No Central Bank Policy Support for Debtors Suing Financial Regulators

The central bank of Bangladesh has issued a stern directive instructing all non-bank finance companies in the country to withhold policy support and financial stimulus packages from any corporate borrower or client actively engaged in litigation against the government, Bangladesh Bank, or the lending institutions themselves. Under the new mandate, delinquent borrowers and client entities seeking restructuring or state-backed relief must unconditionally withdraw all pending writ petitions and legal challenges from the courts before their applications can be processed.

The binding instruction was formalised in a official circular signed by Abul Kalam Azad, Director of Bangladesh Bank’s Financial Sector Support Department, and dispatched to the managing directors and chief executive officers of every licensed finance company operating across the nation.

Over recent years, Bangladesh Bank has introduced an array of policy incentives, loan restructuring windows, and economic recovery packages administered through finance companies. These financial tools were designed to help distressed businesses rebuild, restore stability to a fragile financial sector, generate employment, and drive sustainable economic growth. Regulators discovered, however, that a significant number of corporate entities were availing themselves of state-backed relief packages while simultaneously maintaining aggressive legal actions against the state, the central bank, and their respective non-bank financial institutions.

This dual approach by borrowers created severe judicial backlogs and administrative paralysis across the country’s commercial courts and tribunal chambers. Central bank officials observed that many institutional debtors used pending writ petitions as tactical shields to delay debt recovery efforts while exploiting official concessions intended strictly for bona fide distressed businesses.

To dismantle this loophole and expedite legal resolution across the banking landscape, the regulator has stipulated that any pending litigation must be formally withdrawn prior to receiving regulatory support. When reviewing an application for incentive packages or restructuring support, finance companies must ensure the client takes immediate legal steps to dismiss all relevant cases against public authorities and lenders.

As a mandatory procedural safeguard, applying clients are now required to submit a legally binding affidavit. The document must explicitly declare that the borrower maintains no outstanding writs or litigation against the government, Bangladesh Bank, or the lending finance company. Furthermore, the affidavit must contain a comprehensive, itemised list of all court cases that have been officially withdrawn by the applicant.

To protect compliant businesses from arbitrary renegotiation once they surrender their legal claims, the central bank added a protective clause for borrowers. Once a client submits the verified affidavit, the financial institution is strictly prohibited from altering or escalating the pre-approved terms and conditions of the incentive package. The agreed policy support must be fully honoured and implemented precisely as sanctioned under the primary policy consent.

Issued under the statutory powers granted by Section 41 of the Finance Company Act 2023, the central bank confirmed that the regulatory directive takes immediate effect across the entire non-bank financial sector.