[🇧🇩] Banking System in Bangladesh

[Saif]

A paradigm shift in banking

The global banking sector is undergoing a significant transformation with the introduction of the International Financial Reporting Standard 9 (IFRS 9), which mandates using the Expected Credit Loss (ECL) framework for credit loss provisioning. This shift from the traditional incurred-loss model to

thefinancialexpress.com.bd

A paradigm shift in banking
IFRS 9 and expected credit-loss provisioning
Md Touhidul Alam Khan
Published :
Mar 17, 2025 22:57
Updated :
Mar 17, 2025 22:57

Customers depositing cash at a bank branch in Dhaka. Photo : FE/Files

The global banking sector is undergoing a significant transformation with the introduction of the International Financial Reporting Standard 9 (IFRS 9), which mandates using the Expected Credit Loss (ECL) framework for credit loss provisioning. This shift from the traditional incurred-loss model to a forward-looking ECL approach represents a fundamental change in how banks recognise and account for credit losses. For Bangladesh's banking sector, this transition, as outlined in Bangladesh Bank's BRPD Circular No. 03, dated January 23, 2025, marks a critical step toward aligning with international best practices and enhancing financial transparency. This article delves .into the key aspects of IFRS 9, the ECL framework, and its implications for the banking sector, particularly in Bangladesh.

THE EVOLUTION FROM INCURRED LOSS TO EXPECTED CREDIT LOSS: For decades, banks worldwide have relied on the incurred-loss model, which recognises credit losses only after they occur. While this approach is straightforward, it has been widely criticised for its reactive nature and inability to account for future risks. The incurred-loss model often results in delayed recognition of credit losses, which can exacerbate financial instability during economic downturns.

IFRS 9, issued by the International Accounting Standards Board (IASB) in July 2014, introduces a more proactive approach through the ECL framework. Under IFRS 9, banks are required to recognize credit losses based on expected future defaults rather than past events. This forward-looking approach considers past events, current conditions, and forecast information, ensuring that credit losses are recognized in a more timely and accurate manner. The ECL framework is designed to mitigate procyclicality and provide a more realistic assessment of credit risk, thereby enhancing the resilience of the banking sector.

THE ECL FRAMEWORK: SCOPE AND APPLICATION: Under IFRS 9, financial assets are classified based on the business model for managing them and their cash flow characteristics. Financial assets such as loans, lease receivables, loan commitments, and financial guarantee contracts are subject to the ECL framework if they meet specific criteria. For simplicity, this article focuses on the application of the ECL framework to loans.

THE ECL FRAMEWORK REQUIRES BANKS TO RECOGNIZE CREDIT LOSSES IN THREE STAGES: Stage 1: When a loan is originated or purchased, banks recognise 12-month ECLs, which represent the expected credit losses resulting from default events that are possible within the next 12 months. A loss allowance is established, and interest revenue is calculated on the loan's gross carrying amount.

Stage 2: If a loan's credit risk increases significantly since its initial recognition, banks recognise lifetime ECLs. The calculation of interest revenue remains the same as in Stage 1.

Stage 3: If a loan becomes credit-impaired, banks recognise lifetime ECLs and interest revenue is calculated based on the loan's amortised cost (gross carrying amount less the loss allowance).

TWELVE-MONTH VS. LIFETIME EXPECTED CREDIT LOSSES:

The ECL framework distinguishes between 12-month ECLs and lifetime ECLs. Twelve-month ECLs represent the portion of lifetime ECLs associated with the possibility of a loan defaulting within the next 12 months. It is not the expected cash shortfalls over the next 12 months but the effect of the entire credit loss on a loan over its lifetime, weighted by the probability that this loss will occur in the next 12 months.

Lifetime ECLs, on the other hand, represent the expected present value of losses that arise if a borrower defaults on its obligation throughout the life of the loan. These losses are calculated as a weighted average of credit losses, with the probability of default serving as the weight. Even if a bank expects to be paid in full but later than the contractual due date, a credit loss is recognized.

DISCLOSURE REQUIREMENTS: IFRS 9 mandates that banks disclose detailed information about their ECL calculations, including the basis for measuring ECLs and assessing changes in credit risk. Banks must also provide a reconciliation of the opening and closing ECL amounts and carrying values of the associated assets, categorized by asset class and type of ECL (12 months or lifetime). These disclosure requirements enhance transparency and enable stakeholders to better understand a bank's credit risk profile.

REGULATORY TREATMENT OF ACCOUNTING PROVISIONS: The timely recognition of credit losses is crucial for promoting safe and sound banking systems. The Basel Committee on Banking Supervision (BCBS) has long recognized the close relationship between capital and provisions. In October 2016, the BCBS released a consultative document and discussion paper on the regulatory treatment of accounting provisions under the Basel capital framework, in light of the shift to ECL by both the IASB and the US Financial Accounting Standards Board.

Given the diversity of accounting and supervisory policies across jurisdictions, the BCBS decided to retain the current regulatory treatment of provisions for an interim period. However, the BCBS has set out optional transitional arrangements for the impact of ECL accounting on regulatory capital and corresponding Pillar 3 disclosure requirements. These arrangements provide flexibility for individual jurisdictions as they transition to the ECL framework.

BANGLADESH'S JOURNEY TOWARD IFRS 9 IMPLEMENTATION: Bangladesh's banking sector is poised to embrace IFRS 9 and the ECL framework by 2027, as outlined in Bangladesh Bank's BRPD Circular No. 03 of this year. This transition represents a significant departure from the traditional rule-based loan classification system and underscores the central bank's commitment to enhancing risk management and financial transparency.

To facilitate a smooth transition, Bangladesh Bank has laid out a detailed roadmap with specific timelines and milestones. Key steps include the formation of IFRS 9 Implementation Teams, the development of comprehensive databases for ECL calculations, and extensive training programs for bank employees. By December 2027, the ECL-based loan classification and provisioning system is expected to be fully operational across the banking sector.

PREPARING FOR SUCCESS: Successful implementation of IFRS 9 requires significant institutional readiness. Banks must review and upgrade their internal systems, accounting standards, and IT infrastructure to meet the demands of the new framework. The IFRS 9 Implementation Team, comprising officials from Credit Risk Management, Financial Accounts, IT, and Internal Control and Compliance (ICC), will play a pivotal role in ensuring compliance and operational efficiency.

To maintain transparency and accountability, banks must submit quarterly progress reports to their Board of Directors (BODs), with summaries shared with the Banking Regulation and Policy Department (BRPD). These reports will provide a clear picture of the implementation status, highlight challenges, and outline corrective actions. Additionally, banks are encouraged to seek technical assistance from external experts to address complex implementation issues and ensure a smooth transition.

