B Mirror Report : The Association of Bankers, Bangladesh (ABB), representing chief executives of the country’s banks, has formally requested permission to publish the names and photographs of loan defaulters as part of a broad reform package aimed at reducing soaring non-performing loans (NPLs).

In a letter signed by ABB Chairman and City Bank Managing Director Masrur Arefin and submitted recently to Bangladesh Bank, the organization outlined a five-phase proposal to strengthen loan recovery, curb legal loopholes, and prevent the creation of new defaults. Copies of the letter were also sent to the central bank’s Banking Regulation and Policy Department.

The proposals followed a recent meeting at Bangladesh Bank, where managing directors were asked to recommend measures to address the worsening default situation in the banking sector.

Bangladesh’s NPLs have surged to alarming levels, reaching Tk 644,515 crore by the end of September 2025 accounting for 35.73 percent of total loans. Although the ratio eased to around 30 percent by December, it marks a dramatic rise from Tk 284,977 crore, or 16.93 percent of total loans, a year earlier. Within one-year, defaulted loans increased by Tk 359,538 crore, more than doubling.

Bankers warned that the high volume of bad loans poses a serious threat to economic stability and business confidence. They noted that many loans had long been defaulted but were previously concealed under policy relaxations. The real picture has begun to emerge since the appointment of the new central bank governor following the political transition.

In the first phase, ABB proposed partial write-offs of defaulted loans in line with international standards to enable faster recovery. The group also called for swift regulatory support to liquidate pledged shares and urged relaxed approval requirements for waiving interest on certain personal, housing, credit card, and small business loans affected by death, terminal illness, or natural disasters.

The second phase focuses on motivating defaulters to repay. Key proposals include restricting overseas travel for defaulters without bank or court permission, publicly disclosing defaulters’ names and photographs, and barring them from participating in business association elections.

Currently, defaulters are prohibited from contesting national and local government elections under banking laws, but many reportedly secure temporary court stays to bypass restrictions.

The third phase contains six measures to strengthen loan recovery through the sale of mortgaged assets. ABB proposed removing all income tax and VAT on properties sold or purchased through bank auctions, offering tax incentives to buyers, eliminating the need for district administration approval for auction purchases, and ensuring full cooperation from sub-registrar offices during ownership transfers.

The group also urged allowing banks to complete land surveys and tax payments even in the absence of borrowers, and to enable automatic, cost-free registration of auctioned properties transferred through court orders.

In the fourth phase, ABB emphasized speeding up loan recovery lawsuits and limiting abuse of court stay orders. The association proposed allowing banks access  without court intervention  to borrowers’ financial records, tax returns, asset details, passport information, and other official data.

Other recommendations include imposing mandatory down payments before legal challenges can be filed, abolishing the practice of securing High Court stays against Credit Information Bureau (CIB) reports, and ensuring that stay orders require significant installment payments. Failure to comply would automatically void such stays.

ABB also called for establishing special loan courts in high-default districts, ensuring rapid enforcement of arrest warrants, eliminating case proceedings without personal appearances, extending civil detention for defaulters based on loan size from six months to up to seven years, and swiftly amending the Money Loan Court Act.

The final phase focuses on stopping new bad loans. ABB urged Bangladesh Bank to publish verified lists of land surveyors and asset valuers, introduce a nationwide collateral database similar to the CIB system, and enable easy verification of mortgaged properties at registry and land offices.

In concluding the letter, ABB appealed to the central bank to act swiftly on the proposals to revive the banking sector, recover defaulted loans, and restore financial discipline through strong leadership and supportive policies.