Tk 1.75trn stuck in loan recovery cases

Anisul Islam Noor

10 October, 2019 12:00 AM printer

The country’s banking sector is struggling with loan recovery efforts due to a massive pile up of cases with different courts, analysts said.

A recent report of the central Bangladesh Bank found that the recovery of Tk 1.75 trillion in default loans is stuck in 2.55 lakh pending cases accumulated over the years. Some 75 per cent of the cases were filed by the state-owned banks.

Banks usually can file cases against the loan defaulters in four types of courts—- the Artho Rin Adalat, the Bankruptcy Court, the Certificate Court and the Civil Court. But most of the cases are filed with the Artho Rin Adalat with the highest number of cases pending with this court.

Bangladesh Bank produces the details of the cases with updated information every six months. The last report was prepared based on data as of 5 June.

Analyzing the data shows that more cases have been settled during the July-December period than in the previous six months (January-June). For example, during the July-December period, the recovery of default loans against the pending cases was 4.9 per cent, which was 2.78 per cent during the January-June period.

The highest amount of default loans is stuck with the Artho Rin Adalat with some 62, 204 cases pending till June this year, involving Tk 1.18 trillion. 

The number of cases pending with the Certificate Court is 1.57 lakh, involving Tk 5.33 billion. Some 165 cases are pending with the Bankruptcy Court, involving Tk 5.21 billion. Some 35,514 cases are pending with the Civil Court involving Tk 420.54 billion.

According to the statistics of Bangladesh Bank, state-owned Sonali, Janata, Agrani and BASIC Bank Ltd have some Tk 550 billion stuck in 18,000 cases pending with the Artho Rin Adalat. Another 47 banks have Tk 580 billion stuck in cases pending with the same court.

Banking sector insiders said the state-owned banks have a higher amount of default loans than the private banks as the private banks are more careful in approving loans and they also have higher loan recovery rates.  “Being state-owned banks, the interference of the state is at times higher than that of private banks,” they explained.

Analysts said, in many cases, loans are granted from the state-owned banks under political consideration. These loans often turn default and this result in the filing of cases against the defaulters.

But cases keep piling up in the court, also making a huge chunk of funds stuck in the legal process, they said.