Editorial
Recovering bank loans
ADR could be a good option
THE JS standing committee on law, justice and parliamentary affairs ministry and the committee on the finance ministry met on Tuesday last to evolve ways and means to recover staggering amounts of defaulted bank loans-- a major area of concern for the decision makers. It is a good thing that the two committees met together for the first time in our parliamentary history to address a crucially important economic issue. Such meetings will no doubt consolidate the committee system-- introduced to oversee activities of the ministries -- and will also help achieve a degree of coordination between the committees, and with that perhaps between ministries.
The goal set by the JS committee on the law ministry is effective and quick recovery of bank loans which still amount to over Tk 20,000 crore. This should be a priority area, given the fact that only Tk 10,000 crore has been recovered in the last 19 years. And the method the parliamentary committee wants to employ is Alternative Disputes Resolution (ADR) which is expected to accelerate the pace of loan recovery and take some pressure off the conventional judiciary. However, the final decision will be taken after the law committee holds discussion with that on the finance ministry to work out the modalities. Before that consultations will be held with the stakeholders such as the banks and the defaulters.
Overall it appears to be a pragmatic step that will give the defaulters an opportunity to pay back the loans without facing any legal proceedings.
The ADR method has been tried successfully in many countries and has the merit of quickly resolving cases that would otherwise have been stuck in a long drawn process when handled by conventional courts.
The default culture is quite widespread in our business arena and is something that successive governments have failed to handle efficiently. Weak and outdated banking practices coupled with archaic laws are responsible for disbursement and poor recovery of bad bank loans. Obviously, the integrity of bank loan defaulters, the willful ones, has also been questioned time and again. We believe the JS committee on law has taken the right initiative to recover the bank loans. If it succeeds in its mission, it will be a solid step forward in bringing back the much needed economic discipline.
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