A BRIGHTER FUTURE FOR BANKING: The adoption of IFRS 9 and the ECL framework represents a transformative step for Bangladesh's banking sector. By following the structured roadmap and prioritizing capacity building, banks can ensure a seamless transition to the ECL-based provisioning system. This shift will not only strengthen the financial health of banks but also bolster investor confidence and contribute to the overall stability of the economy.

As Bangladesh's banking sector embarks on this journey, it stands poised to emerge as a more resilient, transparent, and globally competitive player in the financial landscape. The road ahead may be challenging, but the rewards-greater stability, transparency, and trust-are well worth the effort.

The introduction of IFRS 9 and the ECL framework marks a new era for the global banking sector, and Bangladesh is no exception. By adopting a forward-looking approach to credit loss provisioning, banks can better manage risks, enhance financial transparency, and build trust among stakeholders. Successful implementation of IFRS 9 will require careful planning, robust systems, and a commitment to capacity building. However, the long-term benefits of a more resilient and transparent banking sector make this transition a critical step toward a brighter financial future.

Dr. Md. Touhidul Alam Khan is an experienced banker and cost & management accountant from the Institute of Cost & Management Accountants of Bangladesh (ICMAB).​

 

[Saif]

Bad loans at scam-hit banks surge after political changeover

Bad loans soared to alarming levels at over a dozen banks that were mired in loan irregularities and major scams under the previous regime, as large businesses with ties to the former government defaulted heavily following the political changeover.

www.thedailystar.net

Bad loans at scam-hit banks surge after political changeover

Bad loans soared to alarming levels at over a dozen banks that were mired in loan irregularities and major scams under the previous regime, as large businesses with ties to the former government defaulted heavily following the political changeover.

At the end of last year, defaulted loans in the banking sector stood at Tk 345,765 crore, with those state-run and private commercial banks holding the majority.

Among them, non-performing loans (NPLs) at state-owned Janata Bank reached a record Tk 67,148 crore by the end of 2024, accounting for 72 percent of its total disbursed loans, according to Bangladesh Bank (BB) data.

Bad loans at Janata Bank increased by 284 percent in just one year -- up from Tk 17,501 crore, or 19.2 percent of its total lending, at the end of 2023.

Once a respected lender, Janata Bank gained notoriety due to a series of scams and loan irregularities involving Anontex, Crescent, Beximco, Thermax and S Alam Group during the previous government's tenure.

Bad loans linked to these five defaulters crossed Tk 45,000 crore.

The bank is now going through a severe liquidity crisis and struggling to carry out regular banking operations.

To ease the cash crunch, it recently sought a Tk 20,000 crore liquidity support from the interim government and the central bank.

Md Mazibur Rahman, managing director of Janata Bank, told The Daily Star last week that since the political changeover in August, the bank's new management has been working to manage loan irregularities.

Legal action is now being taken against defaulters, he added.

At private-sector National Bank, default loans rose by 109 percent year-on-year to Tk 25,846 crore by the end of 2024, making up 61 percent of the total disbursement.

After the interim government took office in August last year, the central bank restructured the boards of 11 banks, including National Bank.

National Bank, the country's first private-sector commercial lender, had a prosperous past. However, it became a loss-making entity due to massive loan irregularities, poor governance and boardroom conflicts.

During the 16-year tenure of the previous Awami League government, business conglomerate Sikder Group dominated the bank. After the political changeover, Abdul Awal Mintoo, a businessman and vice-chairman of the Bangladesh Nationalist Party (BNP), was appointed as the chairman of National Bank.

Default loans at Islami Bank Bangladesh spiralled to Tk 32,817 crore by the end of 2024, up from Tk 6,919 crore a year earlier. The amount accounts for 21 percent of its total lending.

Islami Bank was one of the worst-affected banks due mainly to the controversial business conglomerate S Alam Group, which dominated the board of the largest Shariah-based bank until mid-August last year.

The Chattogram-based conglomerate and its affiliated firms borrowed more than 80 percent of Islami Bank's total Tk 155,659 crore in loans.

Other banks under S Alam Group's influence were First Security Islami Bank, Union Bank, BCB, and Global Islami Bank. These lenders also saw a sharp rise in bad loans last year.

Year-on-year, defaulted loans at First Security Islami Bank surged by Tk 15,710 crore to Tk 17,851 crore. At Union Bank, bad loans rose by Tk 23,992 crore to Tk 24,835 crore, while at BCB, they increased by Tk 224 crore to Tk 1,432 crore.

At Global Islami Bank, defaulted loans climbed by Tk 4,216 crore to Tk 4,442 crore.

Following the political changeover, these banks were freed from S Alam Group's influence after the central bank dissolved their boards and appointed new ones.

Officials at these banks said that a large portion of the loans disbursed to S Alam Group and its associated companies is now in default.

Defaulted loans at AB Bank stood at Tk 8,573 crore at the end of last year, up from Tk 5,272 crore a year earlier. Bad loans at IFIC Bank rose by Tk 14,603 crore to Tk 17,182 crore over the same period.

Salman F Rahman, a close adviser to ousted prime minister Sheikh Hasina, was the chairman of IFIC Bank. After the government's fall, the central bank restructured the board and removed the Rahman-led management.

Officials at the bank told The Daily Star that although Rahman's Beximco Group had only a 6 percent stake, the group exerted significant influence over IFIC and secured around Tk 10,000 crore in loans -- posing a major risk for a bank of its size.

Bad loans at state-run Agrani Bank reached Tk 27,932 crore, or 38.45 percent of its total lending.

The bank ran into trouble due to excessive exposure to a few large borrowers, including Bashundhara Group, Orion Group, Zakia Group, and Joj Bhuyia Group, according to BB documents.

Social Islami Bank, another lender previously controlled by the S Alam Group, saw its bad loans rise to Tk 13,267 crore, or 35 percent of total disbursed loans.

Padma Bank's defaulted loans increased to Tk 4,870 crore, or 87 percent of its total lending. A few years after its launch, the bank was hit by a massive scam and loan irregularities.

ICB Islamic Bank had the highest default loan ratio, with bad loans accounting for 91 percent of its total lending at the end of last year.

Bankers said defaulted loans surged in 2024 as large borrowers defaulted heavily after the Awami League's fall, pushing overall bad loans to an unprecedented level.

