Borrowers must withdraw lawsuits to qualify for Bangladesh Bank policy incentives

Bangladesh Bank (BB) has instructed banks not to provide any policy support or incentives to borrowers until they withdraw the lawsuits they have filed against the government, the central bank, or the banks concerned.

The central bank issued a circular in this regard today, saying that the directive aims to reduce litigation in the banking sector and ensure that policy support reaches borrowers without ongoing legal disputes with public authorities or banks.

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The circular said Bangladesh Bank has introduced various policy measures to stimulate private investment, employment generation, and sustainable economic growth by increasing credit flow to productive sectors.

As part of these initiatives, borrowers in export-oriented industries, agriculture, cottage, micro, small and medium enterprises (CMSMEs), and other sectors have been receiving different forms of incentives and policy support through banks.

However, the central bank observed that some borrowers have been availing themselves of such policy support while simultaneously pursuing writ petitions and other legal cases against the government, Bangladesh Bank, and the respective banks.

Under the new instruction, banks must verify whether an applicant has any pending writ petition or other lawsuit against the government, Bangladesh Bank, or the bank concerned before extending any incentive package or policy support announced by the government or the central bank.

If such cases exist, the borrower will have to withdraw them before the application can be considered.

Banks have also been asked to obtain an affidavit from applicants declaring that they have no pending legal cases against the government, Bangladesh Bank, or the relevant bank.

Where cases have been withdrawn, applicants must submit a list of those withdrawn cases along with their application.

The directive has been issued under Section 45 of the Bank Companies Act, 1991, and takes immediate effect.