Supreme Court sources said.

Experts say banks have offered borrowers repeated rescheduling facilities under political influences or following High Court directives.

Prabir Niyogi, a lawyer expert in the company law, told The Business Standard that after rescheduling a loan three times as per the law, borrowers no longer avail such opportunities from banks. So, they file writs with the High Court and reschedule loans again and again.

Masud Mia, a lawyer for Mahmud Fabrics and Finishing Limited, told TBS that the appellate division's order did not allow the company to reschedule its loans anymore and it was included in the CIB list. 

Later, when the Chattogram-based company filed a writ petition with the High Court, challenging its inclusion in the CIB list in 2019, a bench refused to hear it, he said, adding that the company is now trying for the petition's hearing in another bench, but has not succeeded yet.

The Supreme Court has no exact data on the total amount of loans that the applicants owe to banks. In 2019, loans amounting to around Tk16,000 crore availed rescheduling permission from the High court, while in 2018, 3,638 applicants scheduled loans of Tk12,000 crore, according to sources. 

In another example, the Rangpur-based Apple Ceramics (PVT) Limited, which is on the CIB top list with a default loan of Tk206 crore, had rescheduled loans taken out from Pubali Bank, Janata Bank, AB Bank and City Bank 11 times till 2018, securing directives from the High Court in its favour.

Later, the banks appealed against the High Court order, bringing an end to the company's rescheduling facilities.

If a loan is not repaid in installments for three consecutive months, the loan is called a substandard loan in banking parlance. Similarly, if a loan is not repaid for six consecutive months, it is called a doubtful loan, and if a loan is paid for nine consecutive months, it is called a bad/loss loan. Borrowers under these three categories are considered as defaulters. 

A defaulter cannot take out a loan from a bank or financial institution and cannot even participate in any national election.

Banks offer loan rescheduling facilities to benefit clients, but there is no provision to give such an opportunity to any customer again and again. A customer can get the benefit up to three times. To avail the rescheduling facility for the first time, they need to pay 15% of default loans in one-time cash. The next two times, they have to pay more at once.

Shah Mohammad Ahsanur Rahman, a bank and company law expert told TBS that after enjoying such facilities three times as per the law, they move to the High Court with powerful lawyers to avoid getting into the list of defaulters or take more loans from banks. Most of the time, they get court directives in their favour. 

In a ruling in July 2019, the Supreme Court instructed the Bangladesh Bank and other banks to be strict in rescheduling loans. According to the ruling, if a businessman takes a rescheduling advantage, they will not be allowed to take a loan from any other bank within the next two months. But there does not seem to be an implementation of these directives, he added.

Ahsan H Mansur, executive director at the Policy Research Institute, told TBS that there is no reason other than rescheduling facilities that have contributed to a drop in default loans. Securing Supreme Court orders to extend such benefits is playing a big part too.

Besides, banks reschedule loans indiscriminately without any scrutiny to make their balance sheet look clean. As per the law, there is no opportunity to reschedule a loan more than three times, but influential borrowers are even taking rescheduling benefits more than 10 times with High Court orders, he added. 

As a result, the rate of rescheduled and restructured loans in the banking sector has increased more than that of default loans, Ahsan said, adding that the court should properly examine and consider such matters during hearing or before giving an order. 

Salehuddin Ahmed, a former governor of the central bank, said  under political and various other influences, banks repeatedly reschedule loans without conforming to the law. Besides, loan rescheduling is also happening following ]High Court orders. The chief justice should have specific instructions to his subordinate courts on what to decide on writs, cases and appeals  in such matters, he added.

Sirajul Islam, executive director and spokesperson of the Bangladesh Bank, said the Bangladesh Bank issues orders from time to time regarding rescheduling of loans. They also monitor banks so that they comply with such directives properly. But banks have nothing to do if rescheduling orders come  from the High Court.

Muhammad A (Rumee) Ali, chairman of AB Bank and chief executive officer of Bangladesh International Arbitration Centre, said banks abide by orders, judgements and directives from High Court and Appellate Division out of respect for law and court.

