DE News Desk :
The Bangladesh Bank (BB) has been formally empowered to take control of troubled banks under a new ordinance promulgated by the interim government, in a landmark move aimed at restoring stability and public confidence in the financial sector.
According to the Bank Resolution Ordinance, 2025, published in the official gazette on May 9, the central bank can now assume control of ailing banks, transfer their assets, and hand over operations to a bridge bank designed to manage the institution on a temporary basis.
The ordinance was approved by the advisory council on April 17 following a proposal from the Financial Institutions Division under the Ministry of Finance.
The move comes amid growing concerns over ballooning non-performing loans, lapses in governance, and declining depositor trust.
Designed to overhaul the country’s crisis resolution framework, the ordinance introduces a set of robust mechanisms including capital restructuring, asset transfers, and the establishment of bridge banks to ensure continuity of essential banking services.
Under the new legal framework, Bangladesh Bank is authorized to determine the transfer value of distressed banks through competitive processes.
Shareholders will be barred from offloading shares once the resolution process is initiated, effectively preventing those responsible from avoiding accountability.
To enforce these powers, BB will establish a dedicated resolution unit and set up a Bank Restructuring and Resolution Fund, with support from government allocations, contributions from international financial institutions, and risk-based levies on banks.
The ordinance also introduces stringent governance provisions.
It enables the central bank to remove directors, top executives, and major shareholders involved in financial misconduct and recover any undue benefits they may have received.
Moreover, BB can take immediate action if a bank fails to meet capital or liquidity requirements or if fraudulent activity by its owners threatens financial stability.
As part of the broader reform effort, a Banking Sector Crisis Management Council chaired by the BB governor will be formed to oversee systemic risk and guide crisis response efforts.
The new ordinance marks a significant step in strengthening the resilience and accountability of Bangladesh’s banking sector.