Borrowers face jail even after losing assets as banks pursue dual legal action

Banks are increasingly pursuing defaulting borrowers through a parallel legal strategy that critics say amounts to double punishment: seizing assets through loan recovery courts while simultaneously pushing the same borrowers towards jail or heavy fines under cheque dishonour cases.

Infograph: TBS

Under this approach, banks file civil cases in Money Loan Courts to recover dues and, at the same time, lodge criminal cases under the Negotiable Instruments Act by invoking post-dated or blank cheques taken as additional security. As a result, borrowers often lose mortgaged property yet continue to face criminal prosecution for the same loan amount.

Legal experts warn that, in the absence of regulatory intervention or consistent judicial guidance, thousands of borrowers remain exposed to overlapping proceedings, while cheque dishonour cases continue to pile up nationwide.

"This is unquestionably an abuse of the law," said Advocate Emran Ahmed Bhuiyan, a bank and company law expert. "Banks recover their dues through loan court verdicts, yet the same borrowers are jailed or fined again under cheque dishonour cases."

Mounting cases, growing pressure

According to Supreme Court data, as of 30 November last year, 324,804 cheque dishonour cases involving nearly Tk450,000 crore were pending nationwide. Roughly 176,000 of these cases—linked to about Tk244,000 crore—were filed by banks and non-banking financial institutions (NBFIs) to recover defaulted loans.

In 2024 alone, banks lodged around 26,000 cheque dishonour cases. Between January and November 2025, another 29,000 cases were filed, underscoring the growing reliance on criminal proceedings for loan recovery.

The experience of Sadiqul Islam Jibon, a businessman from Narayanganj, illustrates the human cost of the parallel legal process.

Jibon took a Tk7 crore loan from Sonali Bank in March 2012. After he defaulted, the bank filed a loan recovery case in 2015 and simultaneously initiated a cheque dishonour case using 30 post-dated blank cheques for the same amount.

In 2021, the loan court ruled in Sonali Bank's favour. With no bidders coming forward, the bank took possession of Jibon's mortgaged four-storey house and 30 kathas of land.

However, the pressure did not end there. In February 2022, the cheque dishonour case concluded with Jibon being sentenced to three years' imprisonment and ordered to repay Tk11 crore. To secure bail, he was required to deposit 50% of the amount—Tk5.5 crore—which he said was impossible after losing his property.

"Even after the loan court verdict, the cheque case continued," Jibon said. "The bank had already taken my property. I had no way to pay Tk5.5 crore."

He eventually sought relief from the High Court, which suspended the verdict and later quashed the cheque dishonour case.

Jibon also alleged that Sonali Bank undervalued his assets. "The property was taken at its 2012 valuation of Tk8 crore, though by 2022 its market value should have been at least Tk5 crore higher," he said, adding that his writ petition on the valuation remains pending.

Sonali Bank's lawyer, Bakhtiar Hossain, said the bank acted within the legal framework and that cheque cases were filed only after recovery efforts failed.

Small, medium borrowers more exposed

Advocate Emran Ahmed Bhuiyan said the Money Loan Court Act allows banks to file recovery cases and, where cheque security exists, to initiate cheque dishonour proceedings as well. In practice, however, borrowers often face imprisonment or fines even after banks have enforced loan court verdicts.

He added that small and medium borrowers are particularly vulnerable. "Banks usually take both mortgaged property and blank cheques from smaller borrowers, while in large loan defaults such cheque securities are rarely used. This reflects a clear double standard."

Verdicts despite overlapping cases

Sources at the Dhaka 1st Joint District Judge Court said that between January 2024 and 30 November 2025, verdicts were delivered in 1,728 cheque dishonour cases. Of these, 983 cases—filed by banks—involved defaulted loans amounting to nearly Tk2,000 crore.

A court official said that in all these bank-filed cases, the accused borrowers also had pending or active loan recovery cases in Money Loan Courts, as reflected in lawyers' submissions. In many instances, banks had already taken possession of mortgaged property.

"Yet the court has no authority to cancel these cases unless the bank withdraws them," the official said.

Former Bangladesh Bank deputy governor Muhammad A (Rumee) Ali said cheque-based litigation is placing growing pressure on banks, customers and courts alike. "A coordinated and consistent legal framework for loan recovery is urgently needed," he said.

High Court interventions

In another case, businessman Lipu Rahman took a Tk6.5 crore loan from Janata Bank's Bogura branch in 2021. After defaulting, the bank filed a loan recovery case and later, in June last year, initiated a cheque dishonour case to recover Tk9.74 crore.

Lipu challenged the cheque case in the High Court, which stayed the proceedings and later quashed the case on 11 September.

Such interventions are becoming frequent. Between January and 30 November this year, the High Court stayed 19,406 cheque dishonour cases filed by banks and NBFIs, involving nearly Tk15,000 crore. In 2024, it stayed another 26,000 cases involving roughly Tk19,000 crore.

Advocate Bhuiyan noted that these stays do not prevent banks from continuing loan recovery proceedings in Financial Loan Courts.

Legal uncertainty over cheque security

On 24 November 2022, the High Court ruled that banks and financial institutions could not file cheque dishonour cases solely to recover loans. The court also directed that all existing cheque dishonour cases remain stayed, advised mandatory loan insurance, and urged Bangladesh Bank to issue guidelines and Parliament to amend the law.

However, BRAC Bank lawyer Moniruzzaman said the Appellate Division later stayed that ruling following an appeal, leaving the legal question unresolved.

Central bank's stance

Bangladesh Bank spokesperson Arif Hossain Khan said there is no legal bar on taking cheques or filing cases upon their dishonour. "The law does not prevent banks from taking such action," he said.

He added that while the central bank discourages banks from taking cheques as loan security, it lacks authority to intervene due to the Appellate Division's stay on the High Court ruling. "Any further action depends on the outcome of the appeal," he said.