The number of pending cases at the Artho Rin Adalat (Money Loan Court) stood at 2,04,000 as of March 2025, while the total amount claimed by banks reaching 2,12,000 crore, according to Bangladesh Bank (BB).
The Artha Rin Adalat Act of 2003 provides a specific legal framework for banks to recover defaulted loans from borrowers, and the law outlines the roles and responsibilities of all parties involved in these cases.
Although the Act aims to expedite the default loan recovery process, huge number of cases, low number of courts and the borrowers' attitude to file writ petitions in the High Court makes delay and hinder the settlement of these cases, insiders said.
"Banks are unable to recover such loans from errant borrowers due to the country's complex legal system which apparently goes in favour of the financial offenders," a senior executive of a private commercial bank told The Daily Observer on Saturday, preferring anonymity.
He added, "Defaulters are frequently avoiding loan repayment despite repeated pressure. Even they are seeking waivers and write-off facilities to escape from payment. So, the banks have no other option but to file a case with the Money Loan Court, and this is creating a backlog in pending cases."
Even after using the Alternative Dispute Resolution (ADR) system to dispose the cases, there is no significant development in resolving the cases outside the court. Moreover, the recovery rate of settlement against the cases is very poor, according to the sources of BB's and Artho Rin Adalat.
From January-March, this year, Tk 788 crore has been recovered against 8,442 cases settled through Artho Rin Adalat. And less than Tk 1,000 crore has been recovered against 10,500 cases settled through ADR till last December.
It is learned that the central bank has given necessary instructions to the banks to speed up the loan recovery process by settling the default loan cases quickly. In addition, emphasis has been placed on taking new steps to increase the resolution of default loan cases through the ADR's method.
It is learned that the Action Plan-G part of Objective 9-4 (B) of the Legal Department of the BB's Strategic Plan 2020-24 includes the issue of monitoring default loans under litigation of banks and financial institutions.
As part of the implementation of that goal of the central bank's strategic plan, it was decided to conduct regular supervision from the Legal Department in December 2021 to quickly settle the loans under litigation in order to reduce the default loans of banks and financial institutions. Accordingly, regular instructions, advice and various assistances are being provided to the banks for the speedy settlement of the related cases. Despite all these initiatives, the settlement of pending cases and recovery of default loans by banks is low.
"The number of Money Loan Court is insufficient to deal with the huge number of pending cases. Even, existing courts lack required number of judges. Sometimes banks filed lawsuits against the defaulters without providing necessary documents, including borrowers' collaterals, and opinions. All these are making delays in settling cases in the Money Loan Courts," said a lawyer who deals with such cases.
According to the BB's, in the first three months of this year (January-March), various banks have filed 7,432 new cases at the Artho Rin Adalat, involving Tk 11,191 crore.
BB's reported that at the end of December 2024, there were 72,540. pending cases at the Artho Rin Adalat, while banks claimed a total amount of Tk Tk 1,78,270 crore.
BB's report further states that according to Sections 22-25 of the Financial Debt Court Act, 2003, there is an opportunity to settle disputes and recover loans outside the court through mediation or compromise. However, in most cases, mediation initiatives are not fruitful due to unavailability of a qualified mediator and failure to resolve the differences between the parties.
In this case, hiring a professional and skilled mediator associated with a mediation service provider may be more fruitful than a person selected with the consent of the opposing parties. Apart from this, there is also an opportunity to take the help of arbitration to recover the amount owed on the loan.
