Bangladesh Repeals Bank Resolution Act Provision Allowing Former Directors Return

🏛 Dhaka, Bangladesh — Bangladesh’s Parliament has passed an amendment to the Bank Resolution Act, repealing a controversial provision that had allowed former owners or directors of banks undergoing merger to regain ownership by paying 7.5% upfront of the money invested by the government or Bangladesh Bank.

📊> Finance Minister Amir Khosru Mahmud Chowdhury moved the amendment bill, which was passed by voice vote. Deputy Speaker Kaisar Kamal presided over the session on 9 September 2026.

📋> What Section 18A Allowed

📊> The amendment repeals Section 18A of the Bank Resolution Act, 2026, which had allowed:

• 💰 Former owners or directors to regain ownership of banks undergoing or listed for merger
• 💰 Payment of 7.5% upfront of the money invested by the government or Bangladesh Bank
• 💰 Remaining 92.5% to be repaid within two years with 10% simple interest

⚠> Controversial Provision Drew Widespread Criticism

💬> The provision was not included in the ordinance issued by the interim government. The current government later added it to the law, drawing widespread criticism from analysts, who said it created an opportunity for those accused of looting banks to buy back ownership in instalments.

💬> Khosru: No One Applied, So Repealing Is Appropriate

💬> In a statement explaining the amendment, Khosru said Section 18A was introduced as a market-based alternative to existing resolution tools, allowing banks under resolution to remain operational while being restructured. The provision also aimed to:

• 📊 Address capital and liquidity shortages
• 👥 Protect depositors and investors
• 💰 Reduce government’s financial exposure
• 📊 Account for banking sector’s prevailing conditions

💬> However, no individual or institution had applied after the law came into force while fulfilling all the conditions of the provision, he said. Therefore, repealing Section 18A was considered appropriate and necessary.

💬> MP Rumeen Farhana Criticises Government

💬> The amendment came amid a brief uproar after independent MP Rumeen Farhana criticised the government over rising loan defaults, saying BNP rule was historically marked by corruption and crises.

💬> “The BNP will come to power, and there will be no gas, electricity or fertiliser crisis — that cannot happen. Bangladesh will not become the champion in corruption — that is also not possible,” she said. Government lawmakers shouted from their seats.

💬> Rumeen later questioned Section 18A, saying it could benefit lawmakers with loan-default records.

🌏> Strategic Context: Bangladesh Banking Sector Reform

📊> For Bangladesh’s banking sector, the repeal of Section 18A is part of broader reform efforts:

• 🏦 Sammilito Islami Bank — merger of 5 troubled Shariah banks (S Alam, Nassa Group controlled)
• 💰 S. Alam Group loans — Tk 225,000cr in loans, Finance Minister says companies won’t be shut down
• 📊 Tk 6.07 lakh crore NPLs — 32.78% of total disbursed loans (June 2026)
• 📊 Tk 1.47T state bank NPLs — 6 state banks with Janata Bank leading at Tk 75,397cr
• 📊 Government cancelled MD contracts — Agrani, BDBL, BASIC Bank
• 📊 BB e-Payment Credit — Tk 10,000 digital credit facility launched

📋> Implications for Bangladesh Banking Governance

📊> The repeal of Section 18A has several implications for banking governance:

• 🚫 No buyback path — former owners cannot reclaim troubled banks
• 📊 Accountability strengthened — looted banks stay under government control
• 📊 Depositor protection — merged banks (e.g., Sammilito) remain government-owned
• 📊 Market confidence — repeal signals commitment to banking reform
• 📊 Political message — government responding to criticism, correcting course
• 📊 Precedent for future — sets standard for bank resolution without owner return

✅> For Bangladesh’s broader banking sector reform agenda, the repeal of Section 18A represents an important course correction. The provision had been widely criticized as enabling bank looters to buy back ownership at a fraction of the cost, effectively rewarding financial crime. By repealing it after no applications were received, the government signals that the path forward for troubled banks is government resolution and restructuring — not return to the owners who contributed to their distress in the first place.

🌏> For the broader economy, the banking sector reform efforts — including the Sammilito Islami Bank merger, S. Alam Group resolution, NPL recovery push, and now the Section 18A repeal — collectively signal that the current government is serious about addressing the legacy banking crisis inherited from the previous administration. While challenges remain immense (Tk 6.07 lakh crore in NPLs, Tk 2.06 trillion stuck in litigation), each reform step strengthens the foundation for a healthier banking sector that can better support Bangladesh’s export economy and broader economic growth.