Besides, they said the central bank's directive for more transparency had led banks to disclose more accurate figures, including previously concealed bad loans.​

 

[Saif]

10 banks in Bangladesh hold Tk 2.57 lakh crore in default loans

Ten commercial banks in Bangladesh collectively had Tk 2.57 lakh crore in defaulted loans as of December 2024, accounting for nearly 75 per cent of the total non-performing loans in the country’s banking sector.

www.newagebd.net

10 banks in Bangladesh hold Tk 2.57 lakh crore in default loans
Mostafizur Rahman 18 March, 2025, 23:43

Ten commercial banks collectively had Tk 2.57 lakh crore in defaulted loans as of December 2024, accounting for nearly 75 per cent of the total non-performing loans in the country’s banking sector.

The alarming concentration of bad loans underscores vulnerabilities of the financial sector, experts said.

According to Bangladesh Bank data, four state-run banks held Tk 1,26,062 crore in NPLs, while six private commercial banks had Tk 1,31,797 crore in NPLs at the end of December 2024.

The total volume of defaulted loans in the country’s banking sector surged by Tk 2 lakh crore in just one year, reaching Tk 3.45 lakh crore by the end of 2024.

About 20 per cent of the total bank loans amounting to Tk 17.11 lakh crore was classified as non-performing, the highest rate in South Asia.

This sharp rise came after the exposure of a massive amount of toxic loans which were previously concealed through data manipulation during the Awami League regime ousted on August 5, 2024, in a mass uprising, experts said.

Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, told New Age that the staggering volume of defaulted loans was the result of years of accumulated corruption and unchecked irregularities.

He warned that the surging NPLs posed a severe risk to the country’s economy, driving up borrowing costs and eroding banks’ lending capacity.

Mustafizur observed that the Bangladesh Bank had recently taken steps such as bank board restructuring, asset recovery plans and efforts to hold defaulters accountable, but these measures would take time to yield meaningful results.

Among the worst-hit banks, state-run Janata Bank recorded the highest volume of defaulted loans at Tk 67,147 crore, more than 67 per cent of its total outstanding loans.

The bank’s biggest defaulter, Beximco Group, owed Tk 25,000 crore, nearly all of which turned into bad debts.

The other major defaulters include Anontex, S Alam Group, Crescent Group and Thermex Group.

Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank, said that the banks with high default loans might struggle to function smoothly.

‘These banks must mobilise deposits and recover bad loans instead of relying on the Bangladesh Bank’s liquidity support to survive,’ he said.

He also noted that the central bank’s initiatives would take time to yield results.

‘We need to wait for some time to assess their effectiveness,’ he added.

Islami Bank held the second-highest amount of defaulted loans, standing at Tk 32,816 crore at the end of December.

Previously controlled by controversial S Alam Group, the bank got most of its NPLs from loans issued to entities linked to the group.

State-run Agrani Bank ranked third with Tk 27,931 crore in defaulted loans, accounting for 38.46 per cent of its total outstanding credit.

Sonali Bank and Rupali Bank reported Tk 15,905 crore and Tk 15,079 crore in NPLs respectively, accounting for 18.61 per cent and 31.71 per cent of their loan portfolios.

Several private banks which were previously under the S Alam Group’s influence also reported high levels of NPLs.

Union Bank held Tk 24,833 crore in bad loans, representing 87.98 per cent of its total disbursed credit.

First Security Islami Bank had NPLs of Tk 17,851 crore (29.33 per cent of its total loans), while Social Islami Bank’s bad loans stood at Tk 13,267 crore (34.79 per cent of its total loans).

National Bank and IFIC Bank also reported significant amounts of defaulted loans at Tk 25,846 crore and Tk 17,851 crore, respectively.

Their NPL rates were 60.5 per cent and 38.5 per cent of their total disbursed loans.

According to the Bangladesh Bank data, S Alam Group alone withdrew nearly Tk 2.25 lakh crore from 10 banks, previously were under the group’s direct or indirect control.

The reckless lending and financial irregularities have put depositors at severe risks, with many banks struggling to repay customer funds.

In response to the crisis, the central bank has recently intervened by restructuring the boards of failing banks and appointing new directors.

It has also injected about Tk 30,000 crore into crisis-hit banks, including National Bank, Union Bank, Social Islami Bank and First Security Islami Bank in an effort to stabilise their operations.

Beyond the top 10 defaulters, several other banks also reported high NPLs.

BASIC Bank recorded Tk 8,601 crore in bad loans, followed by AB Bank Tk 8,572 crore, United Commercial Bank Tk 6,848 crore, Padma Bank Tk 4,870 crore, Global Islami Bank Tk 4,442 crore and Al-Arafah Islami Bank Tk 4,794 crore.

In total, the central bank has so far restructured the boards of 14 private commercial banks.

Since the Awami League-led government assumed power in 2009, banks’ NPLs have skyrocketed.

From Tk 22,240 crore in June 2009, defaulted loans soared to Tk 2,11,391 crore by June 2024 — a nearly tenfold increase in 15 years.

Under the leadership of Bangladesh Bank governor Ahsan H Mansur, the true scale of the crisis is being exposed.

For years, banks, borrowers and regulators had colluded with each other to mask the extent of bad loans through loan rescheduling and data manipulation, experts said.​

 

[Saif]

Islamic banks see deposit shift

Islamic wings of conventional banks have become the preferred choice for religiously inclined depositors as many full-fledged Shariah-based banks struggle with a crisis of trust..This shift has emerged after controversies and financial scandals involving Shariah-based banks, many of which

www.thedailystar.net

Islamic banks see deposit shift
Shariah wings of strong banks gain, while full-fledged lenders stumble

Islamic wings of conventional banks have become the preferred choice for religiously inclined depositors as many full-fledged Shariah-based banks struggle with a crisis of trust.

This shift has emerged after controversies and financial scandals involving Shariah-based banks, many of which were controlled by the controversial conglomerate S Alam Group during the previous regime.

Although the boards of these banks were reshuffled after the political changeover in August last year, industry insiders say rebuilding public trust will take time.

At the end of 2024, deposit growth in the banking sector slowed to 7.47 percent. However, 18 banks experienced deposit surges exceeding 26 percent, with some Islamic wings of conventional banks registering increases of more than 100 percent.

A senior central bank official told The Daily Star that certain conventional banks and their Islamic wings successfully drew in large deposits that had been withdrawn from about half a dozen struggling lenders.

As financial irregularities at commercial banks linked to S Alam Group came under scrutiny, savers moved their funds to banks with stronger financial standing and reputations, he added.

In 2024, deposits at National Credit and Commerce (NCC) Bank rose by only 13.04 percent to Tk 25,410 crore. However, deposits in its Islamic wing soared by a record 110 percent, the highest in the banking sector.

