I remember a borrower who was chanting 'Allah' repeatedly while signing a loan contract. Borrowing is considered a shameful act in his community. Yet he availed the loan to meet the dire need of his business. The thought that he might die remaining indebted began haunting him.
However, we find many borrowers who do not find anything disgraceful in debt. Rather they complain against the banks for sullying their reputation in the name of recovery.
Is a loan defaulter worthy of dishonour? Does the lender get a licence to enjoy his time by harassing a defaulter? The answer is no. Loan default might occur naturally. Like a physically sick person, a financially sick person requires medicine in a bid to fight the harmful financial virus and regain energy. The financial doctors of concerned financial institution need to ensure a flawless diagnosis of the financial disease for writing a successful prescription.
So, care and commitment, not harassment or insult, are what a natural loan defaulter is entitled to. However, what if a financially strong borrower pretends to be sick? In a recent webinar, Bangladesh Bank's executive director Md. Humayun Kabir said that there are many defaulters who are bankrupt not for their inability to repay, but for their unwillingness. The lenders knock at the residential houses of those borrowers failing to reach them elsewhere. Though the doors remain closed, the sound of the lenders ripples through the neighbourhood and hits their fat curtain of dignity.
Our government is going to build 'Bangladesh Asset Management Company' soon to recover the default loan, thanks to the big failure of conventional recovery management. Experts opined that the major problem in conventional recovery system remains to be the stay order of High Court which the mighty borrowers manage to freeze the auction of the mortgaged properties. In most of the cases, the only action remains to the lenders is begging.
Classified loans reached Tk 944.40 billion at the end of last quarter. However, the total nonperforming figure might rise to nearly Tk 2500.00 billion if loans under reschedule, write-off and stay order are considered. The International Monetary Fund (IMF) in a report of last November said that some well-connected businessmen of Bangladesh don't feel any urge to repay their debts and the powerful borrowers dictate the decision of financial sector.
In the book titled The Best Way to Rob a Bank Is to Own One, William K. Black wrote that 'Control Frauds are financial super predators that cause vastly larger losses than blue-collar thieves.' An 'economic development model' is developed here in Bangladesh that tells to rob a bank and then spend the money to make an industry! Robin Hood would steal from the rich and spend for the poor. On the contrary, the rich loan defaulters of Bangladesh are seen to siphon off money to the rich world after looting the small savers!
The mighty borrowers of our society maintain their dignity making the lenders virtually in a position like that of beggars. They know that there always remains a Gouri Sen who will rescue them in case they become default.
I knew a borrower who had incurred a big loss in business. The man offered a 4-storied building as collateral, which was built by him on the land owned by his father. The presence of the recovery force hurt the self-esteem of the father. He planned to sell the property to retire the entire loan. The son left no stone unturned to avert the move of his father. However, the father didn't pay heed to his son. He sensed that his son has an ill motive to escape the liability. The old man surely had a true understanding of the term 'dignity'.
I recently called a customer to remind him of his dues. He yelled: 'are you unaware of the government decision of loan moratorium? How can you call me?' The man started to default on his loan long before the pandemic started. It appeared that the spread of Corona virus was rather good news for him! However, the good borrowers have paid without our phone call. One of our borrowers said that he felt the urge of repaying for fear that he may not survive the pandemic.
Dwarkanath Tagore, the most renowned Bengali entrepreneur of nineteenth century, established an 'Agency House' named Carr, Tagore and Company which got closed just after his death leaving a net debt of around Tk.3 million to his successors. Maharishi Debendranath, eldest son of Dwarkanath, admitted the debt though there was no solid documentary proof. In the primary meeting with the creditors, Debendrath announced that they will not only sell the properties inherited by them but also leave their right on the Trust Asset to which they were mere beneficiary. Some of the creditors cried listening to the announcement because they didn't hope to be repaid without facing court proceedings. They got so sympathetic to the young and innocent successors of Dwarkanath that they allotted an annual endowment of Tk.25,000 for them.
Former Finance Minister A M A Muhith once commented that a bank robbery had taken place in broad daylight while he was asked about a big loan scam. Though the defaulters rob banks, the bankers are in no position to rob from the safe haven of the borrowers! The money has been either sent to Swiss bank or invested in Begumpara in Canada or five-star hotels in Europe. The defaulters love to buy happiness for their family in the most liveable cities of the earth robbing the wealth of the worst liveable. However, when their next generation will learn that they are the sons or daughters of robbers, the reaction won't be a dignified one for sure.
Md Kazi Mamun is a banker.