How to Defend a Bank Suit in Bangladesh: A Borrower’s and Guarantor’s Guide (2026)

Defend bank suit Bangladesh: what a defendant faces in 2026

To defend bank suit Bangladesh borrowers, guarantors and mortgagors must work inside one of the least forgiving procedures in the country. The Artha Rin Adalat Ain 2003 gives the defendant 40 days to answer, forbids set-off and counterclaim, treats sworn pleadings as evidence, and makes every later remedy depend on a cash deposit. A defence not built in the first six weeks is rarely rebuilt later. A well-prepared one can cut the claim, protect third-party property and release a guarantor.

This guide is written for the defendant. It does not repeat how the money loan court works, which our Artha Rin Adalat guide covers. It sets out what to plead, which defences carry weight, how to use mediation, what a deposit buys on appeal or revision, when a writ is realistic, how to resist execution, and where the 2026 reform debate stands.

Summary: A defendant sued by a bank or finance company in Bangladesh has 40 days from appearance to file a sworn written statement, extendable by 20 days on payment of costs. Set-off and counterclaim are barred, so the defence must attack the claim itself: limitation, the arithmetic of interest, the pre-suit sale of collateral, the validity of the mortgage and, for guarantors, discharge under the Contract Act. After the written statement the case goes to mediation. An appeal needs a 50 per cent deposit and a revision 75 per cent.

Key point: The strongest defence points are procedural and arithmetical, and they must be pleaded at the start. Section 9 requires the written statement to admit what is admitted and to state each disputed amount with reasons. In September 2026 the High Court Division refused a writ where limitation and the 200 per cent cap had not been pursued through the statutory remedies.

At a glance

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Table of Contents

How to defend bank suit Bangladesh cases: the first 40 days

Start by fixing the date the defendant appeared or was treated as served. Summons goes by process server and registered post, and if it is not served within 15 days the court can order publication in a Bengali national daily, which counts as valid service.[1] Many defendants first learn of the suit from a newspaper notice or an execution step, so every deadline runs from a date they did not choose.

The written statement deadline under section 10

The court will not accept a written statement filed more than 40 days after appearance, and must then dispose of the suit ex parte. It may extend time by 20 days only if the defendant deposits costs of between Tk 2,000 and Tk 5,000 into the government account and files the challan.[1] There is no third extension. Treat day 40 as the real deadline.

What the written statement must contain

Section 9 is stricter than the ordinary civil rules. The written statement must set out, in a separate paragraph, the claims admitted, and must identify each disputed claim with the amount disputed and the reasons. Documents held by the defendant are filed with a list, documents held by others are listed with the holder's details, and later documents are admitted only for good cause and on costs.[1] A vague denial of "the entire claim" is the most damaging drafting failure we see.

Affidavit evidence and the risk of admissions

The written statement is supported by affidavit, and the affidavit is substantive evidence; in ex parte or summary disposal the court can decide on the sworn pleadings without witnesses. Section 13 lets the court pass judgment at once on an admission, or on the first hearing date if it finds no real dispute.[1] Admit only figures you are content to see decreed tomorrow.

Set-off, counterclaim and the parallel suit

Section 18(2) bars set-off or counterclaim in the written statement, and section 18(3) provides that a separate suit by the borrower cannot be heard with the Artha Rin suit or stay it.[1] The bar is narrower than it looks. In Civil Revision No. 1182 of 2026, decided in June 2026, the High Court Division held that a borrower may sue in a civil court for damages for wrongful refusal of renewal, forced sale of hypothecated goods and classification in breach of Bangladesh Bank circulars, provided the suit does not question the Artha Rin proceedings.[9] Run a genuine cross-claim separately.

Section 12 and the pre-suit sale of collateral

Where the bank holds the defendant's property under a lien or pledge with a right of sale, it may not sue without first selling and crediting the proceeds. Where the loan is secured by a mortgage or hypothecation with a power of sale, it may not sue without selling, or attempting and failing to sell.[1]

Applying for a section 12(6) deduction

Non-compliance does not defeat the suit. Section 12(6) requires the court, on its own motion or on a written application, to deduct the value the bank itself declared for the property, or a value fixed on the sub-registrar's report, with ownership vesting in the bank.[1] File the application with the written statement and attach the bank's own valuation reports. The deduction is a trade: it cuts the claim but surrenders the property at the bank's figure, so compare that figure with a current independent valuation before asking for it.

