BANKS have, as a central bank report says, prepared a list of 3,483 wilful loan defaulters, who together owe about Tk 290 billion. This is apparently a positive step forward to attend to the issues of loan recovery. But, what remains troubling is that no major business group has appeared on the list. Most on the list have defaulted on relatively small loans, with the highest reaching up to Tk 1.5 billion. More than a thousand on the list have defaulted on the credit card, with an amount ranging from Tk 10,000 to Tk 1 million. Large-scale defaulters, who owe billions, remain shielded, as officials say, despite clear evidence of wilful default, which is deliberate non-repayment of the loans despite having the capacity for repayment. Officials say that many banks are hesitant about listing large-scale borrowers as wilful defaulters as they fear that this might hinder their recovery effort. Banks, rather, prefer to negotiate with major clients rather than legally classifying them as wilful defaulters. In the event of recovery issues having remained unresolved, the central bank has instructed other banks to pursue legal action, including lawsuit and the auction of the collateral.
All this appears to be leniency, which has so far been criticised for having encouraged wilful default. Whilst all this goes on, the Bangladesh Bank is not reported to have sent the list of wilful defaulters to other state agencies, as the Bank Company (Amendment) Act 2023 requires it to do, for action needed. The law empowers the central bank to send the list to agencies such as the Bangladesh Securities and Exchange Commission and the Office of the Registrar of Joint Stock Companies for restrictions on defaulters from overseas travel, trade licence acquisition or business registration. The law also allows further restrictions, such as bans on the defaulters from buying property or receiving government awards. The central bank in March 2024 announced that it would be sending such lists, beginning in July that year, to the state agencies, but the move is learnt to have stalled. And, such inaction on part of the government sends out a signal that wilful defaulters could get away without having to face any punitive action. Experts say that the failure to make public such lists and accordingly act on them reflects governance lapses and hints at a long-standing nexus of banks and politically connected borrowers.
Central bank data, meanwhile, show that non-performing loans have surged to about Tk 6,000 billion by this June from Tk 4,200 in March. No meaningful government action on this renders the periodic publication of the figures of outstanding or non-performing loans meaningless. The government should, therefore, be stringent about loan default, small or big.
