Tuesday, November 13, 2018 | ePaper

Banks in dire straits

Tk 2 lakh cr stuck in pending lawsuits

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Kazi Zahidul Hasan :
Banks and financial institutions are fighting cases across the country to recover over Tk two lakh crore from the borrowers.
About 1,00,705 cases are pending  with different courts as of June this year, according to an official figure.
Out of the total pending litigations, a total of 95,271 cases were filed with Artha Rin Adalat (Money Loan Court), Bankruptcy Court and others involving Tk 1.42 lakh crore, while a total of 5,434 writ petitions were filed by the defaulters against their classified loans involving over Tk 57,674 crore.
State-owned banks and financial institutions had 35,029 pending cases with courts involving over Tk 1.11 lakh crore, while private banks and financial institutions had 65,676 cases involving Tk 88,559 owed by loan defaulters.
Sonali had the highest number of pending cases among the public banks. 
"A huge amount of money got stuck with the cases putting banks in an extremely difficult situation," Md Obayed Ullah Al Masud, Managing Director of Sonali Bank, told The New Nation yesterday.
He said that like other banks Sonali was also pursuing the most pending cases for recovery of the outstanding amount.
"We were compelled to file lawsuits against the defaulters as repayment dates of their loans expired long ago," he added.
He said banks filed lawsuits for recovering loans. But it takes a long time to settle due to different legal complexities, including writ in the High Court.
"It's a matter of concern that banks are struggling to settle huge number cases remaining pending over the years involving huge chunk of invested funds. We need a 'special tribunal' for disposing the pending cases. Otherwise, the situation will go worse, making banks vulnerable," said Mohammad Shams-Ul Islam, Managing Director of Agrani Bank
"Banks and financial institutions are caught in a vicious cycle of pending lawsuits. Many of them are rapidly becoming insolvent due to pending cases for years," an unanimous private banker told The New Nation.
He said, the rules must be changed to get rid from the pending cases in loan court.
"Banks have filed cases to recover money from defaulters.  Large amount of money  became stuck in these cases eroding their capital base," Dr Khondkar Ibrahim Khaled, a former Deputy Governor of Bangladesh Bank, told The New Nation on Saturday.
"Though the banks are pursuing the cases through the courts to recover the money, little progress is in sight due to lengthy court procedures," he observed.  
Dr Ibrahim Khaled further said that the country's banking sector is beset with toxic loans due to improper loan sanctioning, poor supervision and risk management practices.
"Banks and financial institutions may not get benefit from the court cases if due diligence is not followed while processing and sanctioning loans," said Ibrahim Khaled.
When asked, he said the government should look for a fresh strategy to quickly dispose of the huge number of cases. Otherwise, the issue would be more complex in the days to come.

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