A Tripartite meeting between Bangladesh Bank (BB), Association of Bankers Bangladesh (ABB) and Bangladesh International Arbitration Centre (BIAC) was held on 12 April 2018 at the Bangladesh Bank Head Office to find out ways to strengthen the Alternative Dispute Resolution (ADR) system to settle large number of pending cases in the banking sector. The meeting was chaired by Mr. Abu Hena Mohd. Razee Hassan, Deputy Governor of Bangladesh Bank. From Association of Bankers Bangladesh, Mr. Syed Mahbubur Rahman, Chairman, Mr. Sohail R.K. Hossain, Vice Chairman, Mr. Md. Arfan Ali, Secretary General participated in the discussion. Mr. Muhammad A. (Rumee) Ali, CEO of BIAC, led BIAC team and took part in the discussion.
Mr. Abu Hena Mohd. Razee Hassan, Deputy Governor of Bangladesh Bank emphasized on strengthening the ADR process to settle the disputes related to Non Performing Loans (NPL) as it is becoming a matter requiring immediate attention for the banking sector. Bangladesh bank is willing to provide relevant support to expedite the ADR process and making it more effective. The Central bank has already encouraged all scheduled banks to try ADR at BIAC through an advisory letter on 19th April 2016.
Mr. Muhammad A. (Rumee) Ali, CEO BIAC highlighted the existing laws/regulations e.g. Sections 22-25 of the Artha Rin Adalat Ain 2003 (as amended in 2010), Sections 89A and 89B of the Code of Civil Procedure 1908 (as amended in 2012) and the Arbitration Act 2001 which he said have limitations. Not every defaulter is a willful defaulter and the reforms should give them an opportunity to settle any dispute through ADR. Among his recommendations, he emphasized that Courts should take into cognizance pre litigation mediation and arbitration. He urged banks to empower the representative from the banks attending the mediation hearings, to take decisions. Often mediation effort is not effective due to limitations imposed on the attending representative. He also appealed to ABB to intensify efforts in this area by referring cases to ADR in order to arrive at an amicable and expeditious settlement.
Mr. Syed Mahbubur Rahman, Chairman ABB mentioned that ADR works better for disputes involving small amounts such as SME and Retails loans, rather than disputes involving large amounts. The volume of cases in SME and Retail are substantially high and the propensity to default willfully in this group is higher.
Mr. Sohail RK Hussain, Vice Chairman ABB recommended that, legal amendments to the Artha Rin Adalat Ain should include mandatory Mediation for Retail and Small Enterprise Sector (of SME) loans and for Medium Enterprise Sector (of SME) mandatory Arbitration. This should be included in all loan contracts up to a threshold of BDT 25 crore. Also the time limit should be 60 days and facilitated under an Institution like BIAC.
Mr. Abu Hena Mohd. Razee Hassan, Deputy Governor of Bangladesh Bank, concluded by requesting ABB and BIAC to jointly put forward a draft guideline, which will be considered by Bangladesh bank for circulation.
Senior Officials from Bangladesh Bank and BIAC were present at the discussion.