The Bank Company (Amendment) Act, 2023 has received the approval of the Bangladesh Cabinet which has a focus to gain the enhancement of financial governance of Bangladesh. One of the special features of this Act is defining the ‘Wilful Defaulter’ and the consequences of making such a default. In simple words, a wilful defaulter refers to the person who does not pay back the loan money to the lender even though he is able.
According to the definition laid down by the Bank Company (Amendment) Act 2023, a wilful defaulter is a person or an institution which fails to repay the loan to the lender despite having the financial capacity. The definition also states that if anyone takes financial benefits from a bank or financial institution providing false information in the name of one or other family members, it will also be considered as wilful default. Furthermore, the Act widens the ambit of a wilful defaulter by extending the definition to a person who uses the borrowed money other than the approved purpose or if a person transfers any asset kept as mortgaged in banks against loans without prior approval from the bank concerned.
Many people or institutions despite having the means, do not pay back the loans availed from banks with the full intention of depriving the banks of the loan taken. In order to curb such intentional default from wilful and habitual defaulters, the Act has devised the following measures to be taken against wilful defaulters:
With loan default plummeting in recent times, the inclusion and recognition of a wilful defaulter and the subsequent measures to be taken to restrain such defaulters in the amended Act will play a vital role in destroying the default culture of loan and bringing the much-anticipated discipline in the financial sector of Bangladesh.
Tasmiah Zaman, Barrister-at-Law is the Co-Lead of Corporate & Employment Law Department at Mahbub & Company (email@example.com); and MD. Nazrul Islam is an Intern at Mahbub & Company.