The Financial Express

Dedicated HC bench to handle bank cases  

| Updated: August 23, 2019 22:20:44

Dedicated HC bench to handle bank cases   

It is good that the incumbent finance minister AHM Mustafa Kamal has felt the necessity of creating a separate High Court (HC) bench to deal with cases pertaining to banks and non-bank financial institutions (NBFIs).

A number of his predecessors did also feel the same way. Even the law ministry, on occasions, had assured the finance ministry of doing the needful. But a dedicated bench to hear cases in relation to bank issues is still not in place.

The importance of having a separate HC bench to hear bank cases is undeniable. In the absence of such a bench, banks do have no options other than waiting for long to get results while delinquent borrowers are enjoying such delays.

That the volume of soured loans of banks crossed the trillion-taka mark months ago is no secret. An ever-bulging portfolio of bad loans has thrown the country's banks into tailspin. A notable part of such loans stuck in bank cases is pending before the money loan courts and the higher courts.

The government in 2003 constituted money loan courts under an act passed by parliament in the same year. Hundreds of cases have been instituted by banks and NBFIs since then to get back their money from defaulting borrowers.

The existence of money loan courts has helped banks get back a part of their soured loans. Yet the delinquent borrowers do often take recourse to dilly-dallying tactics taking advantage of legal loopholes.

But what has been a major problem in the loan recovery process is the propensity among a section of large and influential borrowers to move to higher courts challenging the money loan court act on the plea that the latter has undermined their rights guaranteed by the country's constitution. The fact remains that the money loan court act contains special provisions relating to filing of appeal and settlement by the defaulting borrowers.

The defaulting borrowers are yet go to higher courts to restrain banks and NBFIs from proceeding with execution of the verdicts they get in their favour from money loan courts. Besides, the latter are quite aware of the fact that the HC which remains preoccupied with a huge backlog of other cases would take a long time to hear cases of financial nature.

Moreover, the legal departments in banks, in most cases, are weak and disorganised and those are found to be unable to represent banks' cases strongly in courts.

During the time of the immediate past finance minister, the finance ministry had reportedly requested the law ministry to do the needful for creating a separate bench in the HC to deal with cases. The law ministry had also responded positively. But there has not been any notable progress to this effect. Here, the most important role is supposed to be played by the Supreme Court.

The issue of forming a dedicated HC bench did come up during a recent meeting between the finance minister and the heads of banks and NBFIs. The former assured the latter of taking necessary measures in this respect.

The formation of a specialised bench for bank cases has been long overdue.  Moreover, the judges who would be presiding over the bench need to be adequately conversant with the technicalities of banking operations and company affairs. Hopefully, all the relevant parties would look into the issue that appears to be very important given the current state of the banking industry.


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