The National Board of Revenue (NBR) is now putting its focus on settling the long pending cases through Alternative Dispute Resolution (ADR) system to boost the revenue collection. The revenue collecting authority of the country is at unease as the first two months of the running FY24-25 saw a setback in the collection due to the political unrest, officials said. A senior official of the NBR said that all commissionaretes have been asked to make a list of long pending cases which can be settled through the ADR. The NBR official said that emphasis has been given to utilise the ADR system to clear these cases. The official wished anonymity as he is not authorised to speak on the subject. In a recent meeting, NBR Chairman Md Abdur Rahman Khan asked the officials to take effective steps in this regard, said another official this week. "The NBR chairman also asked the officials to take all out efforts to realise the outstanding taxes," the NBR official said. The NBR introduced ADR on July 1, 2012 to speed up disposal of the revenue-related cases through out-of-court settlement. NBR reforms advisory committee likely to start work next week despite some confusions ADR is a tool that parties can use to settle disputes with the help of a third party. It is used for disagreeing parties who cannot come to an agreement short of litigation. However, ADR is also increasingly being adopted as a tool to help settle disputes within the court system. The NBR chairman has asked the  officials concerned to expedite the Alternative Dispute Resolution (ADR), the NBR official told UNB. Another senior official of the NBR said that as per the law taxpayers have to apply to resolve the tax related disputes. He mentioned that some taxpayers always try to evade tax and feel encouraged to settle the matter in the courts.  He also said that those who failed to make any headway in the courts usually come to the ADR system for resolving their disputes. An NBR official involved in the ADR said that due to the reluctant attitude from the businesspeople of the country the system is yet to give its full swing benefit for them and also for the national exchequer. "The NBR has taken various types of initiatives to vibrant the system, and a former NBR member has been appointed after forming a neutral cell for this system," he said. The NBR chairman, while talking to reporters recently, said ADR is a system where both parties can avail a win-win chance. NBR accelerates efforts to clear revenue case backlog He mentioned that if the taxpayers and tax authority do not come to a consensus then there is nothing to do in this ADR system. “For that reason many do not want to go to the ADR process,” he said. In this connection, the NBR chairman pointed out the reluctant attitude of taxpayers and tax collecting authority as they both want to win it all. “In ADR system both have to compromise or both have to sacrifice, that is the meaning of the ADR,” he said. The chairman  mentioned that those who are involved in the ADR are very much experienced and know the law very well. “They try to convince both parties to come for a consensus. If the taxpayers and tax collecting authority do not want to go for a long legal battle then ADR is the best option,” the NBR chairman said. As per available data, there are more than 27,000 cases pending in various courts related to income tax, Vat and duty involving not less than Tk 39,000 crore. Read more: How to file your Tax Returns in Bangladesh

