Staff Reporter :
The government and the Bangladesh Bank (BB) have been granted broad authority to assume temporary control of any scheduled or Islamic bank and financial institution, under the newly promulgated Bank Resolution Ordinance 2025.
The 67-page ordinance, published on Friday, 9 May following its approval by the Advisory Council on 17 April, enables the authorities to issue share transfer orders as part of their intervention strategy. The measure is aimed at strengthening regulatory oversight and managing systemic risks in the banking sector.
According to the ordinance, the central bank may initiate resolution proceedings against any bank whose beneficial owners are found to have used the bank’s assets or funds-either directly or indirectly – for personal gain or for the fraudulent benefit of others. “Resolution” is defined broadly, empowering Bangladesh Bank to take any necessary action, including restructuring or dissolving the institution in question.
In a significant shift towards accountability, the ordinance introduces provisions for holding top bank officials – including managing directors, chairpersons, and other responsible officers – personally liable for the misuse or mismanagement of bank funds.
The ordinance further empowers the Bangladesh Bank to appoint a temporary administrator to oversee operations at financially weak banks, provided that specific justifications are cited. The central bank may also inject capital into these banks through existing or new shareholders and transfer shares, assets, and liabilities to third parties as part of the resolution process.
Intervention may be triggered if a bank is deemed non-viable, nearing bankruptcy, unable to meet depositor obligations, or otherwise experiencing financial distress. To handle such cases, Bangladesh Bank will establish a dedicated Resolution Department.
Additionally, the ordinance provides for the creation of one or more bridge banks – temporary entities set up to ensure the continuation of critical banking functions. These bridge banks may subsequently be sold to third parties. The central bank also retains the authority to suspend or prohibit the operations of distressed banks.
As part of a coordinated crisis response framework, the ordinance mandates the formation of a seven-member Banking Sector Crisis Management Council.
The council – expanded from the originally proposed six members – will be chaired by the Governor of the Bangladesh Bank and will include the Finance Secretary, the Secretary of the Financial Institutions Division, the Chairman of the Bangladesh Securities and Exchange Commission (BSEC), the Secretary of Legislative and Parliamentary Affairs, and two Deputy Governors (one of whom will be responsible for resolution and the other nominated by the Governor).
The council is required to convene at least once every three months to devise crisis management strategies and contingency plans.
In cases of licence revocation, the Bangladesh Bank will be obliged to petition the court for liquidation of the affected bank. The court will then appoint a liquidator, nominated by the central bank. No further interest or charges will accrue on the bank’s liabilities once the liquidation order takes effect.
The ordinance also provides for voluntary liquidation, but requires prior approval from the Bangladesh Bank. Depositor claims must be settled within seven working days of licence revocation, and all other liabilities cleared within two months.
Furthermore, the legislation establishes personal liability for losses incurred due to the actions, inactions, or poor decisions of individuals in key positions. Non-compliance with rules under the ordinance may result in fines of up to Tk50 lakh, with a further Tk5,000 per day for continued violations.
The Bank Resolution Ordinance 2025 marks a decisive move towards safeguarding depositor interests, enhancing financial sector governance, and equipping regulators with the tools needed to address institutional failures swiftly and effectively.
