Bank of Maldives (BML) Chief Executive Officer Karl Stumke has highlighted that the bank on average files over 200 lawsuits to claim receivables from small-interest loans (Lui Loan).
Stumke emphasized the necessity for a more robust system in resolving the large volume of loan payments that the bank is entitled to receive from debtors.
In an exclusive interview with Mihaaru News, Stumke expressed his concerns about resolving outstanding loan payments, as the bank seeks over 2,000 lawsuits per annum for them.
"It can take many many years for us to realize our security. Possibly why interest rates are little bit higher than it should be. Approximately 200 Lui loans a month go to court for recovery," Stumke said.
"It's a huge burden on the courts. You have small-value-high-volumes loan going into the court. You just get overwhelmed by 2,000 Lui Loans every year."
The bank's small-interest loans for personal use currently carry a 15 percent interest rate, and debtors can seek funding up to MVR 1.2 million from the Lui Loan facility. The loan is subject to repayment within five years.
Stumke further said that due to the large volume of smaller issues filed for lawsuits, the bank faces notable delays in litigating larger claims or other issues.
The BML CEO highlighted the importance of a proper system that would actively address the issues related to smaller loans, and save its time for bigger cases.
He also stressed how such a system would be beneficial for both the bank and the courts, as it would reduce the number of claims cases filed by BML at the courts for trials.
"So, I have now begun with the go ahead [board approval], I think its too early for me to announce where, what will it be. I think in the next three months I will make public of what the next step will be," Stumke added.
In 2022 alone, courts had completed cases related to loans and debt worth a total of MVR 1.4 billion.
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