Photo : Collected
Bangladesh Bank is establishing a new unit dedicated to identifying willful defaulters. The regulatory body of the banking sector has issued a notification stating that the new unit will be operational by April this year.
The notification outlines procedures for identifying willful defaulters and the subsequent actions against them. Individuals or institutions identified as such will be deemed ineligible to receive any state medals. Additionally, they will face restrictions, including a ban on foreign travel and prohibitions on registering new properties or vehicles, obtaining trade licenses, or incorporating new companies through the capital market or joint stock companies. These directives have been communicated through a notification issued by Bangladesh Bank.
The circular, signed by Mohammad Shahriar Siddiqui, Director of the Banking Regulations and Policy Department of Bangladesh Bank, was distributed to the managing directors and chief executives of all scheduled banks on Tuesday.
According to the notification, the definition of a willful defaulter is provided under Section 5 (AAAA) of the Bank Companies Act, 1991 (as amended up to 2023). It specifies that a willful defaulter refers to a person, organisation, or company that has received a loan, advance, investment, or any other financial benefit from a banking company or financial institution, either for themselves, their family members, interested parties, organizations, or companies, but fails to repay the principal amount, interest, or profit despite possessing the ability to do so.
Alternatively, a willful defaulter may obtain a loan, advance, investment, or any other financial benefit in the name of themselves, their family members, interested parties, institutions, or companies by providing fraudulent, deceptive, or false information to a banking company or financial institution. Moreover, the funds obtained must be utilized for purposes other than those specified for the loan, advance, investment, or other financial facility, or used against the terms of the loan or advance. A person or institution will also be considered a willful defaulter if they transfer or dispose of the secured loan or advance without written permission from the banking company or financial institution.
Once identified, these individuals or institutions will be disqualified from receiving any state honours or participating in state functions. Furthermore, they will be prohibited from traveling abroad or registering properties or vehicles. Additionally, they will be barred from establishing companies regulated by the Bangladesh Securities and Exchange Commission (BSEC) or registered as Joint Stock Companies (RJSC).
Moreover, no person or company identified as a willful defaulter shall be appointed as a director of any bank or financial institution. The central bank also stated that if any director is found to be a willful defaulter, they will be dismissed from their position. Additionally, a person identified as a willful defaulter will be disqualified from serving as a director for 5 years after repaying the loan, as per the BRPD circular.
Any individual or organisation identified as a willful defaulter must submit an application within the next 2 months. Failure to file an application or have an appeal accepted by the Central Bank will result in criminal proceedings against the individual or institution.
Messenger/Fameema
