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The Financial Express

Banks\' money and slow-moving MLCs

| Updated: October 24, 2017 00:39:06


Banks\' money and slow-moving MLCs

The state-owned banks that often hit the newspaper headlines, generally for wrong reasons, are victims of backlog of cases instituted with the Money Loan Courts (MLCs). 
A few statistics are enough to show the enormity of the problem being encountered by the public sector banks. According to a recent report of the central bank, the number of cases, filed with the MLCs by the four state-owned commercial banks stood at 17,888 as of 30th June last year. And the amount of default-loan involved in these cases was estimated at about Tk 280 billion. 
The banks are deeply frustrated by the slow disposal of cases by the MLCs. They have valid reasons to be so. It takes years to dispose of cases by the MLCs, mainly because of huge backlog of cases and tactics adopted by the borrowers concerned to delay the litigation process. 
With MLCs in place the situation should have been different. In fact, the MLCs were set up following the adoption of a relevant law in 2003 by national parliament with the objective of expeditious settlement of money suits. But the objective has remained largely unmet and things with MLCs have gone the traditional way. General litigants wait for year after year to get results of their cases they file with the courts. The banks are also victims of inordinate delay. They too have to wait for years to get their cases disposed of by the MLCs. 
The MLC Act 2003 provides for the establishment of at least one MLC in every district of the country and, if necessary, more than one in a district. Not all the districts have MLCs. However, the provision relating to establishment of MLCs allows filing of money suits with the joint district court in the absence of MLC in any district. The court would then act as an MLC. 
There is no denying that the issue of slow disposal of money suits by the MLCs is a serious one since a large chunk of money is stuck up with the pending cases. The banks reportedly raised the issue with the Ministry of Finance on a number of occasions. The Finance Minister himself had written to the Ministry of Law to look into the issue. 
The relevant law has not imposed any cap on the number of MLCs in any district. Obviously, most of the money suits filed by the banks are in Dhaka and, for that reason, it needs to have adequate number of MLCs to dispose of cases expeditiously. But the situation has not improved even after the Finance Minister's official communication. 
The issue of timely disposal of cases by the MLCs has become a critical one for the state-owned commercial banks (SoCBs) that are in a bad shape as far as their financial health is concerned. The Sonali Bank, the largest of the SoCBs, is having its worst time in all matters. It tops the default-loan list. Naturally, it has the largest number of money suits with the MLCs, followed by the Agrani Bank.  More than 50 per cent of amount involved in pending money suits of SoCBs belong to the Sonali Bank alone. 
One has to admit the fact that Bangladesh's legal system is full of loopholes and slow in nature. Millions of cases filed with courts, civil or otherwise, are awaiting disposal. Some cases even are decades old. Instances are galore where wrong men get punishment while actual culprits are roaming freely. At times, when brought to its notice, the higher court volunteers to get the wrong men freed. Corruption which is rather systemic in this country has its strong presence in the legal system, particularly in the lower courts. How it is done is everyone's knowledge. 
The government being aware of the slow nature of the legal system had established the MLCs that are dedicated to addressing only the money suits. But the MLCs have been failing to meet the purpose. The reasons deserve scrutiny by all the stakeholders. This is necessary because, in many cases, the banks have been spending a substantial sum on the time-consuming litigation process. It is natural on the part of the borrowers concerned to delay the process of litigation for their own benefit. 
The system involving MLCs would virtually collapse soon if the money suits keep on coming at the current pace. Besides, in many cases, the banks find it very difficult to execute the verdicts of the MLC for lack of support at the field level. 
The current financial health of SoCBs demands finding a reasonable solution to the problem of their large volume of classified loans. A section of influential yet errant borrowers would always get away because of overall governance problem. But banks should, at least, get back their money from the not-so-powerful borrowers who are usually taken to the courts. If the government desires so, special courts may deliver verdicts within a short period. The same should happen in the case of banks' money suit. All concerned should devise means to ensuring such a speedy disposal. 
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