Under the proposed amendment, banks and financial institutions can take help of district magistrates to establish control over mortgaged property and hand over the property to the buyers, leaving no scope for encroachment.

This step will encourage people to buy such property at reasonable prices, sources pointed out.

Approved by the cabinet last week, the amendment proposal was placed in the Jatiya Sangsad and it was referred to the standing committee on the law, justice and parliamentary affairs for scrutiny.

Under another proposed amendment, the defaulted loan ceiling for filing cases with the money loan courts will be increased to Tk 5 lakh from Tk 50,000. The amendment is proposed to help small farmers, who usually take small amounts of loan and face cases in the money loan courts based at the district headquarters.

When the amendment is passed by parliament, farmers may face certificate cases at upazila headquarters for defaulted farm loans.

The law ministry recently convened a meeting with the high officials of banks and financial institutions to review the Money Loan Court Act, 2003 that came into force on May 1 that year. The meeting proposed the two amendments to make the law more effective.