Bank Resolution Act 2026:
A Dangerous Compromise on Reform
Parliament passes controversial Section 18(a) allowing former owners of five failed Islamic banks to reclaim control for just 7.5% of Tk 35,000 crore in public funds injected — triggering a Bangladesh Bank backlash and IMF concern.
- 02NPL Ratio at 35.73% — Sector seeks structural resolution as IMF targets recede
- 03BRPD-2 Circular: New incentive bonus flexibility for scheduled banks
- 04Bangladesh-IMF Spring Meetings: Reform dialogue in Washington
- 05Islamic Bank deposits recover +Tk 24,194 crore over 12 months to February 2026
- 06Green finance Q4 2025: Tk 837 billion in sustainable finance disbursement
- 07Exam Corner: Loan classification & provisioning under BRPD Circular No. 15/2024
April 2026 was defined by one legislative shock — the passage of the Bank Resolution Act 2026 on 10 April — and by the continuation of Bangladesh’s NPL crisis. Parliament passed the Act with a controversial Section 18(a) provision that allows former owners of five failed Islamic banks to reclaim control for as little as 7.5% of the Tk 35,000 crore in combined public funds injected into Sammilito Islami Bank. Bangladesh Bank had formally opposed the clause before passage. Economists, former World Bank officials, and civil society groups raised immediate alarm.
On the regulatory front, BRPD issued a new circular on 28 April introducing measured flexibility in incentive bonus payments. On the multilateral front, Finance Minister Amir Khosru Mahmud Chowdhury and Bangladesh Bank Governor Ahsan H Mansur attended the 2026 IMF-World Bank Spring Meetings in Washington (21–26 April) to renegotiate reform conditionalities — particularly the impossible NPL reduction targets. And Islamic bank deposits recovered by Tk 24,194 crore over the twelve months to February 2026, a tentative sign that depositor confidence is returning to reformed institutions.
| Indicator | Figure | Period / Source |
|---|---|---|
| NPL Ratio | 35.73% | September 2025 — Bangladesh Bank |
| NPL Ratio (revised) | ~30.6% | December 2025 — Bangladesh Bank |
| Total NPLs | Tk 6.44 trillion | September 2025 — Bangladesh Bank |
| Banks with NPL <10% | 17 PCBs | September 2025 — Bangladesh Bank |
| Sammilito Islami Bank capital | Tk 35,000 crore | Govt + BB combined — Bank Resolution Act 2026 |
| BRPD-2 Bonus Circular | 28 April 2026 | Bangladesh Bank BRPD |
| IMF Spring Meetings | 21–26 April 2026 | Washington DC |
| Islamic bank deposit growth (12m) | +Tk 24,194 crore | To February 2026 |
| Sustainable finance disbursement Q4 2025 | Tk 837.46 billion | Oct–Dec 2025 — Bangladesh Bank SFD |
| GDP Growth Projection FY26 | 4.7%–4.8% | IMF Article IV Consultation, January 2026 |
One formally issued Bangladesh Bank circular with immediate operational significance for all scheduled banks, plus the continuing fallout of the Bank Resolution Act 2026 passage.
BRPD-2 Circular — Incentive Bonus Framework (28 April 2026)
| Circular Detail | Information |
|---|---|
| Reference | BRPD-2, issued 28 April 2026 |
| Issuing Department | Banking Regulation and Policy Department, Division 2 |
| Applies To | All scheduled banks operating in Bangladesh |
| Effective Date | Immediately upon issuance |
What changed: Scheduled banks may now grant a performance-based incentive bonus of up to one month’s basic salary even when the full set of annual performance criteria has not been met — provided two conditions are satisfied: (1) the bank earned a positive operating profit during the performance year, and (2) the bank’s regulatory capital (CRAR) did not decline compared to the prior year.
Critical safeguard: Banks are explicitly prohibited from deferring provisioning obligations in order to fund bonus payments. A bank with a provision shortfall cannot use this flexibility.
Bank Resolution Act 2026 — Passed 10 April 2026
Parliament passed the Bank Resolution Act 2026 on 10 April by voice vote, replacing the interim government’s Bank Resolution Ordinance 2025. The Act establishes a formal Bank Resolution Department and Resolution Fund within Bangladesh Bank. A Bridge Bank concept allows weak banks to stabilise before sale. Individual accountability provisions include penalties of up to Tk 50 lakh with additional daily fines.
