Bangladesh Bankers Urge Travel Bans, Public Shaming of Defaulters

Bangladesh’s leading bankers have called on regulators to impose stricter measures on chronic loan defaulters, including overseas travel bans, public disclosure of names, and disqualification from trade body elections, as the country faces a rising bad-loan crisis.

The Association of Bankers, Bangladesh (ABB), representing managing directors of commercial banks, submitted a set of proposals to Bangladesh Bank aimed at speeding up loan recovery and curbing what it described as a growing “default culture.” The recommendations followed a meeting with Governor Dr Ahsan H Mansur on 12 November, according to a letter signed by ABB Chairman and City Bank Managing Director Mashrur Arefin.

Under the proposals, habitual defaulters would be barred from travelling abroad without explicit permission from a court or the lending bank. Banks would also be allowed to publish defaulters’ names and photographs in the media, while individuals with unpaid loans would be barred from contesting business and trade association elections.

To accelerate balance-sheet clean-ups, the bankers suggested simplifying loan write-offs according to international standards and easing conditions for interest waivers in cases involving death, terminal illness, or natural disasters.

The ABB also proposed incentives to speed up mortgaged asset disposal through auctions, including waiving income tax and VAT, removing the need for Deputy Commissioner approvals, and ensuring full cooperation from Sub-Registrar offices. They recommended automatic, cost-free land ownership mutation in favour of banks following court orders under Section 33(7) of the Money Loan Court Act.

On legal matters, the Association urged the Supreme Court to limit stay orders on Credit Information Bureau (CIB) reports unless borrowers make significant down payments and suggested extending the maximum civil detention for defaulters from six months up to seven years, depending on loan size.

Bankers said the true extent of defaulted loans has become clearer since the fall of the previous government. As of September, total disbursed loans in Bangladesh stood at Tk 18,03,840 crore, of which around Tk 6.5 lakh crore were classified as defaulted, representing a default rate of 35.73 percent.

The ABB’s proposals are now under consideration by the central bank as policymakers weigh tougher enforcement against legal safeguards and economic recovery concerns.