Deposit Protection Ordinance: Tk 2 lakh refund for depositors in case of bank closure
Staff Reporter :
Depositors will be entitled to a maximum refund of Tk2 lakh if a bank or financial institution is liquidated, according to the draft of the “Deposit Protection Ordinance, 2025.”
The ordinance, which has been drafted by Bangladesh Bank, was published by the Ministry of Finance on the website of the Financial Institutions Division on Sunday. The ministry has also requested feedback from stakeholders on the ordinance.
Under the current deposit protection law, depositors are eligible for a maximum refund of Tk1 lakh in the event of a bank liquidation.
Although the previous Awami League government had initiated an amendment to raise this limit to Tk2 lakh, it was not implemented at the time.
According to the ordinance, the central bank will set up a deposit protection fund, which will be managed through a separate account.
The fund will be made up of initial, annual risk-based, and special premiums collected from banks; penalties imposed on member institutions; profits earned from investments; funds recovered from liquidated banks; and other unconditional funds designated for payment.
The fund will primarily be used to cover secured deposits in the event of a bank’s dissolution, although it may also be utilised for financial assistance in bank resolutions.
If the fund faces a deficit, Bangladesh Bank will have the authority to collect special premiums from member institutions, seek unconditional financial support from the government or other sources, or secure loans from the government.
In addition, the central bank will create a separate fund for depositors of non-bank financial institutions.
If a member institution fails to pay the required premium within the specified timeframe, Bangladesh Bank will deduct the corresponding amount from the institution’s current account and deposit it into the relevant account of the Deposit Protection Fund.