Bank Resolution Act may reopen door to looters

Speakers warn at an event in Dhaka

FE Team | Published: April 25, 2026 22:53:49

FE REPORT
The Bank Resolution Act, 2026, in its present form has triggered fresh concerns over the future of Bangladesh's banking sector, with experts warning that controversial former bank owners could regain control of troubled lenders under the new law.
Critics argue that a key provision, Section 18(a), may undermine ongoing reform efforts by allowing individuals linked to past banking irregularities and alleged looting to return through relatively small investments.
The observations came at a roundtable titled "Amended Bank Resolution Act 2026: Banking Sector at Risk Again", organised by Voice for Reform in the city on Saturday.
Among the speakers were Mushtaq Khan, Professor at SOAS University of London; Dr Badiul Alam Majumdar, Secretary of Shushashoner Jonno Nagorik (SUJAN); Shawkat Hossain Masum, Head of Online at Prothom Alo; Dr AKM Waresul Karim, Dean of the School of Business at North South University; and Sarwar Tushar of the National Citizen Party. The event was moderated by Fahim Mashrur, Coordinator of Voice for Reform.
Speakers said the banking sector was among the worst affected during the tenure of the ousted authoritarian regime, alleging that a small group of oligarchs siphoned off vast sums over the past one and a half decades.
Despite reform initiatives undertaken by the interim government since 2024, many banks have yet to stabilise, while millions of depositors remain unable to access their savings.
They noted that the government had earlier introduced the Bank Resolution Ordinance 2025 to facilitate the merger of several troubled banks and injected around Tk 350.0 billion into the sector. However, the inclusion of Section 18(a) in the amended law could allow former shareholders to return and reassert control, a move they described as both unethical and risky for financial stability.
Professor Mushtaq Khan said the interim government should have confiscated or nationalised the assets of those involved in bank looting, but it made a major mistake by failing to do so. He added that those who looted banks did so in such a way that seizing their mortgaged assets would not be sufficient to restore the banks' losses.
Dr Badiul Alam Majumdar said individuals involved in facilitating past bank takeovers are now occupying key state positions.
He alleged that those who should have faced punishment are instead in positions of power, warning that unless the independence of Bangladesh Bank is ensured, irregularities in the banking sector will continue.
Toufic Ahmad Choudhury, former Director General of the Bangladesh Institute of Bank Management (BIBM), said those who laundered money from merged banks must be brought to justice.
Instead of punishing them, an opportunity has been created for them to return as owners of these banks, he said.
"Why was this opportunity given? Providing such an opportunity will create more risk in the banking sector," said Toufic Ahmad.
Shawkat Hossain Masum said some banks in the country were inevitably heading towards bankruptcy, and Bangladesh Bank was either unaware, helpless due to politicisation, or possibly complicit in the situation.
He added that while no government wants to take the blame for closing banks and therefore prefers mergers, the success of such moves remains highly uncertain.
Dr AKM Waresul Karim warned that the provision could be used by business groups linked to S Alam not to revive weak banks, but to regain control of Islami Bank Bangladesh Limited, one of the country's leading banks, with relatively small financial commitments.
Sarwar Tushar alleged that the government has already demonstrated politicisation in economic management, including in central bank appointments, and warned of a potential banking crisis similar to that seen in the energy sector.
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