Irregular pre-suit sales

Where the bank has already sold under section 12, the buyer's title cannot be challenged, but the borrower may claim compensation for illegality or procedural irregularity, and the sale must follow the section 33 tender procedure as far as possible.[1] A sale without proper advertisement or far below the bank's own valuation is a compensation claim and a lever in settlement, not a ground to undo the sale: the Appellate Division has held that an irregular auction cannot be challenged by writ.[12]

Limitation as a defence to a bank suit

The Act overrides the Limitation Act for execution but contains no equivalent override for the suit itself.[1] The First Schedule to the Limitation Act 1908 is therefore the starting point when a borrower seeks to defend bank suit Bangladesh lenders have filed late.

Which period applies

The Schedule gives three years for money lent payable on demand, from when the loan is made; three years on accounts stated in writing; three years on a mutual, open and current account from the close of the year of the last admitted or proved entry; and twelve years to enforce payment of money charged on immovable property, from when it becomes due.[2] A secured claim against mortgaged land is rarely time-barred; an unsecured overdraft or stale guarantee claim may be.

Acknowledgements and part payment

A written acknowledgement of liability signed before the period expires starts a fresh period from signature, and so does a payment on account of the debt.[2] Rescheduling applications, balance confirmations, renewal letters and token payments are all candidates, so map every signed document and payment against the dates. Section 46, which tells banks when to sue, is internal discipline, not a limitation bar.[1]

Interest errors, penal interest and the 200 per cent cap

Most claims are inflated, not invented. The plaint must schedule principal, interest, penal interest, charges and every payment credited, so the bank's own schedule is the first target.[1] Reconstruct the account from the sanction letter, drawdowns and statements, line by line.

The section 47 cap

Notwithstanding any contract, the total of all claims raised in court cannot exceed 200 per cent of the principal: on Tk 100 of principal, no more than Tk 300.[1] On long-running facilities with repeated rescheduling the cap often bites. Challenge capitalised interest that the bank treats as fresh principal.

Lawfully charged, not merely high

Subject to section 47, section 50(1) stops the court reducing interest "lawfully" charged up to the suit.[1] Section 30 of the Bank Company Act 1991 bars any court from trying a bank transaction on the ground only that the interest was excessively high.[5] To defend bank suit Bangladesh claims on interest, argue that a charge breached the sanction letter or a Bangladesh Bank direction, not that it was unfair.

Unlawful penal interest

Penal interest on overdue loans was capped at 1.5 per cent under BRPD Circular No. 10 of 2024; on 13 May 2026 BRPD-1 Circular Letter No. 17 cut the cap to 0.5 per cent with immediate effect.[6] Any penal charge above the cap in force for the period, or on a base the circular does not allow, should be pleaded as a disputed amount.

Post-decree interest

From filing until recovery, section 50(2) fixes simple interest at 12 per cent if the decree is not challenged, 16 per cent on appeal or revision and 18 per cent in the Appellate Division, unless the higher court materially changes the decree.[1] Every challenge has an interest cost.

Guarantor discharge: how a guarantor can defend bank suit Bangladesh claims

The bank must join every third-party guarantor and mortgagor. The decree is joint and several, but in execution the court proceeds first against the principal debtor's property, then, as far as possible, against the mortgagor and the guarantor, and a guarantor who pays takes over the decree.[1]

Sections 133 to 141 of the Contract Act

The surety's liability is co-extensive with the principal debtor's unless the contract provides otherwise. The Contract Act 1872 discharges a surety where the terms are varied without consent, as to later transactions (section 133); where the principal debtor is released (section 134); and where the creditor compounds with, gives time to or promises not to sue the debtor without the surety's assent (section 135).[3]

Mere forbearance to sue does not discharge (section 137). An act inconsistent with the surety's rights that impairs the surety's remedy against the debtor does (section 139), and a surety is entitled to every security the creditor holds, so losing it without consent discharges the surety to its value (section 141).[3]

The 2026 uniform guarantee form

Since BRPD-1 Circular No. 01 of 4 January 2026, banks must use a uniform personal guarantee form. It is irrevocable and unconditional, payable within seven working days of first demand, survives part payment, and preserves the guarantee where time or changed terms are granted only if the guarantor's prior consent was taken; variations need a written instrument signed by both sides.[7] The defence question is factual: was written consent obtained for each rescheduling, enhancement and renewal?

Building the guarantor's defence

• Demand the full chain: every sanction, renewal and rescheduling letter since the guarantee, and the guarantor's signature on each.
• Plead each discharge event separately: unconsented variation, time given, release of the borrower and loss of collateral.
• Check scope: a guarantee of an original term loan does not automatically cover a new or restructured facility.
• Challenge directors joined as such: a shareholder is not a necessary party, a director who executed no charge document is not liable, and a decree against a person outside section 6(5) is without jurisdiction.[10]

For CIB listing of guarantors, see our guide to the consequences of being a loan defaulter in Bangladesh.

