BB to ask state-run banks to trim certificate cases against farmers

February 16, 2015

To advise to find alternative defaulted farm loan recovery window
Bangladesh Bank will ask six state-run banks to take initiatives to decrease the certificate cases against farmers by searching alternative window to recover the defaulted farm loans as the number of unsettled certificate cases has already crossed two lakh. The BB will organise a meeting with the managing directors and chief executive officers of the six state-run banks today at the central bank headquarters in the capital.
The banks are Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank.
The BB will ask the banks to recover the defaulted loans from farmers through persuasion instead of filling certificate cases with court, a BB official told New Age on Sunday.
The finance ministry has recently issued a letter to the central bank asking it (BB) to take initiative to release the farmers from the certificate cases, he said.
According to the latest central bank data, the number of unsettled certificate cases stood at 2,05,372 as of November 30, 2014 from 2,02,274 as of January 31, 2014.
The defaulted loans involving the certificate cases stood at Tk 570.41 crore as of November 30, 2014 from Tk 552.70 crore as of January 31, 2014.
Courts issued arrest warrants against 10,224 farmers between 1991 and 2014 as they failed to repay bank loans in time, the BB data showed.
The BB official said the six state-run banks filed certificate cases with the executive magistrate’s courts to recover defaulted loan up to Tk 50,000 from farmers.
The trend in settling the certificate cases usually maintain a slower pace than that of filing the new cases, he said.
The BB data showed that the six state-run banks filed 2,504 certificate cases against farmers in November last year while the courts settled only 1,710 cases in the month.
In January 2014, the banks filed 3,785 certificate cases while the courts settled 2,499 cases in the month.
The BB official said that the central bank would give directive to the banks to speed up their farm loan recovery programme by avoiding certificate cases.
The farm loans become defaulted as bad category after five years from the disbursement and the loans become written-off after three years from the period of becoming bad loans, he said.
So, the banks usually get eight years to recover the defaulted farm loans before filing certificate cases, he said.
The banks file cases just before writing off the defaulted loans in line with rules and regulations, he said.
The BB will ask the banks to recover the defaulted farm loan within the eight years avoiding filing certificate cases.
The BB will give directives to the MDs and CEOs of the banks to create special cells at all branches of their banks to speed up the recovery programme, he said.
The banks will be allowed to recruit temporary staff on the basis of ‘no work no pay’ to recover the defaulted loans if they do not have sufficient permanent staff, he said.
The banks will be able to convert the defaulted farm loans into blocked accounts by rebating 100 per cent interest if they (banks) fail to recover the bad loans despite close monitoring.
The farmers will be allowed to pay special instalment against the blocked accounts in their suitable time, the BB official said.
The banks should select a single month to recover the loans from farmers and they (banks) should give award to the farmers who will show the best performance in repaying loans, he added.

-With New Age input

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