"Public confidence in some banks was severely shaken last year, which contributed to our strong deposit growth," said M Shamsul Arefin, managing director of NCC Bank.

He told The Daily Star that as customers of certain Shariah-based banks struggled to withdraw their savings, many sought alternative Shariah-compliant options. This trend significantly benefited the Islamic banking units of conventional banks.

"NCC Bank is financially sound and is expanding its Islamic banking operations to cater to the rising demand for Shariah-based financial services," Arefin added.

Similarly, at the end of last year, Pubali Bank's total deposits stood at Tk 70,637 crore. While the bank recorded a 21 percent deposit growth overall, its Islamic wing saw a 91.18 percent rise.

"Many depositors lost trust in full-fledged Islamic banks, prompting them to turn to the Islamic wings of established conventional banks," said Mohammad Ali, managing director of Pubali Bank.

"Our Shariah compliance is very high, which has helped strengthen confidence in our Islamic banking operations," he added.

Another example is Prime Bank, which saw total deposits grow by 12.74 percent last year while deposits with its Islamic wing ballooned by 61.34 percent.

Along that same vein, the Islamic wing of Mutual Trust Bank saw deposit growth of 66.34 percent and One Bank's Islamic wing recorded a 54 percent increase, according to central bank data.

Hassan O Rashid, managing director of Prime Bank, said that the expansion of Islamic banking deposits in Bangladesh is driven by high demand, supportive policies and unique sectoral features such as risk-sharing, financial inclusivity and asset-backed transactions.

"These attributes align with religious principles and provide financial security," said Rashid.

Prime Bank was the first conventional bank in Bangladesh to introduce Islamic banking, launching such services through five dedicated branches in 1995.

"Our 30 years of expertise in Islamic banking, coupled with Prime Bank's financial strength, digital banking approach, timely deposit offerings and well-trained branch officials, have contributed to this growth," Rashid added.

Jamuna Bank recorded a 26.31 percent overall deposit growth last year, with deposits with its Islamic wing growing by 27.17 percent.

"Full-fledged Shariah-based banks are experiencing a temporary crisis of confidence, leading to the strong deposit growth in Islamic wings within conventional banks," said Mirza Elias Uddin Ahmed, managing director of Jamuna Bank.

He added that profit rates in the Islamic wings of conventional banks tend to be higher than those of Shariah-based banks, which has also contributed to the influx of depositors.

"This strong deposit growth has significantly improved our liquidity position," Ahmed said.

Midland Bank recorded an overall deposit increase of 29.77 percent last year, while its Islamic wing recorded a 33.37 percent deposit growth.

Ahsan-Uz Zaman, managing director and CEO of Midland Bank, told The Daily Star that public trust in the bank is growing because it tailors financial products to client needs.

"People now feel more secure entrusting their savings to Midland Bank, which has contributed to our deposit growth," he said.

Last year, deposit growth in the Islamic banking wings of other banks included Sonali Bank at 34.15 percent, Mercantile Bank at 29.15 percent, SBAC Bank at 28.69 percent, Trust Bank at 35 percent, City Bank at 20.40 percent, Meghna Bank at 72 percent, and UCB at 27 percent, according to central bank data.

In contrast, weak and troubled banks, including several Shariah-based ones, saw deposit declines last year. BASIC Bank, Janata Bank, AB Bank, Bangladesh Commerce Bank, EXIM Bank, First Security Islami Bank, ICB Islamic Bank, National Bank, Padma Bank, and Social Islami Bank all reported negative deposit growth.​

 

[Saif]

Troubled banks seek additional liquidity support

Several financially strained banks have sought additional liquidity support from Bangladesh Bank to meet the surge in cash withdrawals ahead of Eid-ul-Fitr. According to central bank sources, at least six banks have requested Tk 5,000 crore in liquidity assistance to cope with the increased demand

thefinancialexpress.com.bd

Troubled banks seek additional liquidity support
FE Online Desk
Published :
Mar 19, 2025 17:45
Updated :
Mar 19, 2025 17:45

Several financially strained banks have sought additional liquidity support from Bangladesh Bank to meet the surge in cash withdrawals ahead of Eid-ul-Fitr.

According to central bank sources, at least six banks have requested Tk 5,000 crore in liquidity assistance to cope with the increased demand. But the central bank has advised them to borrow from financially stable banks under the Bangladesh Bank guarantee scheme, UNB reports.

Meanwhile, First Security Islami Bank, Global Islami Bank, Social Islami Bank, Union Bank and National Bank have signed agreements with Bangladesh Bank to secure loans under this scheme.

Following the change of government in August 2024, Bangladesh Bank provided Tk 29,000 crore in liquidity support to nine banks.

As per the central bank’s records:

Social Islami Bank (SIBL) received Tk 5,500 crore
First Security Islami Bank received Tk 6,500 crore
National Bank received Tk 5,000 crore
Union Bank received Tk 2,000 crore
Global Islami Bank received Tk 2,000 crore
Exim Bank received Tk 8,500 crore
Bangladesh Commerce Bank received Tk 200 crore
ICB Islami Bank received Tk 100 crore
AB Bank received Tk 200 crore​

 

[Saif]

Depositors to get max Tk 2 lakh on bank liquidation

The Bangladesh Bank (BB) has drafted a Deposit Protection Ordinance, proposing a maximum payout of Tk 2 lakh per depositor if a bank undergoes liquidation. The limit will be reviewed every three years.

www.thedailystar.net

Depositors to get max Tk 2 lakh on bank liquidation
Remaining amount will be settled after liquidation, BB says in draft ordinance

The Bangladesh Bank (BB) has drafted a Deposit Protection Ordinance, proposing a maximum payout of Tk 2 lakh per depositor if a bank undergoes liquidation. The limit will be reviewed every three years.

The draft, now open for public feedback, maps out the establishment of a Deposit Protection Authority within the central bank, which will oversee a separate fund maintained through premiums from financial institutions.

Depositors surpassing the protection limit must claim the excess through the liquidator.

The ordinance also details a seven-day payout window for secured deposits and tax exemptions for the fund's earnings. The central bank may impose penalties on institutions failing to pay premiums on time.

Earlier, central bank Governor Ahsan H Mansur hinted at the introduction of the ordinance to ensure depositor protection.

The ordinance will replace the Bank Deposit Insurance Act-2000, under which the maximum payout is Tk 1 lakh.

According to the draft ordinance, the government will establish a deposit protection system for its implementation, with the BB designated as the Deposit Protection Authority.

