Impose travel restriction, disclose identity of loan defaulters: ABB
Business Report :
Bangladesh’s top bankers have urged regulators to impose tougher restrictions on chronic loan defaulters, including overseas travel bans, public disclosure of identities and exclusion from trade body elections, as the country struggles with a mounting bad-loan crisis.
The Association of Bankers, Bangladesh (ABB), which represents managing directors of commercial banks, has submitted a set of proposals to Bangladesh Bank aimed at accelerating cash recovery and curbing what it described as a growing ‘default culture’.
The Association of Bankers, Bangladesh (ABB) urged stricter measures against defaulters to control the increasing defaulted loans in the country’s banking sector.
The association submitted the proposals to the Bangladesh Bank governor through a letter following a discussion it held with the banking regulator earlier on November 12.
ABB recently outlined these proposals in a letter sent to the Governor of Bangladesh Bank. Earlier, on November 12, the organization discussed the defaulted loan situation and ways to overcome it in a meeting with the central bank.
It is necessary to take exemplary action against willful defaulters. For this, it has been recommended to publish their names and identities, impose a ban on foreign travel and declare them ineligible for participating in elections to various business organizations, the proposal said.
However, at the same time, ABB has also said that limited and time-bound assistance is needed for borrowers who are in real crisis. For those who are temporarily unable to repay their loans due to illness, death or natural disasters, a compassionate policy has been proposed following international standards.
To speed up the recovery of defaulted loans, the bankers’ association has recommended tax and customs exemption on assets sold at bank auctions, income tax incentives for buyers and withdrawal of the obligation of court approval for the transfer of auctioned assets.
In addition, emphasis has been placed on strengthening coordination with land registry offices for the speedy transfer of mortgaged assets.
The bankers further recommended simplifying proceedings under the Money Loan Court Law by limiting court adjournments, expediting enforcement of arrest warrants, restricting long-term installment facilities, and establishing separate loan recovery courts in districts with high default cases.
To prevent the creation of new defaulters, ABB has recommended the formation of a central database of mortgaged land and assets under Bangladesh Bank. The organization believes that this will allow banks to easily verify the information and valuation of collateral.
Signed by ABB Chairman and City Bank Managing Director Masrur Arefin, the letter expressed optimism that the central bank would act swiftly to implement the proposals and restore discipline and confidence in the banking sector.
As of September, as per banking sector data, the country’s total disbursed loans rose to Tk 18,03,840 crore, of which approximately Tk 6.5 lakh crore were classified as defaulted, representing a default rate of 35.73 percent, according to banking sources.
The ABB’s proposals now await consideration by the central bank, as policymakers weigh tougher enforcement against these concerns over legal safeguards and economic recovery.