High Court issues rule on interest rate of microcredit loans of Grameen Bank

PNN News Desk | Dhaka

The High Court has issued a rule asking why instructions should not be given to reduce the excessive interest rate imposed on rural and landless borrowers in Grameen Bank’s microcredit loans.

A High Court bench comprising Justice Khizir Ahmed Choudhury and Justice Md. Ziaul Haque issued the rule after a preliminary hearing of a writ petition on Monday.

The rule asks the Governor of Bangladesh Bank, the Finance Secretary, the Managing Director of Grameen Bank, and the former Managing Director and current adviser, along with other respondents, to respond within four weeks.

Senior Supreme Court lawyer Masud Ar Sobhan filed the writ petition last week. He himself argued the case, along with senior lawyer Fatema S Chowdhury. Deputy Attorney General Md. Faruk Hossain and Saifuzzaman represented the state.

The petitioners claim that compared to scheduled banks, Grameen Bank charges more than 20 percent interest on microcredit, which creates additional financial pressure on low-income and landless people.

Senior lawyer Fatema S Chowdhury told journalists that in scheduled banks, if a borrower repays twice the principal amount, they are considered free of debt. However, microcredit borrowers do not receive such benefits.

The rule also asks why Bangladesh Bank should not be directed to ensure similar benefits for microcredit borrowers.

Lawyers believe that the court’s final hearing may have a significant impact on the country’s microcredit sector.