Bangladesh’s parliament has passed the Bank Resolution (Amendment) Bill, 2026, repealing the controversial Section 18(a) of the Bank Resolution Act. Finance Minister Amir Khosru Mahmud Chowdhury introduced the bill in parliament on Wednesday (9 September), and it was subsequently passed by voice vote. The report of the parliamentary standing committee on the Ministry of Finance was also presented to the House.
Under the amendment, Section 18(a) of the Bank Resolution Act, 2026 will be repealed in full. The provision had originally been introduced as part of a market-based framework intended to support the restructuring of troubled scheduled banks, address capital shortages and liquidity problems, and reduce pressure on public finances by avoiding liquidation where possible.
Explaining the decision, the finance minister said the provision was designed to create an alternative mechanism for dealing with banks in financial distress. Rather than moving directly towards liquidation, the framework was intended to allow suitable individuals or institutions to participate in the restructuring process. Such an arrangement was expected to provide a market-based route for dealing with a troubled bank while limiting the potential burden on government resources.
The mechanism, however, failed to attract an eligible participant. According to the government’s explanation, the law imposed stringent regulatory conditions on individuals, shareholders and institutional investors seeking to take part in the process. After the law came into effect, none of them was able to meet the required conditions.
As a result, the provision could not fulfil the purpose for which it had been introduced. The absence of a qualified investor ultimately became a key reason for the government’s decision to remove Section 18(a).
Documents relating to the legislation show that the original Bank Resolution Ordinance prepared during the interim government did not contain the provision. Section 18(a) was added later when the ordinance was converted into an Act after the current government assumed office.
The provision gave a bank’s previous shareholders, or another eligible individual or institution, an opportunity to approach Bangladesh Bank before the bank was taken into a formal resolution process. They could apply to reacquire the bank’s assets, liabilities and shares, subject to the regulatory requirements set out in the law.
The provision became a source of considerable debate and criticism in the financial sector after the Bank Resolution Act was passed. Particular concern emerged over its possible implications for the restructuring of five troubled Shariah-based banks that were being merged to form Sammilito Islami Bank.
The concern centred on the possibility that former directors and shareholders of the affected banks could potentially find a route back into ownership through the provision. Given the sensitive nature of bank restructuring, questions were raised about how such a mechanism could affect ownership, asset management and the broader resolution process.
The original rationale behind Section 18(a), however, was to provide a market-oriented option for dealing with distressed banks. A resolution framework generally seeks to manage a financially troubled institution without allowing its difficulties to cause wider disruption. Depending on the circumstances, restructuring can involve changes to ownership, liabilities, assets and the way the institution operates.
In this case, the mechanism did not become operational in the manner originally envisaged because no investor succeeded in meeting the prescribed requirements. At the same time, concerns surrounding the potential return of former shareholders and directors added to the controversy over the provision.
Against this backdrop, the government moved to repeal Section 18(a), and parliament has now approved the amendment. The specific route previously available under the provision for former shareholders or other eligible parties to seek the reacquisition of a bank’s assets, liabilities and shares will therefore no longer remain part of the Bank Resolution Act.
The amendment represents a significant change to the legal framework for handling distressed banks in Bangladesh. Future restructuring and resolution measures will have to be pursued under the remaining provisions of the amended law, as authorities continue to address challenges involving financially troubled banking institutions.
