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Bangladesh’s Cabinet on Monday approved a draft amendment to the Bank Resolution Act, 2026, paving the way for the repeal of a provision intended to introduce a market-based mechanism for resolving troubled banks.
The approval was given at the 16th Cabinet meeting at the Secretariat, chaired by Prime Minister Tarique Rahman.
The Bank Resolution Ordinance, 2025 was introduced to address risks including capital shortfalls, liquidity crises, insolvency and threats to the existence of scheduled banks while maintaining financial stability.
The ordinance was later placed before the first session of the 13th Jatiya Sangsad and sent to a parliamentary Special Committee for detailed scrutiny.
Following the committee’s recommendations, some provisions were separated for implementation through rules. A new Section 18A was also added, taking into account the government’s potential financial liabilities, customer interests and conditions in the banking sector.
The Bank Resolution Act, 2026 was subsequently passed with the provision.
Section 18A was designed to provide a market-based alternative to existing bank resolution tools. It aimed to keep banks operational during restructuring, address capital and liquidity shortages, protect depositors and investors and reduce the government’s financial exposure.
But no individual or institution submitted an application meeting all the conditions set out under the section, the Cabinet said.
The government therefore prepared the draft Bank Resolution (Amendment) Act, 2026 to repeal Section 18A.
The amendment is expected to revise the legal framework governing the resolution of troubled banks while addressing the interests of depositors, customers and the government.
