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FID reviews legality of disclosing names of loan defaulters in media

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FT ONLINE

The Financial Institutions Division (FID) of the Ministry of Finance is currently reviewing the legal aspects of disclosing the names of top loan defaulters in the country.

The names would be published as advertisements in daily newspapers, as a recommendation to meet the challenges of state-owned banks, a ministry official confirmed the matter to media.

This recommendation, along with 63 others was discussed and finalised to revive the state-run banks, were recently proposed in a workshop last month attended by Finance Minister AMA Muhith and presided over by Financial Institutions Division (FID) Secretary Md Eunusur Rahman.

Following the meeting on Tuesday, the FID secretary said: “Publishing the names of the loan defaulters in newspapers will damage their image.”

He said that legal rules and regulations must be examined as they may contradict with other laws, when it comes to such provision of disclosing the names of loan defaulters. However, the FID may implement new regulations under a new Bank Company Act.

The FID secretary further said that they have been trying their best to incorporate all of the major recommendations.

However, sources say that the recommendations discussed during the workshop will not be implemented during the tenure of the current government, while the succeeding government may consider them.

Other recommendations also include calls to reduce the number of stages for loan approval in state-run banks. The FID has also been mulling the provision of conceding more authority to bank officials at all levels, so that they can execute instant decisions to take required actions against loan defaulters and written off loans.

Moreover, technological capacity may proceed to increase in remote branches of these state-run banks, for smooth operation.

Furthermore, the state-owned bank authority should reward regular borrowers, while taking legal actions against loan defaulters, according to one of the recommendations.

Default loans at state-owned banks account for 27% of total default loans in Bangladesh’s banking sector.

In the last four years, the government has disbursed a total of Tk9,639cr to meet the capital shortfall in the eight state-owned banks. Majority of this amount was channelled to Sonali and Basic Bank.

-SAM

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