United News of Bangladesh

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 recommendations were conveyed to the central bank following a meeting with Governor Dr Ahsan H Mansur on November 12, according to a letter signed by ABB Chairman and City Bank Managing Director Mashrur Arefin. Under the proposal, habitual defaulters would be barred from travelling abroad without explicit permission from a court or the lending bank. Banks would also be authorised to publish the names and photographs of defaulters in mass media, while individuals with unpaid loans would be disqualified from contesting elections of business and trade associations. The measures are part of what the ABB described as ‘shaming’ and restrictive tactics designed to force delinquent borrowers to repay outstanding loans in cash. To speed up balance-sheet clean-ups, the bankers also proposed simplifying the loan write-off process in line with international standards and easing conditions for interest waivers in cases involving death, terminal illness or natural disasters. The ABB further outlined a series of incentives to facilitate faster disposal of mortgaged assets through auctions. These include withdrawing income tax and VAT on properties sold or purchased through bank auctions, removing the requirement for Deputy Commissioner’s approval and ensuring full cooperation from Sub-Registrars’ offices. The bankers also called for automatic, cost-free mutation of land ownership in favour of banks following court orders under Section 33(7) of the Money Loan Court Act. Turning to legal issues, the Association suggested that the country’s top court should refrain from issuing stay orders on Credit Information Bureau (CIB) reports unless borrowers make a substantial down payment. It also recommended extending the maximum period of civil detention for defaulters from six months to as long as seven years, depending on the size of the loan. “The true picture of defaulted loans is finally emerging since the fall of the previous government,” bankers said, pointing to what they described as a longstanding practice of underreporting bad debts. Bankers in Bangladesh push for higher loan limits for homes, cars 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.

The Association of Bankers, Bangladesh (ABB), an organisation of bank executives, has called for greater flexibility in setting service fees and an increase in loan limits for housing and car purchases. ABB representatives placed their demands at a meeting on Monday chaired by Bangladesh Bank Governor Dr Ahsan H Mansur. Senior central bank officials were also present. The association proposed raising the maximum home loan limit to Tk 5 crore and increasing the loan-to-value ratio for buying cars and flats to 90 percent. According to central bank sources, the ABB had submitted these proposals in writing over several months, prompting Bangladesh Bank to arrange the meeting. While the central bank agreed in principle to some proposals, it rejected others to protect customer interests. Some decisions from the meeting are expected to be announced soon through a circular. The proposals included calls to digitise all transactions to eliminate delays in deposits, simplify the process for banks to raise capital through Tier-2 bonds, and introduce more flexible classification and provisioning policies for loans to the Cottage, Micro, Small, and Medium Enterprise (CMSME) sector. ABB also urged that banks be allowed to write off loans that have been non-performing for one year and requested additional time to adjust the excess portion of revolving loans, with the possibility of renewal until December. Farmers forced to take high-interest loans under syndicate pressure: CAB chief The association further sought the removal of fixed service charges, allowing banks to determine their own fees, and full permanent address verification using national identity cards during account opening. Besides, it proposed raising the home loan limit to Tk 5 crore, increasing the loan-to-value ratio to 90 percent, removing the loan limit for purchasing hybrid cars with up to 90 percent financing, and setting maximum limits of Tk 40 lakh for personal loans and Tk 50 lakh for credit cards. ABB Chairman and City Bank MD Masrur Arefin, along with managing directors of several banks, including Abul Kashem Md Shirin of Dutch-Bangla Bank, Mohammad Ali of Pubali Bank, Hasan O Rashid of Prime Bank, Ali Reza Iftekhar of Eastern Bank, Syed Mahbubur Rahman of MTB, Sohel RK Hossain of Bank Asia, and Naser Ezaz Bijoy, CEO of Standard Chartered Bangladesh, among others, attended the meeting.