The central controversy is Section 18(a) — inserted shortly before the bill was tabled without the full knowledge of the drafting committee. Under this provision, former directors or owners of merged banks can apply to Bangladesh Bank to reclaim control, with an upfront payment of only 7.5% of public funds injected. The remaining 92.5% is amortised over two years at 10% simple interest. On a Tk 35,000 crore injection, this means an applicant could reclaim control for approximately Tk 2,625 crore upfront.
What the Act Establishes
✔ Dedicated Bank Resolution Department within BB
✔ Resolution Fund for restructuring activities
✔ Bridge Bank mechanism for weak banks
✔ Depositor priority in bank closure
✔ Personal liability for bank failure
✔ Two-year monitoring after reinstatement
What Experts Say About S.18(a)
✗ Bangladesh Bank formally opposed the clause
✗ Former WB economist: “reinforces a culture of impunity”
✗ BIBM former DG: depositor protection at risk
✗ BUET economists: “pernicious moral hazard”
✗ No requirement to repay depositors first
✗ No permanent disqualification for misconduct
Sources: BRPD-2 Circular dated 28 April 2026; Bank Resolution Act 2026 (Parliament, 10 April 2026); Bangladesh Bank official statements; Voice for Reform roundtable, 25 April 2026.
Significant Bangladesh banking developments of April 2026, sourced exclusively from official and officially verified records.
Most recent officially published data available as of April 2026. Bangladesh Bank monthly Scheduled Bank Statistics for the immediate reference month remain pending official release.
| Indicator | Figure | Period |
|---|---|---|
| NPL Ratio | 35.73% | September 2025 |
| NPL Ratio (December estimate) | ~30.6% | December 2025 |
| Total NPLs | Tk 6.44 trillion | September 2025 |
| PCB NPL Ratio | 32.9% | September 2025 |
| FCB NPL Ratio | 6.1% | September 2025 |
| Sustainable Finance Disbursement Q4 2025 | Tk 837.46 billion | Oct–Dec 2025 |
| Green Finance Disbursement Q4 2025 | Tk 69.80 billion | Oct–Dec 2025 |
| Outstanding Sustainable Finance | Tk 3.94 trillion | 31 December 2025 |
| MFS Total Accounts | 239.3 million | January 2025 |
| MFS Monthly Transaction Volume | Tk 1.72 trillion | January 2025 (+32.6% YoY) |
| Islamic Bank Deposit Growth (12m) | +Tk 24,194 crore | To February 2026 |
| IMF GDP Growth Projection FY26 | 4.7% | IMF Article IV, January 2026 |
| IMF Inflation Projection FY26 | 8.9% | IMF Article IV, January 2026 |
| DSE DSEX Index (12 April 2026) | 5,271 | 12 April 2026 |
Credit & Loans Update
The credit environment remains defined by an elevated NPL stock and the implementation of tighter loan classification standards under BRPD Circular No. 15 dated 27 November 2024. Under this circular, continuous loans are classified as Sub-standard within three months of the expiry date — tighter than the six-month window that applied under the 2019 regime and aligned with Basel III standards as required under the IMF programme conditionalities.
Ten banks reported a combined provision shortfall of Tk 31,549 crore as of June 2025, including National Bank, BASIC Bank, Agrani Bank, Rupali Bank, Bangladesh Commerce Bank, Dhaka Bank, Standard Bank, Bangladesh Development Bank, IFIC Bank, and Southeast Bank. The BRPD-2 bonus circular’s explicit prohibition on provision deferral to fund bonuses directly targets this vulnerability.
Bangladesh Bank’s ADR recovery target requires all scheduled banks to recover a minimum of 1% of defaulted loans by 30 June 2026 through alternative dispute resolution. Banks must establish board-level monitoring systems with mandatory six-monthly reporting.
Deposits Update
Deposit mobilisation remains constrained by a structural confidence deficit. Real deposit returns are negative at current inflation levels (IMF projection: 8.9% FY26), creating a disincentive for long-term fixed deposit placement. Bangladesh Bank’s monetary policy tightening is designed to address this but full transmission takes time.
Islamic Banking Review
Deposit Recovery
Islamic banking institutions collectively attracted Tk 24,194 crore in new deposits over the 12 months to February 2026, reversing the crisis-period outflow. Islami Bank Bangladesh received ~Tk 300 crore in new deposits on a single day in April — a tangible confidence signal.
Recovery strategy: cash loan recovery through legal channels + selective rescheduling for genuinely affected industries + international legal firm partnerships for foreign asset recovery.
Section 18(a) Risk
The Bank Resolution Act’s most immediate application is in Islamic banking — all five merged banks are Shariah-based. Prof Waresul Karim (NSU) warned Section 18(a) could be used to target healthy institutions like Islami Bank Bangladesh, not just the merged entities for which it was ostensibly designed.