Improper classification and mortgage irregularities

Classification as a defence and as a claim

Wrongful classification matters inside the suit where it drove penal interest or acceleration, and should be pleaded within the disputed amounts. Outside it, Civil Revision No. 1182 of 2026 confirms that a damages suit lies for breach of the circulars in classification and credit reporting.[9] The classification rules themselves are explained in our bank loan laws guide.

Was the mortgage validly created?

Section 59 of the Transfer of Property Act 1882 requires a mortgage securing Tk 100 or more to be made by a registered instrument signed by the mortgagor and attested by two witnesses. A proviso applies the same rule to a deposit of title deeds in favour of a scheduled bank or financial institution, save a narrow tripartite flat and plot exception.[4] An unregistered deposit of deeds, a mortgage signed by a non-owner or land outside the schedule are live defences to the mortgage relief, even where the money claim stands.

Third-party owners and embezzlement

Before delivering possession of auctioned or vested property, section 33(7B) requires the court to reconfirm that it was lawfully mortgaged by its true owner or attached as the debtor's own, so co-owners and heirs should raise title early and again at this point. Section 18(1) adds that money embezzled by the institution's own staff is not recoverable as a loan.[1]

Mediation and settlement under sections 22 and 23

The 2010 amendment replaced the original settlement-conference model with compulsory mediation; the original section 21 no longer forms part of the operative text. Once the written statement is filed, the court refers the suit to mediation under section 22.[1]

How the process works

The parties may agree a mediator who is an unengaged lawyer, a retired judge, a retired banker or another suitable person, and must name one within 10 days or the court appoints one. Mediation must finish within 60 days, extendable by 30. If it fails, section 23 allows a further attempt with permission before judgment; compromise remains open under section 45, and mediation again in execution under section 38.[1]

Using mediation strategically

For anyone trying to defend bank suit Bangladesh claims commercially, this is the best window, before post-decree interest and a 50 per cent appeal deposit. Bring the reconstructed account, the cap and penal-interest points, the section 12(6) valuation and the guarantor analysis, and ask for release of guarantors and collateral, a written appropriation of payments and a CIB update. See our guide to court-annexed mediation in Bangladesh. Absent settlement, section 49 lets the court allow four instalments within a year, or twelve over three years with the bank's consent; one missed instalment accelerates the balance.[1]

Ex parte decrees: the 10 per cent route back in

Under section 19, a defendant may apply to set aside an ex parte decree within 30 days of the decree or of learning of it, and must deposit 10 per cent of the decretal amount within 15 days. If the deposit is made the suit is revived; if not, the application is rejected.[1]

In Writ Petition No. 5845 of 2025, decided on 15 January 2026, the High Court Division held that once both conditions are met the court must restore the suit, and cannot refuse because mortgagors served by newspaper publication must have known of the case. It treated the refusal as an interim order open to writ challenge.[8] Keep evidence of the date you learned of the decree.

Appeal deposits under section 41 and revision under section 42

Before any decision to appeal, a defendant trying to defend bank suit Bangladesh decrees should know that, checked against the current text, section 41 requires a defendant to deposit 50 per cent of the decretal amount before an appeal is entertained, in cash with the bank where the claim is partly admitted or as security with the court where it is not. A 10 per cent section 19 deposit is credited, and a bank appealing deposits nothing. A decree above Tk 50 lakh goes to the High Court Division within 60 days, otherwise to the District Judge within 30 days.[1] See our guide to civil appeals in Bangladesh.

Revision and the 75 per cent threshold

A revision against an appellate decree is not entertained unless 75 per cent of the decretal amount has been deposited, including the 50 per cent paid on appeal, and should be decided within 60 days, extendable by 30.[1] Our analysis of civil revision in Bangladesh covers the wider jurisdiction. Weigh the cash locked up and the higher interest against points that can genuinely move the decree; a partial settlement of the undisputed amount can make the deposit on the remainder affordable.

Writ petitions: when the High Court Division will intervene

The Appellate Division held in Gazi M Towfic v Agrani Bank (2002) that, because the Act provides an appeal, no Article 102 application lies against an Artha Rin judgment and decree.[12] On 2 September 2026, in Writ Petition No. 12915 of 2024, the High Court Division discharged a rule against an ex parte decree where neither section 19 nor section 41 had been used, confining writs to exceptional cases such as a total lack of jurisdiction or fraud on the court.[11]

Where a writ can still work

A writ remains realistic where the court acted without jurisdiction, for example against a person outside section 6(5), and against interim orders such as a wrongful refusal to restore under section 19.[8] [10] A writ against a private bank's own section 12 sale is generally not maintainable.[12]

The 25 per cent interest penalty

Where a defendant who could have appealed on depositing instead challenges the decree by writ, and the writ is dismissed, section 50(4) applies interest at 25 per cent a year.[1] A failed writ can cost more than the deposit it avoided. See our guide to writ petitions in Bangladesh.

