The money loan courts (Artha Rin Adalat), which were created in 2003 to help expeditious resolution of disputes between banks and their clients over loan repayment, are overburdened.
These courts are failing to meet the very objectives behind their formation, to a large extent.
According to the Bangladesh Bank (BB) statistics, a total of 62,204 cases were awaiting disposal in the money loan courts across the country until June 2019. A total of Tk 1176.14 billion is stuck up with these cases.
But these figures do not match those maintained by the Supreme Court (SC). According to the Supreme Court statistics, until June 2019, at least 21,849 cases were awaiting disposal in the money loan courts across the country.
Of those cases, 1592 have remained pending for over five years, according to the SC records.
Sources said, a large number of cases have remained pending for many years, mainly due to the weakness of the existing laws, lack of required number of judges, courtrooms and complexities in case management.
Banks and financial institutions are failing to get out of this vicious cycle.
The size of funds stuck up in these cases is also huge.
In most cases, money loan courts are failing to complete trial within the stipulated time (maximum 120 working days) mandated by the money loan court act of 2003.
Attorney General Mahbubey Alam told The Financial Express, "The rate of disposal of cases by the money loan courts is comparatively low. So the banks and financial institutions concerned need to be more serious in recovering their non-performing loans. They have to appoint efficient lawyers and monitor the cases regularly."
"The courts are trying their best to dispose of the maximum number of cases. However, it is not possible to dispose of a case hurriedly. A judge has to hear both the parties for the sake of fair trial," the attorney general said.
Sources said, the government is genuinely eager to reduce the amount of defaulted loans in the interest of the economy. And the main way to reduce the amount of the bad loans is expeditious disposal of cases pending with the money loan courts.
According to the Bangladesh Bank statistics, until June 2019, the state-owned six commercial banks had 18947 cases with the money loan courts and funds worth Tk 550.93 billion remained stuck up with these cases. The state-owned specialized banks had 6537 cases involving funds amounting to Tk 21.32 billion.
The private banks had as many as 29170 cases with the money loan courts and the amount involved was Tk 581.70 billion.
Besides, foreign banks had a total of 7550 cases involving funds worth Tk 22.17 billion.
A total of 165 cases are awaiting disposal by the Bankruptcy Courts. The amount involved in these cases is Tk 5.21 billion. A total of 157088 cases are pending in Certificates Courts, involving a sum of Tk 5.33 billion. A total of 35514 cases are now pending in other courts of the country involving funds worth Tk 420.54 billion.
Besides, a total of 9363 cases have been referred to the alternative dispute resolution (ADR) system. The amount involved in these cases is Tk 55.76 billion.
Many borrowers have filed writ petitions with the High Court against money loan court verdicts. In most cases, the writ petitioners get stay order in favour of them. That is why banks and other financial institutions are not being able to recover their money from the borrowers. And, at the same time, the borrowers legally couldn't be identified as loan defaulters.
The top bankers see these writ petitions as the biggest obstacle to recovering the defaulted loans.
Dr Zaid Bakht, Chairman of Agrani Bank Limited, said, "We don't have enough courts to hear a huge number of lawsuits. At the same time there is a lack of required number of judges. There is also an opportunity in the trial process to prolong it, deliberately. A loan defaulter can file appeal with the higher court after completing a trial process in the lower court. As a result, the trial process runs for year after year."
So it is urgent to set up a dedicated and special High Court bench to help expeditious disposal of the money loan cases, Dr Zaid suggested.
He also said that a provision can be added to the relevant law to force the loan defaulters to deposit with the courts a portion of the disputed amount before filing an appeal.
Syed Mahbubur Rahman, Managing Director & CEO of Dhaka Bank Limited, also said, "Capacity needs to be improved. We need more money loan courts and judges. Lengthy process of trial system should be stopped."
He felt the need for legal provision that would allow the banks to go for auction of the mortgaged property following a trial court verdict and before an appeal against it.