He hopes that the law minister and the chief justice will come to a decision after considering such issues.

Attorney General AM Amin Uddin told TBS that the Appellate Division and the High Court are well aware of any case related to banks, including applications for delisting in the CIB list and rescheduling of loans.

Orders are now not given in favour of applicants like before. Steps will be taken for unresolved hearing on writs regarding offering of rescheduling facilities as soon as normal court proceedings resume, he added.

Bangladesh / Top News

HC / HC rule / HC directives / Default Loan / Default loans / Defaulted loans / defaulter / Bank Loans / Loan Defaulter / loan / Loan Defaulting

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Brioche rolls exit an oven at the Brioche Pasquier factory in Milton Keynes, UK.Photographer: Ryan Peters/Brioche Pasquier
    The great European energy crisis is now coming for your food
  • Photo: Bloomberg
    Bangladesh-Iraq trade grows four-fold
  • TIB calls on govt not to impose foreign debt burden on people
    TIB calls on govt not to impose foreign debt burden on people

MOST VIEWED

  • Rape, robbery on moving bus: 6 accused on 3-day remand
    Rape, robbery on moving bus: 6 accused on 3-day remand
  • Photo: Collected
    HC rule for state recognition of armed resistance builders after Bangabandhu killing
  • HC warns ACC in full verdict of Jahalam case
    HC warns ACC in full verdict of Jahalam case
  • Photo: Collected
    7 years in condemn cell despite acquittal: HC orders judicial inquiry
  • Illustration: Collected
    Narayanganj 7-murder: Nur Hossain gets life term in arms case
  • Lawyer who earned Tk26cr from Grameen Telecom workers union asked to explain his fee
    Lawyer who earned Tk26cr from Grameen Telecom workers union asked to explain his fee

Related News

  • New loan rescheduling policy will bring banks under accountability: Bankers
  • Betting on self-regulation?
  • Bond defaulters needed to report in CIB
  • Government says the time is critical in letter to IMF
  • $4.5 billion dollar IMF loan: The pros and cons

Features

The elevated ground is made out of soil on which grass and trees have grown. This grass-covered elevated ground extends to the perimeter of the establishment. Photo: Maruf Raihan

Aman Mosque: Where form and function complement each other

11h | Habitat
Photo: BSS

Begum Fazilatunnessa Mujib . . . woman of moral power

1d | Thoughts
Will Glass Cosmetics be your next skincare holy grail?

Will Glass Cosmetics be your next skincare holy grail?

1d | Brands
Akij Tableware: More than just dishes on a table

Akij Tableware: More than just dishes on a table

1d | Brands

More Videos from TBS

Why Donald Trump buried ex-wife Ivana at a golf course

Why Donald Trump buried ex-wife Ivana at a golf course

1h | Videos
In absence of groom, his brother stands by the bride

In absence of groom, his brother stands by the bride

4h | Videos
Tajia procession of Muharram

Tajia procession of Muharram

4h | Videos
Importance of Ashura in Islam

Importance of Ashura in Islam

6h | Videos

Most Read

1
Diesel price hiked by Tk34 per litre, Octane by Tk46
Energy

Diesel price hiked by Tk34 per litre, Octane by Tk46

2
Housing projects sprouting up by Dhaka-Mawa expressway
Real Estate

Housing projects sprouting up by Dhaka-Mawa expressway

3
Infographic: TBS
Banking

Dollar rate will be left to market after two months: Governor

4
Bangladesh to resume talks for Ukrainian wheat import
Economy

Bangladesh to resume talks for Ukrainian wheat import

5
A liquefied natural gas (LNG) tanker is tugged towards a thermal power station in Futtsu, east of Tokyo, Japan November 13, 2017. REUTERS/Issei Kato/File Photo
Energy

Summit proposes long-term LNG supply to Petrobangla

6
Dollar for LC settlement reaches new high at Tk110
Banking

Dollar for LC settlement reaches new high at Tk110

EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2022
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net