SoBs defy MoF order on public display of top defaulters’ list

None of the state-owned banks (SoBs) and financial institutions have displayed the list of top loan defaulters on their notice boards and posted the same on websites, defying a directive of the ministry of finance (MoF), officials said.

The directive was issued a year earlier.

Most of the lenders said the matter is under process, but some bankers argued public display of the list is not possible since big loan defaulters may file defamation cases against them.

The authorities of the banks and financial institutions are, deliberately, dragging their feet on implementing the ministry's directive, the officials added.

Until September, the amount of default loans in the country's banking sector reached Tk 1.0 trillion, an all-time high. This worries experts and bankers.

In the first nine months of the current calendar year, the non-performing loans jumped by nearly 34 per cent.

People familiar with situation said since the state-owned banks and financial institutions were reeling from various problems, including capital shortage and growing volume of default loans.

In August last year, the Finance Ministry convened a workshop to have expert opinion on how to get such loans recovered.

In the workshop, experts from different sectors made a good number of recommendations on how to tackle the challenges successfully.

Later, the financial institutions division picked up 27 recommendations from them and asked the banks and financial institutions to implement those.

The division also asked the banks and financial institutions to update it about the implementation progress.

Officials said one of the key recommendations from the workshop was displaying the list of top loan defaulters on the notice board and posting the same on websites of the banks and financial institutions.

Until now, none of the banks and financial institutions took effective measures to do so, according to the officials.

The people with knowledge of the matter said Sonali Bank, the largest state-owned bank, recently told the division that it had forwarded the recommendation to its legal consultant for showing the list of top loan defaulters on its notice board and websites.

Sonali sought opinion from its legal counsellor on whether loan defaulters can file defamation cases or take other legal steps against the bank if their names are displayed openly.

The counsellor said that showing the list of defaulters on the website for administrative purposes and displaying the list on notice board is not a similar thing. The issue is a part of an administrative strategy for recovering loan, the counsellor said.

He also opined the names of loan defaulters can be published in newspapers before it files the case against them.

But he stopped short of giving opinion on whether the list can be displayed on notice board and website.

Contacted over telephone on Sunday, managing director of Sonali Bank Obayed Ullah Al Masud told the FE he attended the workshop organised by the ministry last year.

"But none of us have implemented the recommendation regarding public display of the names of top defaulters," he said. "I think displaying their (defaulters) names would not bring any positive result."

Mr Masud felt there are many more strong steps, which may work in this case. The government needs to amend the existing rules and laws to bring the defaulters to book, he said.

There exists a few courts in the country that look after financial crimes, he said, adding a separate bench in the High Court needs to be set up to handle such cases.

"Whenever we declare big borrowers to be defaulters, they file writ petition in the higher court. When our counsellors vacate the writ, they again file writ petitions. It continues year after year," he said.

There should be limit to how many times a defaulter can file writ petitions, he added.

He agreed the move to display the names of loan defaulters publicly is good step, but he feared defaulters in this case may file defamation cases against bankers.

Agrani Bank recently informed the finance ministry that bank branches have been directed to display the list of top defaulters.

However, while visiting some branches on Sunday and Monday no such list was found on notice boards and the website of Agrani.

Managing Director of Agrani Mohammad Shams-Ul Islam told the FE on Sunday that he was doubtful about the possible outcome of displaying the list of loan defaulters.

"Names of many top defaulters have been published in newspapers on several occasions. Did they return the money?" he questioned.

But Mr Islam said he will take steps for displaying the names immediately.

Janata Bank, Rupali Bank, Basic Bank, Bangladesh Development Bank Ltd and Bangladesh House Building Finance Corporation (BHBFC) informed the ministry that the issue is under process.

They also said steps will be taken in line with the measures taken by other banks and financial institutions.

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