IMF seeks removal of section 18(A) as condition for new loan package

The International Monetary Fund (IMF) has sought a time-bound action plan for comprehensive banking sector reforms, specifically raising structural objections over the newly added Section 18(A) of the Bank Company Act, finance ministry sources said, reports UNB.
The global lender has placed these conditions as part of ongoing negotiations for a completely new loan package formally requested by the government on June 1.
A senior official of the ministry told UNB on Tuesday in anonymity that the IMF has expressed strong reservations regarding Section 18(A) of the Bank Company Act-a controversial provision incorporated into the legislation that creates a legal window to return the ownership of forced-merged or restructured banks back to their previous owners. The multilateral lender views this clause as a masked loophole that compromises structural governance and weakens accountability within the financial sector.
To satisfy the IMF conditions and ensure financial sector discipline, the government has taken a decision in principle to drop Section 18(A) from the law entirely.
In addition to stripping the controversial provision, the IMF has sought explicit, definitive plans from the government to sharply bring down non-performing loans (NPLs), execute the merger of weak financial institutions, and completely halt state and political interference in commercial bank management.