REJAUL KARIM BYRON

Bangladesh has committed to a sweeping overhaul of its troubled financial sector, outlining a detailed three-year roadmap as part of its latest agreement with the International Monetary Fund.

The reform plan, also backed by the World Bank and the Asian Development Bank, is built on a package of legislative, supervisory, and institutional changes designed to restore stability, aggressively pursue bad loans, and protect taxpayers from future bank failures.

Under the plan, Bangladesh will establish a government-wide strategy for the banking sector. This will clarify the roles of Bangladesh Bank and the finance ministry in managing crises and define the conditions for any potential state support for ailing lenders.

A new Banking Sector Crisis Management Council (BCMC) will be constituted to oversee the process and coordinate responses. The government said the goal is to ensure banks are financially sound and to end the long-standing practice of granting “regulatory forbearance” to weaker institutions.

At the heart of Bangladesh’s financial sector reform is a legal overhaul to strengthen recovery mechanisms, modernise insolvency procedures and give regulators the tools needed to intervene decisively in troubled banks.

With non-performing loans and governance lapses weighing on the sector, the reform package represents the strongest policy signal in years. The IMF has linked future disbursements under its $5.5 billion programme to the implementation of these reforms.

LEGAL BLITZ

The government has committed to enacting or amending a series of laws by the first quarter of FY2026, laying the legal foundation for a more resilient financial system:

Bankruptcy Act: A new corporate insolvency framework will be introduced to allow for the early restructuring of viable but distressed companies, aiming to keep them out of lengthy liquidation proceedings and align Bangladesh with international standards.

Money Loan Court Act: The law governing loan recovery will be amended by the first quarter of fiscal 2026 to clear bottlenecks. In the interim, Dhaka has pledged to boost staffing and resources for the courts to tackle case backlogs and enforce verdicts more quickly. The system has long been plagued by understaffing and delays.

Distressed Asset Management Act: This law will create a framework for licensing private asset management companies. This The As part To

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