ABB proposes naming loan defaulters and travel bans abroad

The Association of Bankers, Bangladesh, ABB, has proposed a series of stricter measures against wilful loan defaulters as defaulted loans continue to rise alarmingly in the banking sector.

In a recent letter sent to the governor of Bangladesh Bank, the organisation recommended publishing the names of defaulters, imposing bans on foreign travel and declaring them ineligible to contest elections of business bodies.

Earlier, on November 12, the ABB discussed the current state of defaulted loans and possible recovery measures at a meeting with the central bank.

According to the proposal, exemplary action against wilful defaulters is essential. Alongside disclosure of their identities, the ABB suggested restrictions on overseas travel and barring them from participating in elections of trade and business organisations.

At the same time, the bankers’ body proposed limited and time-bound support for borrowers facing genuine distress. It recommended adopting compassionate policies in line with international standards for clients temporarily unable to repay loans due to illness, death or natural disasters.

To speed up loan recovery, the ABB suggested tax and duty exemptions on assets sold through bank auctions, income tax incentives for buyers and removal of the requirement for court approval in transferring auctioned assets. It also emphasised stronger coordination with land registry offices to ensure faster transfer of mortgaged properties.

The organisation further proposed reducing unnecessary delays in money loan courts, speeding up execution of arrest warrants, limiting long-term instalment facilities and establishing separate loan recovery courts in districts with high volumes of defaulted loans.

In addition, to prevent the creation of new defaulted loans, the ABB recommended setting up a central database of mortgaged land and assets under Bangladesh Bank, which would allow banks to verify collateral information and valuations more easily.

In the letter signed by ABB chairman and City Bank managing director Masrur Arefin, the organisation expressed hope that the central bank would take swift steps to implement the proposals, helping restore discipline and confidence in the banking sector.