"The responsibilities of the authority will be separate and independent from the Bangladesh Bank's regular responsibilities, such as regulatory, supervisory, and resolution-related functions," says the draft.

To ensure the effective exercise of its powers and responsibilities, the central bank will create a separate division within its organisational structure, called the "Deposit Protection Division".

Decisions regarding the deposit protection system will be made by a board of directors comprising seven members, with the BB governor as the chairman.

The board will determine the maximum limit of protected deposits at least once every three years and oversee regulations, by-laws, investment policies, and risk-based premium rates.

It will also allocate funds to support bank resolutions.

Deposit protection fund

Under the ordinance, the central bank will establish a deposit protection fund, maintained through a separate account.

The fund will comprise initial, annual risk-based, and special premiums received from banks; penalties collected from member institutions; profits earned from investments; adjusted funds from liquidated banks; and other unconditional funds designated for payment.

Primarily, the fund will be used to pay secured deposits in the event of a bank's dissolution, though it may also provide financial assistance for bank resolution.

In the case of a fund deficit, the BB will have the authority to collect special premiums from member institutions, seek unconditional financial assistance from the government or other sources, or secure government loans.

Besides, the central bank will establish a separate fund for depositors of non-bank financial institutions.

The draft ordinance says that, regardless of the Income Tax Act, 2023, the Business Profits Act, 1947, or any other existing tax laws, no income tax, surtax, or business profits tax shall be applicable to the income, profits, or receipts of the Deposit Protection Fund.

Moreover, if a member institution fails to pay the prescribed premium within the stipulated timeframe, the BB will deduct the corresponding amount from the institution's current account and deposit it into the relevant account of the Deposit Protection Fund.

The central bank may also impose a penalty on overdue premiums, applying an interest rate equivalent to the higher of Bangladesh Government Treasury Bonds or Treasury Bills.​

 

[Saif]

Banks get remedies but what about ailing NBFIs?

Irregularities, scams, and governance failures necessitate reforms for both banks and non-bank financial institutions (NBFIs), but the severity of ailments in both sectors seems to have left the banking regulator with no option to pick and choose.

www.thedailystar.net

Banks get remedies but what about ailing NBFIs?

Irregularities, scams, and governance failures necessitate reforms for both banks and non-bank financial institutions (NBFIs), but the severity of ailments in both sectors seems to have left the banking regulator with no option to pick and choose.

For the Bangladesh Bank, the question is no longer regarding which will get the remedy first, but how long the other can sustain itself in a state of neglect.

The longer NBFIs remain untreated, the worse their condition will become. Banks require urgent reforms, but so do NBFIs, industry leaders say, warning that delays may push them beyond recovery.

Of the 35 NBFIs in the country, a dozen are currently struggling to repay depositors due to an acute liquidity crisis, a persistent issue that has tarnished the sector's image over the years.

After the political changeover on August 5 last year, the central bank initiated a series of banking sector reforms, including the formation of taskforces, the introduction of new laws and amendments to existing legislation such as the Bank Company Act.

The regulator also injected fresh funds into weak banks to protect depositors.

However, the treatment has been entirely different for struggling NBFIs. Since the interim government took office in early August last year, no visible initiatives have been taken to reform the ailing sector.

The central bank has also refrained from injecting funds to revive the NBFI sector and help companies repay depositors.

Following the political changeover, more than half a dozen banks were unable to repay depositors, prompting the central bank to inject over Tk 25,000 crore into weak banks by printing money.

Justifying this move, BB Governor Ahsan H Mansur said it was necessary to maintain depositor confidence.

This raises a simple but important question: if banks receive central bank funds to protect depositors, why are weak NBFIs denied similar support?

Institutional and individual depositors of over a dozen NBFIs, including People's Leasing, International Leasing, Union Capital, FAS Finance, Aviva Finance, Fareast Finance, and First Finance, are still struggling to recover their deposits. For instance, Khalil Ahmed Khan, a depositor at Aviva Finance, has not received his full deposit despite it maturing on January 21 this year.

He told The Daily Star that he invested Tk 23 lakh in three fixed deposit receipts (FDRs) on January 21, 2024. Despite repeated requests, the company has repaid only Tk 8.98 lakh, while Tk 14.01 lakh remains unpaid.

Many other desperate depositors visit weak NBFIs daily, only to return empty-handed.

The Bangladesh Leasing and Finance Companies' Association (BLFCA), a forum of non-bank financial institutions, has met with the BB governor twice but has yet to receive any commitment regarding liquidity support for weak NBFIs.

Md Golam Sarwar Bhuiyan, managing director of Industrial and Infrastructure Development Finance Company Ltd and former chairman of the BLFCA, told The Daily Star that the central bank informed them it is currently prioritising banking sector reforms.

According to Bhuiyan, NBFI sector reforms will begin once banking reforms are completed.

But Mohammad Rafiqul Islam, managing director of United Finance, believes reforms to both the sectors can run simultaneously. He urged the central bank to extend its focus to ensure depositors recover their funds.

Akin to weak banks, Midas Finance Managing Director Mustafizur Rahman said most NBFIs require liquidity support from the central bank.

Meanwhile, central bank officials maintain that banking sector reforms are crucial for economic stability. However, they assure that a mega reform plan for the NBFI sector is in the pipeline.

"Now is the time to initiate NBFI sector reforms," Fahmida Khatun, executive director of the Centre for Policy Dialogue, told The Daily Star.

She highlighted severe governance issues in the sector, stressing the need for stricter rules and regulations to strengthen governance.

The economist also recommended that regulators conduct audits of NBFIs, similar to banks, to assess their actual financial health.​

 

[Saif]

Tk 41,129cr bad loans written off by 10 banks

The top 10 banks in Bangladesh have collectively written off Tk 41,129 crore in bad loans by the end of December 2024, accounting for nearly half of the total written-off loans in the banking sector, according to Bangladesh Bank data.

www.newagebd.net

Tk 41,129cr bad loans written off by 10 banks
Mostafizur Rahman 05 April, 2025, 23:24

The top 10 banks in Bangladesh have collectively written off Tk 41,129 crore in bad loans by the end of December 2024, accounting for nearly half of the total written-off loans in the banking sector, according to Bangladesh Bank data.

Banks typically resort to loan write-offs when they determine that the chances of recovering the money lent are practically nil, banking experts said.

Written-off bad loans have increased due to a higher rate of non-performing loans and write-off policy relaxation by the central bank in February 2024, they said.

