The High Court yesterday ruled that the loan defaulters must make down payment of 15 percent of the outstanding amount to get fresh loans from any scheduled bank in line with the 2012 Bangladesh Bank circular.
Delivering a verdict on a writ petition, the court, however, said the BB circular issued on May 16 this year will be valid for the next 90 days so that the borrowers can apply for rescheduling their bank loans.
The central bank issued the circular allowing borrowers, who became defaulters by December last year, to reschedule loans for 10 years by making a down payment of only 2 percent instead of the existing 10 percent.
The HC gave the verdict after hearing the writ petition filed by Human Rights and Peace for Bangladesh (HRPB) in early February. The rights organisation sought court directives for the formation of a commission to look into the irregularities and corruption in the banking sector in the last two decades.
Talking to The Daily Star, Barrister Munirujjaman, a counsel for the BB, said the HC made the observation as the central bank’s May 16 circular was suspended for various reasons.
The lawyer also said he would issue an advocate certificate to the BB immediately so that it can implement the circular, if necessary, as the release of full text of the HC verdict may take time.
Asked, petitioner’s lawyer Manzill Murshid said that according to the 2012 BB circular, the banks concerned are supposed to submit lists of names of loan defaulters to the Credit Information Bureau and take permission from the BB for giving the borrowers fresh loans.
From now on, the banks have to follow the conditions of the 2012 circular, he mentioned.
A number of bankers told this newspaper that rescheduling of defaulted loans with 2 percent down payment will depend on the banks as the BB circular in this regard is not mandatory for the lenders.
“The defaulters are struggling to pay 2 percent of their outstanding loans as down payment. How will they pay 15 percent for getting fresh loans,” said the managing director of a bank, seeking anonymity.
Yesterday, the HC ordered the BB to constitute a nine-member committee comprising banking experts to find out the loopholes in sanctioning, distributing and recovering the loans, and to make necessary recommendations and suggestions to this effect.
The central bank has also been ordered to follow the recommendations and suggestions of the committee.
The HC ruled that in future, any commercial bank has to appoint its top five officials, including the managing director, under supervision of the BB.
The court said the interest rate of bank loans should be reduced to a single digit to facilitate business and development in the country.
“We have found that the borrowers have been facing hardship due to high interest rate. So the banks should reduce the interest rate from double digit to a single digit,” observed the HC bench of Justice JBM Hassan and Justice Md Khairul Alam.
The court said smooth circulation of money is necessary for a sustainable economy and development of the country. And banks are the heart of money circulation, the court said.
Nobody can deny that some financial scams have been detected involving several institutions, including Hallmark, BASIC Bank and Bismillah Group, it mentioned.
The government, the Anti-Corruption Commission and the BB have taken some measures but those are inadequate for stopping these kinds of scams, the HC observed.