High Court observes on loan defaulter as tax hike for savings profit
12:00 AM, June 25, 2019 / LAST MODIFIED: 05:57 AM, June 25, 2019

Good punished, bad rewarded

HC observes citing tax hike for savings certificate profit, how loan money is being laundered abroad

Borrowing large amounts from banks, some people set up industries in the country with a portion and launder the rest to other countries, the High Court observed yesterday, adding that those people consider the countries to be their second home.

On the other hand, retired and poor people purchase savings certificates in most cases. But the government, in the proposed budget, has hiked the tax on their profits from five to 10 percent, the court said, adding that it was like punishing the good and favouring the bad.

The HC also said the Bangladesh Association of Banks had promised the prime minister a year ago that they would bring down the lending rate to single digit, but it was still 17-18 percent.

The banks have not kept the promise and the Bangladesh Bank has not taken any action against them, it observed.

The HC bench of Justice FRM Nazmul Ahasan and Justice KM Kamrul Kader came up with the observations while hearing a writ petition challenging the government’s failure to stop various irregularities and corruptions in sanctioning loans.

Human Rights and Peace for Bangladesh (HRPB) filed the petition on February 13.

At the beginning of the hearing, Bangladesh Bank submitted a report to the HC detailing the amount of defaulted bank loans in the country. The same HC bench on May 16 had ordered the BB to submit by yesterday a list of names and addresses of borrowers who had defaulted loans of over Tk 1 crore.

It had also asked the BB governor to submit to it a report by the same date with details on the money laundered to different countries and the steps taken to recover it.

According to the BB report, the amount of total defaulted bank loans in Bangladesh is Tk 2.2 lakh crore in the last 20 years.

Of the total, 1.1 lakh crore is eligible to be collected, Tk 80,000 crore is involved with court orders in connection with different cases and Tk 30,000 crore cannot be realised, Attorney General Mahbubey Alam told the court citing the central bank’s report.

The money was taken by loan defaulters from different banks through 10,476 different accounts in the last 20 years.

Mahbubey Alam and Barrister M Moniruzzaman submitted the report in two sealed packets to the HC bench during yesterday’s hearing.

Initially, the lawyers did not disclose the names and other particulars of the loan defaulters in the open court saying that such information was confidential and it could not be disclosed to people other than in parliament as per the relevant law.

Writ petitioner’s lawyer Advocate Manzill Murshid opposed the Bangladesh Bank lawyers’ statement saying that all information except for the ones involved in state secrets could be disclosed to the public as per the Right to Information Act.

He told the court that the bank owners who have links with government top brass took large amounts of loans from their own financial institutions.

He prayed to the HC to extend its May 21 order that halted the loan defaulters’ privilege to secure further loans by rescheduling their defaulted loans upon a down payment of just 2 percent of the total loan amount.

After hearing the arguments, the HC bench extended for two months its May 21 order that issued a status quo on the Bangladesh Bank’s circular allowing defaulters to reschedule their loans with a repayment period of up to 10 years and to get further loans.

The bench then asked the Bangladesh Bank lawyers and Deputy Attorney General Abdullah-Al-Mahmud Bashar to submit their replies to its rule through affidavits in two weeks.

It also asked the respondents to show causes why they should not be directed to form a commission to look into the irregularities and corruption in giving out loans and waiving interest in the last two decades.

Those made respondents to the rule are secretaries to the Cabinet Division, the Prime Minister’s Office, the finance ministry, the financial institutions division and the law ministry, the BB governor, and the chairmen of the National Board of Revenue and the Anti-Corruption Commission.

Earlier on Saturday, the finance minister in a report in parliament disclosed that there were 1.7 lakh loan defaulters in the country, with the bad loans standing at over Tk 1 lakh crore.

Half of the defaulted bank loans amounting to Tk 50,942 crore is with top 300 borrowers, Finance Minister AHM Mustafa Kamal told parliament, blaming banks for not choosing borrowers wisely.

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