The committee has been given 45 days from the day they receive the court order to submit its report.
If unauthorised and unlicensed microcredit institutions or entities are found, the court has ordered the committee to seek assistance from local government representatives to immediately close their offices and take legal action against them.
The Microcredit Regulatory Authority has been ordered to provide a list of unlicensed lenders within 45 days.
Justice Abu Taher Md Saifur Rahman and Justice Md Zakir Hossain made the decision on Monday in response to a petition seeking the identification of those who lend money at high interest rates across the country.
Syed Sayedul Haque represented the petitioners at the hearing, while Deputy Attorney General Noor Us Sadik represented the state.
The petition, filed on Sept 7, was filed in the public interest and included a report from Aug 28 that mentioned high interest being charged to farmers.
The petition called on the court to ban informal loans by moneylenders and to issue a rule and instructions on the matter.
The rule challenged the silence from the authorities responsible for monitoring the activities of microcredit lenders.
The finance secretary, the Bangladesh Bank governor, the executive vice chairman of Microcredit Regulatory Authority and the director general of the Department of Social Services have been ordered to respond to the rule.
In a supplementary petition, lawyer Sayedul Haque presented data on loan sharks running their business with high interest rates on Sept 20, citing information from the Microcredit Regulatory Authority.
At least 746 organisations received microcredit licences from July 2007 to January this year, according to the regulator. Also, as many as 134 entities or organisations have had their licences revoked between January 2009 and February this year.
According to the existing law, only banks, financial organisations and licensed microcredit organisations can run a money lending business which requires debtors to pay interest, lawyer Sumon said in his argument.
Some organisations, especially in rural areas, however, have kept lending money while charging a high interest rate. People, mostly from the lower-income, marginal and middle-income groups across Bangladesh are falling prey to these loan sharks.
The senior judge asked why the defendants’ inactivity has been challenged in the petition despite the revoking of their licences.
Though authorities revoked the licence, they did not stop the money lenders from continuing to run their business, the lawyer said in response.
Justice Abu Taher Md Saifur Rahman wanted to know which of the 134 organisations that had their licence revoked, are still operating.
The lawyer failed to provide the information but said that the authority can take legal action against the loan sharks according to the existing Microcredit Regulatory Authority law. Only licensed organisations, however, can file a complaint to the authority according to section 41 of the law.
This is why groups of unlicensed lenders have been deceiving the people, he said. The central bank has the power to monitor the situation, but does not do it. The petitioners, therefore, filed the appeal to challenge their inactivity.
“Bangladesh is not in a strong position [to handle such issues]. What can we tell the government? The religious leader called Ragib [Ragib Ehsan of the Ehsan Group], used to be a teacher. When he found teaching wasn’t paying much, he began to run a money lending business and used different ideas from Islam like ‘halal money’ as a way to lure people in and get a large amount of money from them,” the judge said.
The issue needs intense scrutiny and one or two media reports would not be sufficient, the judge said. “It’s a complicated issue and we need to see which authorities are involved with it and which laws are involved.”
The High Court order was then issued on Monday.