Coordinated Legal Framework Needed for Loan Recovery
Published on: 04 January 2026, 10:00 AM
Last Modified: 04 January 2026, 09:09 PM
Challenging Landscape for Borrowers
Banks are increasingly adopting a dual approach in recovering loans from defaulting borrowers. Critics argue this strategy, which involves seizing assets through loan recovery courts while simultaneously pressing for criminal charges under cheque dishonor laws, constitutes double jeopardy for borrowers.
The Parallel Legal Strategy
Under this controversial approach, financial institutions file civil cases in Money Loan Courts to recover outstanding debts. Concurrently, they initiate criminal proceedings under the Negotiable Instruments Act, leveraging post-dated or blank cheques as collateral. This method often results in borrowers losing their mortgaged properties while still facing criminal prosecution.
Legal Experts Raise Concerns
Legal experts warn that without regulatory oversight or consistent judicial guidelines, borrowers could find themselves entangled in overlapping legal battles. This issue has only worsened as cheque dishonor cases continue to proliferate across the nation.
“This is a clear abuse of legal practices,” stated Advocate Emran Ahmed Bhuiyan, a specialist in bank and corporate law, emphasizing the troubling trend where banks recover their dues while borrowers face imprisonment or hefty fines.
Mounting Challenges for Borrowers
According to data from the Supreme Court, as of late November 2025, over 324,000 cheque dishonor cases were pending nationwide, involving roughly Tk450,000 crore. A significant number of these cases were initiated by banks and non-banking financial institutions to recoup defaulted loans, indicating a heavy reliance on criminal proceedings for loan recovery.
Real-Life Implications
The plight of Sadiqul Islam Jibon, a businessman from Narayanganj, encapsulates the harsh consequences of these legal strategies. After defaulting on a Tk7 crore loan from Sonali Bank, he found himself ensnared in a web of legal issues, ultimately losing his mortgaged property and facing a three-year prison sentence for cheque dishonor.
“Even after losing my property, I was still facing court proceedings,” Jibon noted, highlighting the difficulties borrowers encounter with overlapping cases.
The Need for Legal Reform
Advocate Bhuiyan asserts that the existing Money Loan Court Act permits simultaneous civil and criminal actions. However, the reality is that small and medium-sized borrowers are disproportionately impacted by these practices. Legal frameworks must evolve to prevent the misuse of cheque securities and establish fairer recovery processes.
High Court Interventions
Recent High Court interventions have stalled many cheque dishonor cases, representing a growing momentum towards legal reform. For instance, between January and November 2025, the High Court stayed 19,406 cases involving nearly Tk15,000 crore. Yet, as legal uncertainties linger, banks continue their recovery efforts in Financial Loan Courts despite these stays.
Towards a Sustainable Solution
Former Bangladesh Bank deputy governor Muhammad A. Rumee Ali emphasized the urgency for a cohesive legal framework governing loan recovery. Without proper guidelines and regulatory oversight, the pressures on borrowers, banks, and courts will continue to mount.
In conclusion, a comprehensive examination of current practices and proactive reforms are crucial in establishing a fair and just loan recovery system that protects the rights of borrowers while also fulfilling the needs of financial institutions.
