The High Court has directed the government to shut down all the unauthorized microfinance institutions and private lending across the country, particularly in the rural areas.
The higher court also directed the government to take legal action against the unauthorised microfinance institutions. The Microcredit Regulatory Authority has also been directed to submit a list of names of local money-lenders that have no license and are lending money at high interest rates in rural areas across the country. The report has to be submitted to the court within 45 days.
The HC bench of Justice Abu Taher Md Saifur Rahman and Justice Zakir Hossain issued the order on Monday in response to a writ petition filed seeking to identify persons who lend money at high interest rates across the country.
The HC bench issued a rule asking the authorities concerned to explain why their failure to monitor and supervise the activities of unauthorised microfinance institutions should not be declared illegal.
The court also directed the Bangladesh Bank to form a special committee to investigate the activities of unauthorised financial institutions that deal in microcredit loans and private lenders. The central bank was asked to shut down the unauthorised organisations, and to take legal action during the investigation.
Barrister Sayedul Haque Suman stood for the writ petition, while Deputy Attorney General Noor Us Sadiq represented the state. Earlier, the High Court fixed September 27 for the order after hearing on this matter.
On September 7, Barrister Suman filed the writ petition with the High Court seeking its directives for the closure of unregistered high-interest private lending.
In the writ petition, 136 persons including the finance secretary, home secretary, law secretary, Bangladesh Bank governor, Inspector General of Police (IGP), deputy commissioners and superintendents of police in 64 districts were made respondents.
Barrister Sumon said that high-interest private lending is going on under the guise of cooperative societies in every village across the country. ‘Cooperative societies are authorised to lend, but not the private lenders, that is illegal. “The common people have become hostages to these private lenders. The amount of interest they collect on weekly and monthly basis is skyrocketing. The interest per week for Tk 10,000 is Tk 500-600 and in some cases, it rises to Tk 1,000,” he added.
He also said many families have become destitute bearing the burden of high interest on loans taken from the unregistered cooperative societies. In many cases, private lenders are carrying on before the very eyes of the administration. “So I have filed the writ petition with the High Court seeking directives to close all unauthorised lending businesses across the country,” he added.
