Bangladesh Bank (BB) today asked banks to take part in the trials of loan related cases with highest preparation as it is observing 'a huge negligence on the part of petitioner banks' that causes long delays in settlement of cases.

The central bank issued the directive as it--after reviewing the verdicts of the Money Loan Court--found higher-than-expected lingering of the loan related cases at the court.

"This is affecting the interest of both depositors and banks," the BB said in a notification.

Under the circumstances, the central bank suggested banks to take highest preparation and contact with respective lawyers to do their part efficiently.

As the rules, cases at the money loan court are required to be settled within 120 days.

The central bank's directive comes the time when roughly 72,500 cases involving Tk 178,277 crore are pending at the money loan court. At the same time, the stockpile of defaulted loans is rising.

At the end of June this year, the nonperforming loans in the country's banking sector rose by Tk 24,419 crore to a record of Tk 156,039 crore, thanks mainly to the lack of corporate governance in the sector.

The amount of defaulted loan was 10.11 percent of the total outstanding loans as of June 30, 2023, from 8.8 percent three months ago, according to BB data.

A senior official of a private bank said banks try to settle loan related cases fast because of their own interest.

However, the number of courts is low in comparison with the number of cases.

Besides, many borrowers file writ petitions at the High Court seeking to stay the proceedings of the cases. In such cases, the banking regulator has to settle writ to restart the regular legal proceedings at the court.