The top state-owned bank, Sonali Bank, alone wrote off Tk 8,568 crore, followed by Agrani Bank writing off Tk 5,627 crore, Janata Bank Tk 5,126 crore and Bangladesh Development Bank Limited Tk 2,968.89 crore.

Among the private sector banks, Southeast Bank wrote off Tk 3,664 crore, United Commercial Bank Tk 3,197 crore, Prime Bank Tk 3,184.76 crore, The City Bank Tk 3,164.79 crore, BRAC Bank Tk 2,962.5 crore, and Bank Asia Tk 2,664 crore.

As of December 31, 2024, the total volume of outstanding written-off loans in the banking sector stood at Tk 81,578 crore, marking a sharp increase from Tk 53,612 crore a year earlier.

Of the total amount written off by the end of 2024, state-run banks wrote off Tk 25,832 crore and private commercial banks Tk 52,780 crore.

Nine foreign banks operating in Bangladesh wrote off Tk 2,353 crore in total, with Standard Chartered Bank accounting for nearly half of that amount -- Tk 1,139 crore.

The practice of writing off loans allows banks to remove irrecoverable debts from their balance sheets, transferring them to off-balance sheet records, banking experts noted.

While this accounting maneuver presents a healthier financial picture on paper, the underlying liabilities remain unresolved, raising concerns about the long-term stability of the banking system, they observed.

The surge in write-off loans, however, raised critical questions about the banks’ loan approval processes, risk management practices, and political interference, they further observed.

The relaxed loan write-off policy came on February 19, 2024, when the Bangladesh Bank — under the influence of the previous Awami League-led government — eased the write-off guidelines.

According to the revised rules, banks can now write off loans classified as ‘bad and loss’ after just two years of default, down from three years previously.

This followed a 2019 policy change, which had already reduced the timeframe from five years to three.

Additionally, banks no longer need to file a case with the Artha Rin Adalat (Money Loan Court) for writing off defaulted loans below Tk 5 lakh, raising the threshold from Tk 2 lakh.

By lowering the write-off barrier, the central bank essentially provided banks with a tool to mask their deteriorating asset quality rather than confront it.

Surprisingly, the policy still exists even after the political shift on August 5, experts said.

Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue, said that the loan write-off policy needs tightening, especially considering the leniency that was introduced earlier in 2024.

He said that the Bangladesh Bank must undertake a comprehensive review of the policy to identify its flaws and enact necessary reforms to prevent the situation from worsening.

He also emphasised that banks must focus more seriously on recovery efforts if they are to regain public trust and stabilise their financial base.

The ever-increasing volume of written-off loans is a direct consequence of banks’ failure to pursue recovery effectively, BB officials said.

‘Once a loan is written off, most banks stop meaningful follow-up efforts to recover the dues. This has created a perverse incentive for willful defaulters, who now find it even easier to escape the consequences of defaulting,’ they said.

Non-performing loans surged dramatically in 2024, reaching Tk 3.45 lakh crore by year’s end — up from Tk 1.45 lakh crore in December 2023.

The NPLs grew rapidly each quarter in 2024: Tk 1,82,295 crore in March, Tk 2,11,391 crore in June, and Tk 2,84,977 crore in September.

Nearly 20 per cent of all loans in the banking sector —amounting to Tk 17.11 lakh crore — were classified as non-performing by the end of the year, indicating for Bangladesh the highest NPL ratio in South Asia.

A draft white paper released on December 2, 2024 further revealed that the total distressed assets —including NPLs and rescheduled, restructured, written-off, and litigated loans — had exceeded Tk 6.75 lakh crore.

The situation has put tremendous pressure on banks’ profitability and liquidity.

As most of their income comes from interest on performing loans, the erosion of loan quality severely limits their revenue generation.

Banks are now forced to maintain higher provisions against defaulted loans.

According to Bangladesh Bank regulations, provisions range from 0.25 to 5 per cent for unclassified loans and rise sharply to 20 per cent for substandard, 50 per cent for doubtful, and 100 per cent for bad or loss category loans.

Besides the top 10 banks, Pubali Bank wrote off bad loans amounting to Tk 2,463 crore, Uttara Bank Tk 2,446 crore, AB Bank Tk 2,304.73 crore, National Bank Tk 2,154 crore, IFIC Bank Tk 2,144.86 crore, Dutch-Bangla Bank Tk 2,096.80 crore, One Bank Tk 2,072 crore, and Eastern Bank Tk 2,018.75 crore.​

 

[Saif]

Can ‘bridge banks’ act as a ‘financial ambulance’ for ailing banks?

Bangladesh’s banking sector, once celebrated for its contribution to economic growth, is currently facing a crisis. The sharp increase in non-performing loans (NPLs), severe liquidity issues, and persistent governance scandals have placed several banks on the brink of failure. This precarious...

www.thedailystar.net

Can ‘bridge banks’ act as a ‘financial ambulance’ for ailing banks?

Bangladesh's banking sector, once celebrated for its contribution to economic growth, is currently facing a crisis. The sharp increase in non-performing loans (NPLs), severe liquidity issues, and persistent governance scandals have placed several banks on the brink of failure. This precarious situation not only threatens the stability of the financial system but also undermines public trust. In such a challenging environment, the concept of "bridge bank" emerges as a potential solution.

The crucial question is: can "bridge banks" truly rescue Bangladesh's troubled banking sector?

The challenges besetting Bangladesh's financial landscape are serious and widespread. Non-performing loans, often worsened by politically motivated lending practices and inadequate credit management, have reached concerning levels, with the NPL ratio ranking among the highest in South Asia. Many banks are also grappling with significant capital shortages, failing to meet the minimum capital requirements set by regulatory authorities. These financial troubles are aggravated by significant governance issues. Insider lending, a lack of transparency, and high-profile scams have seriously damaged public confidence in the banking system. This creates a harmful cycle: as banks struggle to manage their operations, depositor trust declines, which in turn destabilises the entire financial ecosystem.

This is where "bridge bank" comes into play. This temporary institution is designed to take over the operations of distressed banks, essentially acting as a "financial ambulance" that stabilises these failing entities until a long-term solution—whether it be restructuring, sale, or liquidation—can be achieved. Normally established by central bank or regulatory authorities, a "bridge bank" aims to protect depositors, maintain essential banking services, and reduce systemic risks.

The advantages of "bridge banks" for Bangladesh is significant. By stepping in to manage troubled banks, it can prevent sudden collapses, ensuring that customers continue to have access to their funds and banking services. This continuity helps maintain public confidence during turbulent times. Additionally, a "bridge bank" can safeguard depositors' funds during crises, reducing the risk of panic withdrawals and bank runs. It also creates necessary time and framework for restructuring distressed banks, including recapitalisation, governance improvements, and management of non-performing assets. Most importantly, by isolating failing banks from the broader financial system, a "bridge bank" can prevent the crises from spreading to healthier institutions, thereby protecting the overall banking sector.

