Commercial bankers have sought permission from Bangladesh Bank to publish photographs and lists of loan defaulters as part of efforts to recover defaulted loans.

The Association of Bankers, Bangladesh (ABB), representing commercial banks, sent a letter to Governor Ahsan H Mansur on Wednesday outlining the proposal.

The move follows a meeting on Nov 12 between the central bank and ABB on strategies to recover non-performing loans, where bankers were asked to submit recommendations.

After around two and a half months, ABB submitted a set of proposals, with public disclosure of defaulters among the key suggestions.

Bangladesh Bank first attempted to introduce branch-level publication of defaulters’ lists in 2014, but the initiative was halted following High Court directives.

The Bangladesh Association of Banks (BAB), representing bank sponsors, had backed the move at the time.

Similar attempts were made again in 2018 and 2019, but those efforts were also stalled due to political influence.

The issue of publishing defaulters’ lists was discussed at several meetings of the finance ministry in 2021 as part of loan recovery measures, but the proposal was never implemented.

With defaulted loans continuing to pose challenges for the financial system, bankers have now raised the issue once again, seeking regulatory approval to proceed.

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.

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.

Tags: #banks in Bangladesh#Bangladesh Bank# defaulted loans#ABB# bank CEOs#Classified loans# deafaulters of loans