Why is Bangladesh Bank’s circular on loan rescheduling not applicable to non-banking financial institution borrowers? HC
A non-banking financial institution’s borrower was told that the rescheduling facility is only applicable for banking sector borrowers.
The High Court has asked the authorities concerned to explain why Bangladesh Bank's (BB) circular allowing borrowers/defaulters to reschedule their loans by giving a down payment of only 2 percent is not applicable to borrowers of non-banking financial institutions.
The HC bench of Justice JBM Hassan and Justice Md Khairul Alam on Monday (Dec 2) issued the rule after a preliminary hearing of a writ petition.
Five people including the Bangladesh Bank governor, general manager of Department of Financial Institutions & Markets of BB, general manager of Banking Regulations and Policy Department, managing director of Phoenix Finance and Investment Ltd were asked to respond to the rule within four weeks.
Lawyer Polash Chandra Roy moved for the writ petitioner while Deputy Attorney General Nur-us Sadik represented the state.
Phoenix Finance and Investment Ltd's borrower Md Yunus Patwari filed the writ petition.
Earlier, he had asked Phoenix Finance and Bangladesh Bank for a loan rescheduling facility by giving a down payment of 2 percent of his loan.
On May 16 this year, Bangladesh Bank issued a circular allowing borrowers to reschedule their loans for 10 years by giving a down payment of only 2 percent instead of the existing minimum 10 percent.
Patwari was told that the facility is only applicable for the borrowers of banks, not for the borrowers of non-banking financial institutions.
The reasoning was that since the Banking Regulations and Policy department of BB issued the circular, it is only applicable to borrowers of banks, not to borrowers of financial institutions which are controlled by the Financial Institutions & Markets department of BB.
The Bangladesh Banks circular states that defaulters can get a facility to repay their loans over 10 years at a simple 9 percent interest after rescheduling the loan by giving a down payment of 2 percent of the loan.
On September 12 this year, Yunus Patwari has served a legal notice on Bangladesh Bank over this issue.
Later, lawyer Raju Howlader Polash, on behalf of Md Yunus Patwari, filed the writ petition as there was no response to the legal notice.