Despite Bangladesh Bank’s initiatives to promote good governance in the banking sector, 17 banks have recently violated their loan disbursement limits, and are now embroiled in a severe liquidity crisis. Having been over-aggressive in providing loans, they are now unable to recover the loans and attract new deposits as desired, according to a latest internal report of the central bank seen by UNB. The banks should not sanction any new loans until they restore the ratio of their loans to deposits in accordance with limits set by Bangladesh Bank, which regulates the financial sector.   Also Read: Banks' assets will decrease by 40% if international reporting standards followed: FRC Chairman Conventional banks can provide loans of up to Tk 87 for every Tk 100 in deposits, while Shariah-based banks can give loans of up to Tk 92 against every Tk 100 in deposits, according to the rules of Bangladesh Bank. This is called Advance Deposit Ratio (ADR) or loan-deposit ratio limit in banking terms. According to the central bank report covering January 1-26 of this year, 17 banks violated the limits set for them on lending order due to lack of discipline. As a result, the concerned banks have been plunged into an extreme liquidity crisis, making it difficult for them to sanction new loans. Some of them are even unable to pay depositors in some cases. Experts fear that the existing situation has created additional risks for depositors. According to them, irregularities, corruption and ‘ghost loans’ - loans to firms that turn out to be non-existent -are behind the collapse of the banking system’s loan disbursement process. Also Read: Prime Bank receives $50m from IFC to support trade, forex liquidity needs in Bangladesh “In the banking sector, there have been allegations of giving large amounts of ghost loans in recent times. If this continues, the sector will be at risk,” said Dr ABM Mirza Azizul Islam, economist and adviser on finance to the last caretaker government. Mirza Azizul told UNB, "Lending beyond the limit against deposits disrupts the credit system." Besides, the debt collection situation of the banks is not satisfactory now. In such a situation, if the non-performing loans increase further with additional loans, then there is a danger for the bank and its depositors will suffer, he added. He suggested the intervention of the central bank in these banks immediately. Also Read: BB signs deal with 32 banks to accelerate disbursement of green fund According to the Bangladesh Bank report, the ADR of National Bank Ltd stood at 98.23 while that of AB Bank was 96.64 in its conventional stream and 103.45 in its Shariah stream. State-owned Basic Bank’s ADR stood at 91.17, One Bank’s was 89, and multinational National Bank of Pakistan’s was 87.52. Widespread irregularities and corruption have already been reported in these banks. Apart from this, Community Bank's ADR was 88.28, NRB Bank’s at 88.05 and IFIC Bank's ADR was 87.48, the report states. Shariah-based Exim Bank's ADR stood at 100.28, Standard Bank's at 96.28, Premier Bank's Islamic Window 155.09 and Bangladesh Commerce Bank's Islamic Window's ADR was 133.26. Read More: Banks’ transaction time from 9:30 am to 2:30 pm for Ramadan Apart from this, the ADRs of five other Shariah-based banks ranged between 93.01 to 104.54. A managing director (MD) of a private bank told UNB that the lending limit has undoubtedly been set by Bangladesh Bank based on adequate research and global best practices. No bank should have to cross the limit. “These violations are creating risk in the banking sector. Depositors in particular will be at greater risk. Already some banks and non-bank financial institutions are not able to return money to depositors,” he said, maintaining anonymity. The central bank has also extended the period of ADR adjustment five times to allow the banks to bring their lending practices in line with the limits. Read More: BB disburses Tk 4000 crore as liquidity support to 5 Islami banks However, many banks could not coordinate this. In such a situation, Bangladesh Bank even increased the required ADR to improve the overall liquidity situation of the banking sector to maintain the pace in credit flow to the private sector. The executive director and spokesperson of Bangladesh Bank, Md Mezbaul Haque, told UNB that although some banks may at times find themselves in violation of the ADR set for them, the central bank would under normal circumstances give them time to get themselves back within the limit. “But if they stay outside the limit for long, then they must be warned and action would be taken accordingly,” Mezbaul said. Read More: One of Silicon Valley's top banks fails; assets are seized

Commercial disputes can be resolved through mediation if encouraged by the regulators, but settling such disputes can take four years in Bangladesh. Also, many countries have introduced reforms like automatic assignment of cases to judges, specialised commercial court, electronic payment, and expansion of the alternative dispute resolution (ADR) framework to improve the litigation system. They made changes to applicable civil procedure or enforcement rules and expanded court automation, too. Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman said this while addressing the webinar "Country Competitiveness of Bangladesh: Key Reforms in Doing Business" organised by DCCI Saturday. Also read: It's time to change the mindset on taxpaying: Salman F Rahman The Global Competitiveness Index 2019 ranked Bangladesh 105 and the report also highlighted a profound competitiveness deficit in LDCs, he said. To overcome the transition of economic graduation and to be among the top 100 in the World Bank's Ease of Doing Business Index, improving competitiveness is a prerequisite for Bangladesh, Rizwan continued. "However, Bangladeshi policymakers are yet to take necessary initiatives in association with the private sector for improving country competitiveness." Salman F Rahman, the prime minister's private industry and investment adviser, said at the webinar: "The entire judicial system needs revamping. We need to resolve the disputes quickly." Also read: Salman encourages introduction of Sukuk Bond in Bangladesh market "But the mediation and arbitration system are not being used widely in the country due to not having a standard civil litigation management timeframe," he continued. Law and Justice Division Secretary Md Golam Sarwar said, "We are going to implement an e-judiciary project to foster effective and speedy disposal of cases including commercial disputes. Steps have been taken to amend the existing Insolvency Act 1997." "For effective settlement of commercial disputes, the government is planning to set up commercial courts in Dhaka and Chattogram."

The government is working on incorporating the Alternative Dispute Resolution (ADR) provisions into existing laws to make the commercial dispute resolution process easier and shorter.