Transparency International Bangladesh (TIB) today said the Bank Resolution Act, 2026 risks facilitating corruption and rehabilitating individuals responsible for looting the banking sector, warning that the move could prove self-defeating.
A provision in the new law allows former shareholders of weak banks that have been merged to regain ownership without any form of accountability, the anti-corruption watchdog said in a press release today.
The banking sector may once again turn into a haven for corruption and plunder as a result, it added.
TIB also observed that, instead of addressing long-standing mismanagement, irregularities and governance deficits, the move perpetuates an entrenched culture of impunity associated with past authoritarian practices.
Referring to an earlier amendment under the “Bank Resolution Ordinance, 2025” issued during the interim government, which barred individuals or groups responsible for a bank’s collapse from returning to ownership even if all funds were repaid, TIB Executive Director Iftekharuzzaman said the inclusion of Section 18(a) in the “Bank Resolution Act, 2026” guarantees impunity rather than justice.
“Whatever justification the government may offer, this decision -- one that facilitates and shields corruption and plunder -- does not ensure legal accountability for those who looted the banking sector; instead, it effectively rewards them on a massive scale, making it self-defeating.
“While the decision is disappointing, it is hardly surprising. The fall of authoritarianism does not necessarily mark an end to the abuse of power and forcible capture in the banking sector. Rather, under a ‘winner takes all’ approach, it signals a shift in policy capture, leaving room for the re-emergence of kleptocratic practices after only a brief pause.
"This move by the government exemplifies that trend and is merely a continuation of the highly controversial decision surrounding the appointment of the Bangladesh Bank governor," Iftekharuzzaman said.
Questioning the rationale behind the provision, he said it was unclear how former owners of crisis-ridden banks could regain control by paying only 7.5 percent of the government-determined amount upfront, with the remaining 92.5 percent to be repaid over two years at 10 percent interest.
“By what magic have the former owners of crisis-ridden banks, who were the pioneers of plundering this sector, suddenly attained such purity that they will deposit only 7.5 percent while the remaining 92.5 percent will be repaid over two years at only 10 percent interest?” he said.
He further questioned how such owners would inject new capital, cover existing capital shortfalls, repay depositors and creditors, meet tax obligations, compensate affected parties, and rebuild regulatory compliance frameworks.
Dr Iftekharuzzaman also expressed concern over Bangladesh Bank’s ability to enforce post-reacquisition conditions, citing conflicts of interest. He warned that, under the guise of meeting conditions, former owners might secure fresh loans on favourable terms and exploit the ongoing normalisation of loan defaults, potentially deepening insolvency in the banking sector.
“The burden of this will ultimately fall on the people,” he said.
He added that returning ownership to former shareholders without ensuring accountability through proper legal processes would not bring qualitative improvements to the sector.
“Under the pretext of keeping banks operational, protecting depositors, and ensuring economic stability, the government has passed a law in parliament by majority vote that introduces a new provision supportive of corruption,” he said.
Questioning whether the law aligns with the ruling party’s electoral commitment to reform the financial sector, he asked if the decision had instead been taken to protect the interests of a vested syndicate.
TIB urged the government to reconsider the move.
