Highlights
- Cabinet approves amendment repealing controversial Section 18(a)
- No applicant met conditions to reclaim control of banks
- Section 18(a) allowed former owners to regain bank control
- Government announced repeal decision following stakeholder feedback
- Experts warned former owners’ return could undermine banking reforms
- Bank Resolution Act, 2026 passed Parliament on 10 April
The Cabinet today (10 August) gave final and in-principle approval to the draft Bank Resolution (Amendment) Act, 2026, formally advancing the government’s plan to repeal Section 18(a) of the Bank Resolution Act, which had created a pathway for former owners of weak banks to regain control.
The approval was given at the 16th Cabinet meeting at the Secretariat, chaired by Prime Minister Tarique Rahman.
The draft amendment was prepared specifically to repeal Section 18(a) as no individual or institution applied while complying with all the conditions stipulated under the provision, according to the Cabinet.
The government had announced its decision to scrap the provision in June.
On 29 June, Finance Minister Amir Khosru Mahmud Chowdhury told Parliament that Section 18(a) would be repealed following feedback from stakeholders, saying those responsible for looting people’s assets would not be given an opportunity to regain control of banks.
Section 18(a) was incorporated into the Bank Resolution Act, 2026 as a market-based alternative to existing resolution mechanisms.
It was intended to allow banks undergoing resolution to remain operational while being restructured, address capital shortfalls and liquidity crises, protect depositors and investors, and reduce the government’s financial exposure.
Under the provision, former owners of weak banks could seek to regain control by submitting an undertaking to repay funds determined by the government or Bangladesh Bank, inject fresh capital and restore the institution’s financial solvency.
Applicants were also required to settle liabilities to depositors and creditors, pay outstanding taxes and rebuild risk management and compliance frameworks.
The financial conditions included an initial pay order equivalent to at least 7.5% of the total amount determined within three months of approval. The remaining 92.5% was to be paid over two years with 10% simple interest.
Bangladesh Bank would supervise the institution for two years following approval, after which a special committee would conduct a final review of compliance. Approval could be revoked if the conditions were not met.
The provision had drawn criticism from banking sector experts, who warned that allowing former owners to potentially regain control could undermine ongoing reforms and allow those responsible for financial distress to return to the institutions.
The Bank Resolution Ordinance, 2025 was introduced to address risks arising from capital shortfalls, liquidity crises, insolvency or other threats to the survival of scheduled banks and to maintain financial stability.
It was later placed before the parliament as a bill and referred to a special committee for detailed scrutiny. The committee recommended amendments, including separating some provisions for implementation through rules.
The Bank Resolution Act, 2026 was subsequently passed by Parliament on 10 April with Section 18(a) incorporated into the law.
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