Draft of 'Bank Resolution (Amendment) Act, 2026' approved

The cabinet has granted in-principle and final approval to the draft of the 'Bank Resolution (Amendment) Act, 2026'.

These decisions were adopted during the 16th cabinet meeting held at the conference room of the Cabinet Division in the Secretariat, chaired by Prime Minister Tarique Rahman on Monday (August 10).

The 'Bank Resolution Ordinance, 2025' was issued to timely address any risks threatening the capital deficit, liquidity crisis, insolvency, or existence of scheduled banks and to ensure financial stability. To transform the ordinance into law, when it was introduced as a bill during the first session of the Thirteenth National Parliament, it was sent to a parliamentary 'Special Committee' for detailed review. The Financial Institutions Division proposed this law.

The Special Committee recommended presenting the ordinance in an amended form. In light of those recommendations, certain provisions of the ordinance were separated to be implemented through rules.

Additionally, taking into consideration the government's financial liabilities, the interests of customers, and the actual situation of the banking sector, the bill was introduced in Parliament with the addition of a new section, 18a. The 'Bank Resolution Act, 2026' was subsequently passed in the form it was introduced.

Section 18a was added with the objectives of introducing a market-based alternative system alongside the prevailing resolution mechanism, restructuring banks under resolution while keeping them operational, resolving capital deficits and liquidity crises, protecting the interests of depositors and investors, and reducing the government's financial involvement.

However, since no individual or institution applied while complying with all the conditions of section 18a of the 'Bank Resolution Act, 2026', the draft of the 'Bank Resolution (Amendment) Act, 2026' has been formulated with the intent to repeal this section.