FROM PAGE B1

As per the draft, the DAMU chief would serve a single three-year term and could remain in office until the age of 65.

As per the draft, DAMU will issue licences for private-sector firms that would purchase bad loans directly from banks and non-bank financial institutions. These firms will be called Distressed Asset Management Companies (DAMCs).

At least 20 percent of the board members of these companies would have to be independent directors.

DAMCs would be able to buy stressed assets from banks and financial institutions on a clean-cash basis through mutual agreements. Separate trusts could then be established to manage those assets or raise funds from investors.

The trusts would safeguard the assets even if the parent company faced financial difficulties. DAMCs could raise funds from investors at home and abroad, but would not be allowed to borrow from banks or financial institutions.

To professionalise the recovery process, banks and DAMCs could hire specialised Loan Servicer Companies (LSCs). These specialised firms would handle borrower communications, debt restructuring, asset tracing and legal procedures.

However, LSCs would be barred from accepting public deposits or using coercive or unlawful methods to recover debts. DAMU would enforce a strict code of conduct for these entities.

One of the most significant changes proposed in the draft is that DAMCs would be able to seize and sell mortgaged property without first obtaining a court order.

They would also be allowed to take control of companies with large distressed loans and appoint administrators to run them. Ownership would be returned to the original owners if the companies later repaid their debts.

The law would bar habitual defaulters and their associates from owning, managing or participating in recovery companies and agencies. They would also be barred from purchasing assets sold under the law.

Violations of DAMC licensing conditions could result in administrative fines ranging from Tk 10 lakh to Tk 1 crore.

Operating without a licence or using a false identity would be a criminal offence punishable by up to seven years in prison, a Tk 1 crore fine, or both.

Anyone providing false information to obtain a licence could face up to 10 years in prison, according to the draft.