Execution stage: how to defend bank suit Bangladesh decrees

Our guide to the execution case in Bangladesh covers general procedure; these points are specific to money loan decrees.

• Time bar: notwithstanding the Limitation Act, execution must be filed within one year of the decree, a later case within one year of the previous one's disposal, and none more than six years after the first; a late case must be rejected outright.[1]
• Third-party claims: a claimant to attached property must give security of 10 per cent of the decretal amount or unpaid balance, decided within 30 days plus 30, and forfeited if the claim was brought to delay.[1]
• Auction: any surplus over the decree returns to the debtor; track tender notices and press for re-advertisement where bids are inadequate, because a shortfall can be pursued in a further execution case.[1]
• Civil detention: up to six months, only after at least one auction has failed to satisfy the decree unless none can be held. Heirs, persons who joined a corporate borrower after the loan and persons under 18 cannot be detained; release follows payment of 25 per cent and a bond for the balance within 90 days, and detention does not discharge the debt.[1]
• Settlement: section 38 allows mediation at any stage of execution, and a negotiated private sale at market value usually beats a forced auction.[1]

A defence plan from service to final order

The sequence we follow when instructed to defend bank suit Bangladesh proceedings is below. Diarise every deadline from service or knowledge, not instruction, and never let negotiation run past a statutory date.

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The 2026 Artha Rin amendment: where it stands

Bangladesh Bank prepared a draft Artha Rin Adalat Ordinance 2025 to replace the 2003 Act, with an appellate money loan court of High Court-rank judges, a recovery officer, power to suspend defaulters' national identity cards and passports, and bars on defaulters contesting elections or serving as directors. On 19 January 2026 the law ministry turned down a new statute and asked for targeted amendments, to be identified by a nine-member committee including the Law Commission, Bangladesh Bank and banks.[13]

As at 20 October 2026, no Artha Rin amending Act appears among the Acts of 2026 published by the Legislative and Parliamentary Affairs Division, which include the Commercial Courts Act and the Bank Resolution Act.[14] The deposit, interest and execution rules above remain in force, so anyone preparing to defend bank suit Bangladesh lenders file today should work from the current text and check the transitional provisions of any bill that is tabled.

TRW defends borrowers, guarantors and third-party owners through our banking and finance litigation practice and advises on alternatives through our restructuring and insolvency practice. To review a plaint or decree, contact TRW.

Frequently asked questions

How long do I have to file a written statement in an Artha Rin suit?

Forty days from appearance, extendable by 20 days only on deposit of costs of Tk 2,000 to Tk 5,000; after that the suit proceeds ex parte.[1]

Can I claim set-off or file a counterclaim against the bank?

No, section 18(2) bars both. An independent civil suit for damages that does not challenge the Artha Rin proceedings remains possible.[1] [9]

Can a bank suit be time-barred?

Yes. Demand loans and accounts generally carry three years under the Limitation Act 1908 and money charged on land twelve; written acknowledgements and part payments restart the period.[2]

What if the bank sued without selling the mortgaged property first?

Where it had a power of sale, section 12(6) requires the court to deduct the property's declared or assessed value from the claim.[1]

Can the court reduce the interest the bank has charged?

Not interest lawfully charged, but the total claim cannot exceed 200 per cent of principal, and charges that breach the sanction terms or Bangladesh Bank directions can be disputed.[1] [6]

What is the maximum penal interest in 2026?

Since 13 May 2026, 0.5 per cent, reduced from 1.5 per cent by BRPD-1 Circular Letter No. 17.[6]

When is a guarantor discharged?

Where terms are varied, time is given or the borrower is released without consent, or where the bank impairs the guarantor's remedies or gives up security. The 2026 form preserves the guarantee only where prior consent was taken.[3] [7]

How much must I deposit to appeal an Artha Rin decree?

Fifty per cent of the decretal amount, credited with any 10 per cent paid under section 19. Revision requires 75 per cent in total.[1]

Can I file a writ instead of appealing?

Only exceptionally, such as a lack of jurisdiction or against an interim order. A dismissed writ used to avoid the deposit attracts 25 per cent interest.[1] [11]

Has the Artha Rin Adalat Ain been amended in 2026?

Not as at 20 October 2026. A replacement ordinance was turned down in January 2026 and targeted amendments are being prepared, but no amending Act has been published.[13] [14]