Strong ADR process can reduce NPL: experts


DHAKA, Feb 28, 2018 (BSS) – Promoting the idea of the Alternative Dispute Regulation (ADR) is essential in the commercial sector, including banks, to settle a large number of pending disputes and reduce a huge amount of Non-Performing Loan (NPL).

“ADR is that mechanism which resolves disputes more efficiently and amiably by finding the self-made process best suited to the parties,” Additional Managing Director and Chief Operating Officer of Mutual Trust Bank (MTB) M Hashem Chowdhury told BSS here today.

He said ADR is gradually becoming a popular process to settle the huge number of cases in the banking sector and to bring NPL to a tolerable level.

According to the Bangladesh Bank’s latest data, out of the total outstanding loans of around Taka 7,53,000 crore, the amount of NPL was Taka 80,307 crore till September 2017. The percentage share of classified loan in total outstanding was 10.67 percent.

Hashem Chowdhury informed that around 3.10 million cases are pending, of which 1.30 million are commercial, in the country.

To settle the huge cases, he said, the authorities concerned will have to take immediate steps to accelerate the ADR process. “It is the method where disputants can participate in the solution finding process, so ADR can’t be substitute of formal judicial system but can complement and support it,” he added.

Referring to the different countries, the senior banker said, around 95 percent cases are settled through the ADR process in the Netherlands which is 99 percent in Malaysia.

“The USA, the UK, the Netherlands and Malaysia once were at the stage where we are today. But for welcoming ADR, the mentioned countries have come out of the tangle,” he added.

In Bangladesh, he said, the ADR process can not only support the legal objective, but also support other development objectives, such as economic and social objectives, by facilitating the disputes that are impeding the progress of these objectives.

Talking to BSS, Adviser of the Union Bank Limited SM Aminur Rahman said the authorities concerned will have to accelerate the process as it can bring a satisfactory solution among the parties to the dispute.

“If the settlement comes through a win-win situation for both parties, the process will be effective to bring the NPL to a tolerable level,” he added.

Alluring Fashions Chairman M Saiful Islam said as the huge amount of NPL has become a matter of concern for the banking sector, the authorities concerned will have to take more immediate steps to settle the cases in the banking sector for implementing the country’s development goals, ‘Vision-2021’ and ‘Vision-2041’.

“Through the ADR process, a huge number of pending cases will be settled and the financial sector will go to a better position,” he added.

A Bangladesh Bank senior official said the central bank is taking necessary steps to accelerate the ADR process for reducing NPL.

Under the ADR process, there were 5,832 cases involving Taka 4,180 crore till June 2017. Out of those, 3,586 cases involving Taka 1,078 crore were settled. The rate of settlement under the process is around 61 percent.

The recovery rate under the process is also good as around Taka 466 crore was recovered till June 2017.

The BB official urged all commercial banks, including Islami Bank Bangladesh Limited (IBBL) and Rupali Bank and Pubali Bank, to come forward for settling their cases under the ADR process.

The BB official hoped that the amount of NPL will come down to a tolerable level under the ADR process.