However, the introduction of a "bridge bank" in Bangladesh presents a distinct set of challenges. A strong legal and regulatory framework is vital for ensuring successful outcomes. While the proposed "Bank Resolution Ordinance" is a positive step forward, it requires transparent execution free from political interference to be effective. Setting up and managing a "bridge bank" needs considerable financial resources, meaning they will require backing from the government, international institutions, and contributions from other banks.

Good governance and transparency in managing a "bridge bank" is also crucial. Without proper oversight, there is a risk of mismanagement or misuse of resources, which could further erode public trust. Moreover, there is the moral hazard; banks may adopt reckless behaviour, believing that they will be shielded by a "bridge bank". This highlights the necessity for stringent regulatory oversight.

Globally, the "bridge bank" model has proven effective in addressing banking crises. During the 2008 financial crisis in the United States, for instance, the Federal Deposit Insurance Corporation employed a "bridge bank" to manage failing institutions like IndyMac Bank, ensuring the continuity of services and protection for depositors. Similar results have been observed in countries like Portugal, Italy, and India, where "bridge banks" played a key role in stabilising troubled banks and restoring public confidence in the financial system.

While a "bridge bank" may not be the panacea for all the issues facing Bangladesh's banking sector, it presents a promising avenue for addressing its challenges.

The author is a former managing director and CEO of a first-generation private bank in Bangladesh.​

 

[Saif]

Islamic problem banks to merge in two large banks

Bangladesh's Islamic-banking sector will be restructured with planned merger of the weakened and struggling ones of the lenders into two large banks to restore stability. Bangladesh Bank Governor Dr Ahsan H Mansur Wednesday announced the plan, now that there have been wide-ranging reforms launch

thefinancialexpress.com.bd

Islamic problem banks to merge in two large banks
BB governor places plan on restructuring Islamic banking sector to restore stability
FE Report
Published :
Apr 09, 2025 23:44
Updated :
Apr 09, 2025 23:44

Bangladesh's Islamic-banking sector will be restructured with planned merger of the weakened and struggling ones of the lenders into two large banks to restore stability.

Bangladesh Bank Governor Dr Ahsan H Mansur Wednesday announced the plan, now that there have been wide-ranging reforms launched in the country by the post-uprising interim government, including in financial sector.

"Most Islamic banks are in trouble. We plan to restructure the sector and consolidate it into two large banks," he said while inaugurating the 10th Annual Banking Conference 2025, hosted by Bangladesh Institute of Bank Management (BIBM).

He notes that there is currently one large Islamic bank and several smaller ones -- many in distress. And weaker banks would likely be merged with the stronger ones.

Mansur acknowledges the absence of a dedicated legal framework for Islamic banking, saying, "There is a regulatory gap, and we are working to address it, aligning with international standards."

Issuing a strongly worded warning to money-launderers, the Governor said the central bank is spearheading a multi-agency initiative to recover funds siphoned off abroad -- especially during the previous government's tenure --through the banking channel.

"Both legal and ethical measures are required. Life will be made difficult for those who laundered money, so that nobody follows suit in the future," he said.

"Even if we fail to recover all the laundered money, we will ensure those responsible face immense difficulties."

He stresses that the central bank is firmly committed to tackling illicit financial flows and calls for cooperation from all stakeholders.

Highlighting regulatory reforms, Mansur said Bangladesh Bank had recently dissolved boards of several underperforming banks to protect depositors' interests.

"If a bank's board fails to function within the regulatory framework, we will intervene -- forcefully, if needed. The message is loud and clear."

He notes that amendments to the Bank Company Act 2023 aim to improve governance, ensure proper board formation, and enforce stricter 'fit and proper' criteria for directors.

The Governor also calls for further amendments to the Bangladesh Bank Order to enhance the institution's autonomy and establish a unified regulatory framework for both public and private banks.

He feels that despite political changes, reforms must continue, and central bank autonomy must be preserved.

On digital banking, Mansur said licensing terms are being revised to promote small and nano-loans, aligning with broader financial-inclusion goals.

He mentions rapid expansion of mobile-financial services, with Nagad hitting a record transaction volume last month and average daily MFS transactions reaching Tk 5,000 crore.

He told the meet of bankers that capital-deficient banks would be gradually brought from negative to positive capital levels, potentially aided by political stability.

In the keynote presentation, Grameen Bank Chairman and North-South University Vice-chancellor Prof Abdul Hannan Chowdhury urged structural reforms and ethical leadership to rebuild public confidence in the banking sector.

He has identified persistent challenges -- such as weak oversight, rising non-performing loans (NPLs), and liquidity stress -- and advocated for aggressive technological adoption and institutional reform.

Citing successful blockchain pilot projects by Standard Chartered, HSBC, Prime Bank, and bKash in LC settlements, Prof Hannan said the technology can help curb trade-based money laundering which accounts for 75 per cent of illicit financial outflows.

He recommends using AI for CMSME credit scoring, adopting Robotic Process Automation (RPA) for compliance, and developing crowd-funding regulations for startups.

To address governance issues, he proposes a Bangladesh Bank-managed pool of independent directors and institutionalized performance-based board evaluations.

He also called for constitutional safeguards to ensure central bank independence, real-time IT-based supervision tools, and better coordination between fiscal and monetary policies.

To recover bad loans, he suggests establishing a special tribunal and an asset- management company, along with independent international audits to verify financial disclosures and detect "window-dressing".

Bangladesh Association of Banks (BAB) Chairman Abdul Hai Sarker stressed that customer trust is central to the sector's turnaround. "The real owners of banks are the customers. Without their confidence, the sector cannot recover."

He appreciated the conference as a platform for sharing reform strategies and governance improvements by regulators and industry leaders.

