Imagine losing your home, your business, and still facing the threat of jail—all because of a loan gone wrong. This is the harsh reality for thousands of borrowers in Bangladesh, caught in a legal web where banks wield dual weapons: civil and criminal proceedings. But here's where it gets controversial: Is this a fair recovery strategy, or a form of double punishment?
Banks are increasingly adopting a parallel legal approach to recover defaulted loans, a tactic that has sparked intense debate. Here’s how it works: When a borrower defaults, banks file a civil case in Money Loan Courts to reclaim their dues. Simultaneously, they initiate criminal cases under the Negotiable Instruments Act, leveraging post-dated or blank cheques provided as additional security. The result? Borrowers often lose their mortgaged assets but still face the prospect of imprisonment or hefty fines for the same loan amount. This dual pursuit raises a critical question: Are banks overstepping, or simply exercising their legal rights?
And this is the part most people miss: The absence of clear regulatory intervention or consistent judicial guidance leaves borrowers vulnerable to overlapping legal battles. Legal experts, like Advocate Emran Ahmed Bhuiyan, argue that this practice is an “unquestionable abuse of the law.” He points out that banks recover their dues through civil verdicts, yet borrowers are further penalized under criminal charges for cheque dishonour. This raises ethical concerns about fairness and proportionality in loan recovery.
Take the case of Sadiqul Islam Jibon, a businessman from Narayanganj. In 2012, he took a Tk7 crore loan from Sonali Bank. After defaulting, the bank filed a loan recovery case in 2015 and simultaneously initiated a cheque dishonour case using 30 post-dated blank cheques. By 2021, the loan court ruled in the bank’s favour, and Jibon’s mortgaged property was seized. But the ordeal didn’t end there. In 2022, he was sentenced to three years in prison and ordered to repay Tk11 crore in the cheque dishonour case. To secure bail, he had to deposit Tk5.5 crore—an impossible feat after losing his assets. “The bank had already taken my property. I had no way to pay,” Jibon lamented. His case was eventually quashed by the High Court, but not before highlighting the human cost of this legal strategy.
Here’s the kicker: Small and medium borrowers are disproportionately affected. Banks often take both mortgaged property and blank cheques from smaller borrowers, while large loan defaults rarely involve cheque securities. This double standard raises questions about equity in banking practices. For instance, Supreme Court data reveals that as of November 2023, over 324,000 cheque dishonour cases were pending nationwide, with banks filing roughly 176,000 cases linked to defaulted loans. In 2024 alone, banks lodged around 26,000 such cases, underscoring their growing reliance on criminal proceedings.
The High Court has intervened in several cases, staying proceedings and quashing cheque dishonour cases. For example, businessman Lipu Rahman successfully challenged a cheque case filed by Janata Bank, which was later quashed. Yet, these interventions do not prevent banks from pursuing loan recovery in civil courts, leaving borrowers in a legal limbo.
But here’s the controversial twist: In November 2022, the High Court ruled that banks cannot file cheque dishonour cases solely for loan recovery. However, this ruling was stayed by the Appellate Division, leaving the legal landscape uncertain. Bangladesh Bank, while discouraging the use of cheques as loan security, admits it lacks the authority to intervene due to the stay. This raises a thought-provoking question: Should the law be amended to prevent such dual legal actions, or do banks need this leverage to recover defaulted loans?
What do you think? Is this a fair practice, or an abuse of power? Share your thoughts in the comments below, and let’s spark a conversation about the balance between loan recovery and borrower protection.
