Borrowers must withdraw lawsuits to get BB incentives

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

The central bank issued a circular in this regard yesterday, saying the directive aims to reduce litigation in the banking sector and ensure that policy support reaches borrowers free from ongoing legal disputes with public authorities or banks.

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

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

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

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

If any such cases exist, the borrower must withdraw them before the application can be considered.

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

Applicants who have withdrawn cases must submit a list of those cases along with their applications.

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