Bank and non-bank financial institutions of the country are increasing at an alarming rate. Due to various irregularities and mismanagement, defaults are not being collected at all. This time, Bangladesh Bank has instructed to form a separate unit to identify willful defaulting borrowers of financial institutions. The Financial Institutions and Markets Department of the Central Bank has issued a notification instructing the formation of this unit by April 30 of this month.
According to the new guidelines, any willful defaulting borrower of a financial institution will not be eligible for state awards or honours. The person’s car, land, house, flat etc. will be sent to the registration authority. If a finance company lists a borrower as a willful defaulter, in that case the concerned borrower will not be eligible to become a director of a finance company or bank company until five years have passed after the borrower is discharged from that list by paying off the loan.
According to the guidelines of Financial Institutions and Markets Department of Bangladesh Bank, after a person, institution or company defaults, several processes must be followed in identifying whether the person or institution is a willful defaulting borrower or not. In order to carry out all activities related to identification of defaulting borrowers, a separate unit called ‘Willful Defaulting Borrower Identification Unit’ must be formed in the head office under the two steps below the managing director of the finance company, the chief executive officer, by April 30 of this year.
According to the definition of willful defaulter given in 2023, finance companies are required to identify whether any of their defaulting borrowers are individuals, institutions or willful defaulting borrowers. Within 30 days after being identified as a defaulter, the concerned unit of the finance company shall identify the borrower by taking into account the relevant factors for determining whether the borrower is a willful defaulter or not. However, if it is not possible to identify within the stated period due to logical reasons, the period can be extended by another 30 days with the approval of the chief executive officer of the finance company.
If any person, institution or company is identified as a willful defaulter, certain procedures have to be followed for finalization. For example, if a defaulting borrower is identified as a willful defaulting borrower, the concerned borrower should be given 14 working days to present his statement stating the reasons for the identification.
If the concerned borrower fails to give a statement within the stipulated time or if the statement given by the borrower is considered acceptable or not by the ‘Willful Defaulting Borrower Identification Unit’ then the approval of the chief executive officer of the finance company shall be taken in order to take a final decision in this regard. However, as per the definition given in the National Industrial Policy, the approval of the Executive Committee of the Finance Company will be necessary in the case of loans with a status of 75 crores and above in the large industrial sector, 300 crores and above in the ‘medium industry’ sector and 10 crores and above in other sectors.
Action against willful defaulting borrower
Under Section 30(9) of the Finance Companies Act, 2023, Bangladesh Bank can send the list of willful defaulting borrowers to various related agencies. If they request to take necessary measures to ban their foreign travel, ban on trade license issue, ban on company registration to Bangladesh Securities and Exchange Commission, Registrar of Joint Stock Companies and Firms, the related agencies of the government will take necessary measures to fulfill the purpose of the law.
A willful defaulter shall not be eligible for any State award or honour; The list of willful defaulting borrowers will be sent by Bangladesh Bank to the registration authorities of vehicles, land, houses, flats etc. The authorities concerned can take appropriate action under existing laws. If a borrower is listed as a willful defaulter, in that case, the concerned borrower will not be eligible to become a director of any finance company or bank company until five years have passed after the borrower has been discharged from the said list.
penalty
In case of violation of the above instructions by the finance company or if any finance company is found to have knowingly or willfully violated the instructions by Bangladesh Bank under the powers given in the Finance Companies Act, 2023, a fine of not less than 50 lakh taka and not more than one crore taka shall be imposed on the concerned finance company for the said violation. will be imposed. If the said contravention continues, an additional fine not exceeding one lakh rupees shall be levied for every day after the first day of such contravention.
EAR/EA
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