Bangladesh Bank has not yet issued implementation guidance on Section 18(a) application procedures, review timelines, or due diligence criteria. All Islamic bank compliance teams should monitor BRPD circular portal at bb.org.bd.
Sources: Bangladesh Bank quarterly NPL data; BRPD Circular No. 15/2024; provision shortfall data; Islami Bank Bangladesh statements; Bank Resolution Act 2026.
MFS & Digital Banking
The Bangladesh Bank Payment Systems Department circular of 13 October 2025 mandated that from 1 November 2025, the National Payment Switch Bangladesh (NPSB) would connect all banks, MFS providers, and payment service providers on a single interoperable network — ending the era of provider-specific MFS siloes. By April 2026, both bKash and Nagad had received regulatory clearances to join. Technical integration and commercial agreement challenges slowed full rollout but the structural shift is irreversible.
bKash posted a profit of Tk 315.77 crore in 2024 — a 67% year-on-year increase — reflecting the maturation of its model from person-to-person transfers into merchant payments, utility settlements, and financial services distribution.
Capital Market & Banking
DSEX Performance
The DSEX closed at 5,271 on 12 April 2026 — no material improvement in investor confidence post-election. The banking sector is the DSE’s largest listed component, meaning banking sector uncertainty (NPLs, Resolution Act, merger process) directly weighs on the index.
Bangladesh Bank’s framework requires supervisory approval before dividend distribution by any bank with a provision shortfall — limiting payouts at multiple institutions including SCBs.
Corporate Bond Market Gap
Bangladesh’s bond market-to-GDP ratio stands at just 6.6% (March 2025) vs Vietnam 27%, Indonesia 31%, Nepal 43%. This gap forces large corporates to rely entirely on bank credit — amplifying NPL risk when major borrowers default.
Proposals under BSEC discussion: Tk 500 crore single-borrower bank exposure cap, bond trading integration with DSE, Bond Guarantee Fund, green bonds and sukuk for climate financing.
Green & Sustainable Finance
Q4 2025 Results
Sustainable finance: Tk 837.46 billion (Q4 2025) vs Tk 732.92 billion (Q3 2025) — strong quarterly growth.
Green finance: Tk 69.80 billion (Q4 2025) vs Tk 67.76 billion (Q3 2025) — modest growth, lagging the sustainable finance trajectory.
Outstanding sustainable finance: Tk 3.94 trillion as of 31 December 2025.
Climate Risk Fund utilisation: Only Tk 153 million in Q4 2025 — well below potential.
Participation Gaps
Banks: 56 of 61 reported sustainable finance exposure in Q4 2025 — high participation rate.
Finance companies: Only 12 of 34 reported any exposure — a significant NBFI participation gap.
Dr Masrur Reaz (Policy Exchange Bangladesh): “While growth in sustainable finance is encouraging, green finance continues to lag — climate-focused investments are yet to gain sufficient traction.”
BB’s green taxonomy update (aligned with National Adaptation Plan) faces an expected delay, per IMF Country Report 26/24.
Sources: Bangladesh Bank MFS data January 2025; Bangladesh Bank Payment Systems Dept Circular, 13 Oct 2025; bKash financial disclosures 2024; Bangladesh Bank SFD Quarterly Report Oct–Dec 2025.
Individual Bank Updates — April 2026
HR & Governance Update
Economists’ conference at BRAC Centre Inn: Debapriya Bhattacharya (CPD) called for a formal political statement from government explaining Section 18(a)’s intent. Prof Rehman Sobhan called for an active parliamentary opposition to act as a governance watchdog on reform implementation. Former CAG Mohammad Muslim Chowdhury called for state-owned banks — Sonali, Janata, Agrani, Rupali — to be brought under genuine corporate governance structures and listed on DSE following thorough asset quality reviews.
Bank Company Act accountability provisions: The Bank Resolution Act 2026 introduces personal liability for bank failure — civil penalties up to Tk 50 lakh plus daily fines. These apply independently of existing Bank Company Act 1991 penalties. All bank directors and senior managers should note that the accountability architecture around bank resolution has been substantially strengthened, even as the Section 18(a) ownership reinstatement mechanism has been criticised for weakening accountability for past failures.
Sources: Bank Resolution Act 2026; Parliamentary proceedings; economists’ conference proceedings; Voice for Reform roundtable, 25 April 2026; Bangladesh Bank official statements; individual bank disclosures.
