The interim government has promulgated an ordinance, allowing the Bangladesh Bank, the central bank of the country, to take over any crisis-hit bank, transfer its assets and hand over the bank鈥檚 operations to a bridge bank.
The gazette of the Bank Resolution Ordinance, 2025 was published on May 9.
Earlier on April 17, the advisory council at a meeting approved the ordinance put forward by the Financial Institutions Division under the finance ministry amid mounting concerns over rising non-performing loans, governance failures and eroding public confidence in the country鈥檚 banking sector.
The ordinance aims to strengthen the weak banks鈥� financial stability, safeguard depositors and hold responsible individuals accountable in case of any wrongdoing.
The ordinance provides a range of resolution mechanism, including the creation of bridge banks to maintain weak banks鈥� critical operations, capital restructuring and asset transfers to third parties.
A bridge bank is a special type of bank that is authorised to take over and operate a failing bank for a limited period of time.
The ordinance empowers the Bangladesh Bank to determine the transfer price for distressed banks through open competition and prevents shareholders from disposing of shares once a resolution process begins.
The central bank will establish a separate department to implement its resolution powers and create a Bank Restructuring and Resolution Fund backed by government contributions, international financial institutions and risk-based levies on banks.
To further strengthen governance, the ordinance introduces strict measures against the bank directors, key management personnel and major shareholders engaged in financial misconduct.
It allows the BB to remove and replace top executives and recover undue remuneration in case of a bank failure.
The ordinance empowers the BB to prevent shareholders from transferring or disposing of shares in banks under resolution to ensure that those responsible for a bank鈥檚 downfall cannot evade accountability.
Furthermore, if a bank fails to meet capital or liquidity requirements, or if fraudulent use of funds by its owners jeopardises its financial health, the central bank can take immediate corrective action.
To enhance crisis management, the ordinance establishes the Banking Sector Crisis Management Council chaired by the BB governor.