Staff Reporter :
The Bangladesh Bank has ordered all banks of the country to form specialized units for identifying willful loan defaulters within 9 April 2024.
The ‘Willful Defaulting Borrower Identification Unit’ will have 30 days to determine whether someone is a willful defaulter, the central bank said in a circular issued on Tuesday.
The move comes as the central bank looks to rein on defaulters and boost good governance in the banking sector.
According to the BB circular, the unit to identify willful defaulters will be headed by officers ranking two grades below the managing director of the bank.
The main task of this unit will be to identify whether any defaulting clients- individual, institution or company- is a willful defaulter or not.
The unit will have 30 days to determine whether someone is a willful defaulter. However, if necessary, the managing director can extend the period by another 30 days.
The list of willful defaulters should be sent to the central bank every three months. The list will also include details such as the reason for willful default and whether the bank has sent any notice to the defaulter to pay back the loan.
The units will begin work from 1 July 2024.
Failure to comply with the said instructions will result in fines ranging from Tk50 lakh to a maximum of Tk1 crore for the banks, according to the circular.
Besides, a fine of Tk1 lakh will be levied for every day from the first day of violation. According to the Bank Company Act, if a person or institution willfully fails to repay a loan, they will be considered a willful defaulter.
A willful defaulter cannot be eligible to be a director of a bank or financial institution until five years pass after their exclusion from the list of willful loan defaulters.
The central bank has set a target to bring down non-performing loans to 8 percent by 2026 in light of IMF guidelines.
Besides, the central bank has taken 17 roadmaps to improve banking governance and reduce non-performing loans. One of those is identifying loan defaulters and taking action against them.
