The High Court yesterday questioned the legality of Bangladesh Bank’s decision to grossly relax the policy for rescheduling defaulted loans.
It issued a rule asking respondents to explain in four weeks why the central bank circular issued on July 18, which stated changes that reportedly patronise loan defaulters, should not be scrapped.
Eight government high officials — including the cabinet secretary, principal secretary to the prime minister’s office, finance secretary, law secretary and BB governor — have been made respondents to the rule.
The bench of Justice JBM Hassan and Justice Razik-Al-Jalil issued the rule, after rights organisation Human Rights and Peace for Bangladesh (HRPB) filed a writ petition, challenging the legality of the circular.
According to the circular, defaulters will now get a maximum of eight years to repay term loans instead of two years, as previously stipulated.
Defaulters will reportedly also be allowed to reschedule their non-performing loans (NPLs) four times instead of three, along with other benefits, according to the BB notice.
During yesterday’s hearing, HRPB lawyer Manzill Murshid told the court that BB has issued the notice to patronise big loan defaulters, which is discriminatory and contradictory to the constitution.
Depositors will be harmed, and the financial condition of banks will weaken because of the new provisions, he argued.
Attorney General AM Amin…
