Bangladesh Moves to Repeal Bank Resolution Act Provision Allowing Former Directors Return

Prothom Alo English, Dhaka — A bill has been placed in parliament to repeal the controversial Section 18(A) of the Bank Resolution Act — a provision that had been added by the current government to allow former and controversial directors of the merged Sammilito Islami Bank to return to the banking sector. Following widespread criticism, the provision is now set to be removed.

Finance Minister Amir Khasru Mahmud Chowdhury placed the bill in parliament on Thursday (3 September 2026). The House later sent it to the Parliamentary Standing Committee on the Ministry of Finance, chaired by Deputy Speaker Kaiser Kamal, for scrutiny and submission of a report within two working days.

📜 Section 18(A): What It Allowed

The bill proposes repealing Section 18(A) of the Bank Resolution Act. The provision stated that:

• 📜 Individuals who were shareholders of a bank before it came under resolution could apply to Bangladesh Bank to reacquire shares, assets and liabilities of the bank
• 📜 Bangladesh Bank could also extend the opportunity to another suitable person if it deemed appropriate

The provision created an opportunity for former and controversial directors to return to banks that had been placed under resolution — including Sammilito Islami Bank, which was formed through the merger of five troubled Islamic banks.

🏛 Timeline: How Section 18(A) Was Added and Now Removed

• 📅 Former interim government: issued Bank Resolution Ordinance — did NOT contain Section 18(A)
• 📅 BNP government: amended and approved the ordinance, adding Section 18(A)
• 📅 Widespread criticism: provision drew fire for allowing controversial directors to return
• 📅 3 September 2026: Finance Minister places bill to repeal Section 18(A)
• 📅 Standing Committee: asked to report within 2 working days

👥 Finance Minister's Justification

In the statement outlining the bill's objectives and reasons, Finance Minister Amir Khasru said it would be appropriate to repeal the provision since no individual or institution had applied under it after fulfilling all the requirements stipulated in the section. The practical non-use of the provision provided the government with a clean opportunity to remove it without affecting any pending applications.

🏛 Sammilito Islami Bank Context

Sammilito Islami Bank was formed through the merger of five troubled Islamic banks:

• 🏛 EXIM Bank
• 🏛 Social Islami Bank
• 🏛 First Security Islami Bank
• 🏛 Global Islami Bank
• 🏛 Union Bank

The former directors of these banks — many of whom were associated with the S Alam Group — had been removed from their positions as part of the bank resolution process. Section 18(A) would have allowed them to potentially reacquire their ownership stakes — a scenario that drew intense public criticism given the alleged financial irregularities under their management.

📊 Broader Banking Sector Reform Context

The Bank Resolution Act amendment comes amid comprehensive banking sector reforms:

• 📊 Sammilito Islami Bank: 10,000 recovery cases filed, Tk 1,42,000 crore deposits
• 📊 15-year rescheduling for Tk 1,000 crore+ defaulters
• 📊 NPLs cross Tk 6 lakh crore: 32.79% default ratio (highest globally)
• 📊 18,000 customers sought Tk 1,300 crore withdrawals on first day
• 📊 Govt cancels MDs of Agrani, BASIC, BDBL
• 📊 Strategic partner search: Qatar for Sammilito Islami Bank
• 📊 Govt seeks foreign funds: $4.5 billion for Dhaka-Chattogram Expressway

👥 Jamaat MP's Private Bill Denied

In a separate parliamentary development, Jamaat-e-Islami MP Nazibur Rahman had introduced a private member's bill seeking to amend the Government Money and Budget Management Act. When he sought permission to introduce the bill in parliament, the finance minister spoke on the matter and requested that the bill be withdrawn. Nazibur, however, refused to withdraw it.

The matter was then put to a vote. The "No" votes prevailed, and Nazibur was therefore denied permission to introduce the bill — demonstrating the government's parliamentary majority and its willingness to use procedural tools to manage the legislative agenda.

🌏 Strategic Implications

The repeal of Section 18(A) carries several strategic implications:

• ✅ Closing the return door: former controversial directors permanently blocked
• ✅ Reinforcing bank resolution: merger framework protected from reversal
• ✅ Public confidence signal: government responding to criticism
• ✅ No pending applications: clean repeal without affecting active cases
• ✅ Fast-track process: 2-day standing committee report
• ✅ Parliamentary majority demonstrated: government can pass reform legislation
• ⚠️ Political dimension: S Alam Group and former directors lose return pathway
• ⚠️ Legal certainty needed: repeal must be clean and unambiguous

The repeal of Section 18(A) represents a strategically important legislative step in Bangladesh's banking sector reform — permanently closing the door on former controversial directors of merged banks returning to their positions. The clean repeal (with no pending applications under the provision) provides a straightforward legislative path — and the 2-day standing committee scrutiny timeline signals the government's urgency to complete the amendment before the broader banking sector reform agenda advances through the LDC graduation transition period beginning November 2026.