BIBM Director-General Md Akhtaruzzaman highlighted the need for inclusive digital transformation. "While the sector has seen major transformation over the past decade, digitalization must ensure no one is left behind -- financial inclusion remains our top priority," he said.​

 

[Saif]

Defaulted bank loans in Bangladesh and the IMF

Bangladesh was supposed to implement its new loan reclassification policy as of first April. Now it seems that because of the vulnerabilities of the banking sector, Bangladesh Bank will renegotiate the programme with the International Monetary Fund (IMF), a mission of which is in the capital now. T

thefinancialexpress.com.bd

Defaulted bank loans in Bangladesh and the IMF
Selim Jahan
Published :
Apr 11, 2025 00:12
Updated :
Apr 11, 2025 00:12

Bangladesh was supposed to implement its new loan reclassification policy as of first April. Now it seems that because of the vulnerabilities of the banking sector, Bangladesh Bank will renegotiate the programme with the International Monetary Fund (IMF), a mission of which is in the capital now. The new policy would declare a loan as defaulted, if it is not paid within three months of the due date. Earlier, the time limit was six months. The new loan classification policy is consistent and compatible with the global Basel III Banking Regulatory Policy. Bangladesh initially agreed to implement this new loan reclassification policy as a condition for the $2.7 billion loan that it received from the IMF in 2023.

Bangladesh is not alone in requesting a postponement in the implementation of the Basel III Banking Regulation Policy. The United States (US), the United Kingdom (UK) and the European Union (EU) have also requested for more time in implementing this policy. The United States will start its implementation from July this year with a three-year transitional period. The European Union will also delay the process so that their medium-sized banks are not under pressure. All these events may strengthen the position of Bangladesh with regard to the renegotiation of its loan reclassification policy.

Currently, the amount of defaulted loans is on the rise in the Bangladesh economy. At the end of 2024, defaulted loans of the country stood at 20 per cent of the total disbursed loans. Only a year ago, in 2023, the ratio was 8 per cent. During the period 2023 -2024, the defaulted loans in Bangladesh have increased by Tk 2 trillion, bringing its total to Tk 3.6 trillion by end-December, 2024. The Bangladesh Bank projects that the ratio of defaulted loans in the country may rise up to 30 per cent of the total disbursed loans, and in absolute terms, it may surpass Tk 5 trillion. A weak regulatory framework, persistent inefficiency in the financial system, illicit money laundering and capital flight have all contributed to increases in defaulted loans in the country.

The increases in the defaulted loans may impede the implementation of the new loan reclassification policy of the Bangladesh Bank. If the country returns to the global definition of defaulted loans, the defaulted amounts may rise, and it may be more difficult to conform to the IMF conditionalities. The IMF conditionalities require Bangladesh to decrease the ratio of defaulted loans to total disbursed loans to 10 per cent for public banks and to 5 per cent for the private banks. All these are linked to the February 5 release of the third tranche of the IMF loans. That date has been postponed without any explanation.

On the other hand, because of the deterioration of the country's banking sector's asset quality, Moody has downgraded its rating of the future of the banking sector of Bangladesh. Further tough loan classification policy will make the current situation more complex. Given the country's economic sluggishness and its high inflation, a higher number of entrepreneurs may not be able to pay off their debts.

In fact, in 2012, Bangladesh adopted the global standard for loan reclassification to identify the country's defaulted loans. According to that standard, if after three months of the stipulated time, a loan is not paid off, that becomes a defaulted loan. But in 2019, that standard was relaxed and the relevant dead line for loan repayment was extended from 3 to 6 months. But in reality, the debtors used to get about 9 months to repay their loans. Furthermore, in 2012, because of the policy of refixing of the time period for repayment of loans, the defaulters could reclassify their loans for three successive times. That process helped the defaulters to hide their bad assets.

There were, however, many reasons for such phenomena. But the biggest reason was to provide undue and illegal advantages under the state patronage to a few vested interest groups. With the state saving their backs, these interest groups used the banks as their private coffers. By breaking the rules and regulations of all economic disciplines, they dominated the management boards of different banks, controlled the management structures of these financial institutions. And as such, they institutionalized a permanent system of stealing money and money laundering from the banking system, where there were no structures of transparency and accountability. There were dual outcomes of the process - non-repayments of loans amounting crores of taka and laundering abroad the money and resources representing the defaulted loans.

There is no doubt that because of all these deviations, huge amounts of defaulted loans could be hidden on paper, but ultimately, it devastated the financial wellbeing of the country. As a result, during the last decade, 10 banks were on the verge of collapse. Along with it, billions of taka were laundered outside the country. In spite of all these wrong-doings, the foreign credit rating institutions did not downgrade the rating of our financial institutions. Yet, because of the rapid soaring of defaulted loans as well as the ensuing tough implementation of the policies, in future, there may be downgrading of these ratings. The outcome of the Bangladesh-IMF negotiations will have an important impact of the future stability on our financial system. Balancing between the rules and regulations of the regulatory system and the economic realities on the ground would represent a big challenge for Bangladesh.

Dr Selim Jahan is former Director, Human Development Report Office and Poverty Division, United Nations Development Programme (UNDP), New York, USA.​

 

[Saif]

Govt approves ordinance to prevent bank fund looting: Adviser Rizwana

The Advisory Council has approved the Bank Resolution Ordinance to bring order to the banking sector and prevent money looting, said Environment Adviser Syeda Rizwana Hasan on Thursday. “You know how money was looted by one industrial group that had established a monopoly on several banks. T

thefinancialexpress.com.bd

Govt approves ordinance to prevent bank fund looting: Adviser Rizwana
Published :
Apr 17, 2025 18:43
Updated :
Apr 17, 2025 18:43

The Advisory Council has approved the Bank Resolution Ordinance to bring order to the banking sector and prevent money looting, said Environment Adviser Syeda Rizwana Hasan on Thursday.

“You know how money was looted by one industrial group that had established a monopoly on several banks. The ordinance was approved to prevent these, to bring discipline in banking and corporate sectors and to secure interest of depositors,” she said while briefing reporters at the Foreign Service Academy in the capital, UNB reports.

Earlier in the day, a meeting of the Advisory Council was held at the Chief Adviser’s Office in Tejgaon with Chief Adviser Prof Muhammad Yunus in the chair.

A committee has been formed to start an investigation and ensure the punishment of those involved in financial crimes, Rizwana added.

Several other ordinances were also approved, including those related to revenue policy and management and amendments to the Grameen Bank Ordinance, she said.

Several key changes will be brought in the Code of Civil Procedure (CPC) as part of implementing the recommendations made by the Judicial Reform Commission, said Rizwana.

She said the outdated judicial procedures will be modernised.

“Execution will be included within the judgment itself, so no separate verdict will be required. Summonses will be issued through telephone and SMS, while accused persons will be notified via email and WhatsApp once a case is filed,” the adviser said.

"Referring to the Grameen Bank Ordinance, Rizwana stated that Chief Adviser Professor Muhammad Yunus had been politically targeted by the regime in power at the time."

The previous government had established its control over Grameen Bank but the new law will designate it as a public-interest institution, she said.​