What steps has cenbank taken to tackle banking sector crisis?

The central bank is also working on the Distressed Asset Management Act 2026, which is aimed at addressing distressed assets in the banking sector.

Bangladesh Bank has unveiled a five-year, 13-point roadmap to tackle the country’s banking crisis, following record NPLs of Tk6.06 lakh crore, about one-third of total disbursed credit.

The plan, presented to the parliamentary standing committee on the finance ministry yesterday (4 October), includes curbing bad loans, naming deliberate defaulters, limiting borrowers’ exposure across banks, and addressing capital shortages, provisioning gaps, accumulated losses and weak loan recovery, according to the report obtained by The Business Standard.

Bangladesh Bank has already taken several measures to strengthen governance and supervision in the banking sector, including introducing risk-based supervision and working on new legislation to address distressed assets and insolvency.

Under risk-based supervision, banks are assessed based on their risk profile, risk management and governance, internal controls, and risk mitigation measures. The assessment is followed by a composite risk rating and supervisory action.

The central bank is also working on the Distressed Asset Management Act 2026, which is aimed at addressing distressed assets in the banking sector.

It is also pursuing amendments to the Money Loan Court Act and drafting an Insolvency and Bankruptcy Act 2026 to replace the Bankruptcy Act 1997.

Amendments to the Bank Company Act are also being pursued to strengthen governance in the banking sector.

These measures form part of broader efforts to address weaknesses in banks’ capital, asset quality, loan recovery and governance, according to a report presented to the parliamentary standing committee on the finance ministry.

Source: The Business Standard