POST TIME: 4 November, 2019 00:00 00 AM
HC upholds BB decision

HC upholds BB decision

The High Court (HC) yesterday upheld a Bangladesh Bank’s circular over loan rescheduling to loan defaulters that allowed them to reschedule their classified loans with 2 per cent down payment and 9 per cent interest over 10 years.

However, the HC directed the central bank to follow the 2012 master rule in giving fresh loans to defaulters, which means the defaulters have to deposit 15 per cent of their dues and interests in order to get a fresh loan.

“Borrowers must pay at least 15 per cent of the “Outstanding Balance” to avail any further credit facility from the rescheduling bank,” according to the master rule of 2012.

At the same time, the HC bench ordered the BB to issue a circular giving 90 days more to apply for rescheduling loans and further loans.

The HC bench also ordered central bank to form a nine-member committee with experts of the banking sector to find out loopholes in lending and recovery of loans.

The committee has also been asked to find out the way to stop irregularities, corruption and mismanagement in the financial sector.

While delivering verdict on a writ petition, the HC bench also asked the authorities concerned to take necessary opinions and suggestions from the Bangladesh Bank (BB) in recruiting top five officials to any bank.

The HC bench comprising Justice JBM Hassan and Justice Md Khairul Alam delivered the verdict after disposal of a rule issued earlier over a BB circular that allowed defaulters to reschedule their loans with 2 per cent down payment and 9 per cent interest over 10 years and get further loans.

“We are of the view that due to the high interest rate on the bank loan the borrowers facing hardship. So the authorities concerned of the banks should reduce the interest

rate from double digit,” the HC bench observed.

It also observed that money is blood of economy. The circulation of smooth money is necessary for the sustainable economy in the country. Blood circulation is controlled by the heart and money circulation is controlled by the banks. Therefore, banks are the heart of the circulation of money, it noted.

The HC bench came up with the orders and observations while declaring final verdict on a writ petition challenging the legality of Bangladesh Bank's circular offering the


Earlier, the HC bench had on May 21 had put a freeze on the circular following the writ petition filed by Human Rights and Peace

for Bangladesh (HRPB), a human rights organisation.

Attorney General Mahbubey Alam took part in the hearing on behalf of the finance ministry, advocate Shah Monjurul Hoque appeared for Bangladesh Association of Bankers, advocate Ajmalul Hossain, barrister Shameem Khaled and advocate Munirujjaman stood for the Bangladesh Bank, advocate Khurshid Alam Khan for Anti-Corruption Commission while advocate Manzill Murshid took part hearing on behalf of writ petitioner HRPB.

On July 23 in 2019, the same court issued a rule asking the authorities concerned of the Bangladesh Bank and the government to explain in 10 days as to why the circular

issued on May 16 this year giving privilege to the loan defaulters should not be declared illegal.

After final hearing on the rule, the HC bench yesterday came up with the orders and