IMF Programme — Spring Meetings Dialogue
The 2026 IMF-World Bank Spring Meetings (Washington, 21–26 April) were the most significant international engagement for Bangladesh’s banking sector in April. Finance Minister Amir Khosru Mahmud Chowdhury and Bangladesh Bank Governor Ahsan H Mansur attended, focusing on three areas of conditionality pressure: revenue mobilisation, exchange rate policy, and banking NPL reduction targets.
IMF Article IV Key Findings (Jan 2026)
📌 GDP growth projected at 4.7% in FY26
📌 Inflation elevated at 8.9% FY26; falling to ~6% FY27
📌 Gross reserves target: USD 24.1 billion by end-June 2026
📌 Debt risk upgraded from low to moderate
📌 Debt service exceeds 100% of total government revenue
IMF Calls On Bangladesh To
✔ Expand asset quality reviews to all systemic & SCBs
✔ Advance risk-based supervision
✔ Improve bank balance sheet transparency
✔ Strengthen AML/CFT framework
✔ Maintain tight monetary policy until inflation firmly on downward path
✔ Implement credible government-wide banking reform strategy
World Bank Assessment
The World Bank’s most recent Bangladesh Development Update projected real GDP growth at 4.8% in FY26, underpinned by decelerating inflation and improved private consumption. Investment remains subdued due to political uncertainty and banking vulnerabilities. Bangladesh’s LDC graduation is scheduled for November 2026 — preferential EU tariff treatment continues until 2029, providing an export buffer through the transition.
Correspondent Banking & Trade Finance
Bangladesh’s ability to maintain international correspondent banking relationships — essential for trade finance in the RMG sector — depends on its AML/CFT ratings and governance reputation. The IMF explicitly called for AML/CFT framework strengthening in its January 2026 Article IV. The Bank Resolution Act 2026 and its Section 18(a) provision has been noted internationally as a governance regression, with potential implications for how international counterparty banks assess Bangladesh’s sector-wide compliance posture.
Sources: IMF 2025 Article IV Consultation Report (January 2026); World Bank Bangladesh Development Update; Bloomberg, April 2026; Bangladesh Embassy Washington.
Topic: Loan Classification & Provisioning in Bangladesh
Loan classification and provisioning is among the highest-frequency topics in both JAIBB and DAIBB examination papers and appears in almost every Bangladesh Bank Officer written test. The current governing circular is BRPD Circular No. 15 dated 27 November 2024 — the master circular. Candidates who cite the 2019 regime’s rules will lose marks.
The Five Classification Categories
| Category | Status | Overdue Period (Continuous Loan) | Provisioning Rate |
|---|---|---|---|
| Standard | Unclassified | Current — repaid on schedule | 0.25%–2% (General Provision) |
| SMA | Unclassified (watch) | 1–3 months overdue | No specific provision |
| Sub-standard | Classified ⚠ | 3–6 months overdue | 20% Specific Provision |
| Doubtful | Classified ⚠⚠ | 6–9 months overdue | 50% Specific Provision |
| Bad / Loss | Classified ⚠⚠⚠ | 9+ months overdue | 100% Specific Provision |
What Changed Under BRPD 15/2024
The 2019 regime allowed a continuous loan to remain Standard for up to six months after expiry before Sub-standard classification. BRPD Circular No. 15/2024 tightened this to three months — aligning with Basel III and IMF programme conditionalities. This single change is a primary driver of the NPL ratio increase from late 2024 onwards.
General vs Specific Provision
General Provision is maintained against performing loans to cover expected losses not yet specifically identified. Rates vary: 2% for consumer finance, 1% for credit cards, 0.25%–1% for other categories.
Specific Provision is maintained against classified loans at the rates shown in the table (20%, 50%, 100%). A bank with insufficient total provision has a provision shortfall — treated by Bangladesh Bank as a capital deficiency requiring remedial action.
1. Know the current 2024 circular thresholds — not 2019. Examiners test current rules.
2. SMA is NOT a classified category. It is a monitoring flag (1–3 months overdue).
3. Memorise provisioning rates in sequence: 20% → 50% → 100% (SS → Doubtful → Bad/Loss).
4. Understand why tighter classification thresholds increased NPL ratios — this is a DAIBB analytical question.
5. Know the difference between General Provision (portfolio level) and Specific Provision (per-account, classified loans).
Dated: 27 November 2024
Department: Banking Regulation and Policy Department
Applies to: All scheduled banks
This is the CURRENT master circular on loan classification. Read it in full before your examination.
Five developments every Bangladesh banking professional must track through May and June 2026. Each is traceable to a confirmed official process, deadline, or scheduled data release.