The decision was taken by the Bangladesh Bank (BB)’s Board of Directors under Section 15 of the Bank Resolution Act, 2026, allowing the institutions to implement corrective measures aimed at returning to a viable operating condition.

The four finance companies are Prime Finance & Investment Ltd, GSP Finance Company (Bangladesh) Ltd, Bangladesh Industrial Finance Company Ltd (BIFC), and Premier Leasing & Finance Ltd.

Under the directive, the companies must reconstitute their boards, arrange fresh capital from existing or new shareholders, and inject the necessary liquidity within the stipulated period.

The NBFCs have also been instructed to improve their financial position by selling assets, recovering defaulted loans and rescheduling or settling classified loans to reduce their non-performing loan (NPL) ratios. They must ensure repayment of deposit liabilities owed to both individual and institutional depositors.

The central bank said the measures are intended to bring the companies back to a sustainable operating position while protecting the interests of depositors and maintaining financial stability.

According to the directive, if any of the four institutions fail to meet one or more of the stipulated conditions within the three-month deadline, the Bank Resolution Department will immediately initiate resolution proceedings under the provisions of the Bank Resolution Act, 2026.

The latest move marks the first major application of the newly enacted resolution law to troubled finance companies, reflecting the central bank's efforts to address long-standing weaknesses in the country's non-bank financial sector and strengthen depositor protection.

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The government's first short-term Sukuk attracted bids worth BDT 566.07 billion against an issuance target of just BDT 55 billion –an oversubscription of more than 10 times.

The Sukuk, issued to finance the Important Rural Infrastructure Development Project-2 (IRIDP-2), offers an annual rental rate of 9.36%.

Key Takeaways

📌 Exceptional investor appetite

The overwhelming response from Islamic banks, financial institutions, institutional investors and individuals demonstrates growing confidence in Shariah-compliant capital market instruments.

📌 A milestone for Islamic liquidity management

For the first time, Bangladesh has introduced a short-term Sukuk alongside existing long-term Islamic securities. This provides Islamic banks with a much-needed instrument for managing short-term liquidity while complying with Shariah principles.

📌 Regulatory value beyond investment returns

The Sukuk qualifies as a Statutory Liquidity Reserve (SLR) asset for eligible institutions and can also be used as collateral to access Bangladesh Bank's Islamic Banks Liquidity Facility (IBLF). These features significantly enhance its attractiveness to Islamic financial institutions.

📌 Secondary market development

With trading beginning in the secondary market, the instrument is expected to improve liquidity, broaden investor participation and support the gradual development of Bangladesh's Islamic capital market.

Why this matters

The oversubscription is more than a successful auction—it signals a structural shift in Bangladesh's financial market.

For years, Islamic banks have faced a shortage of Shariah-compliant investment and liquidity management instruments despite holding a significant share of the country's deposits. The introduction of a short-term Sukuk helps address this gap while strengthening monetary operations for the Islamic banking sector.

Since the launch of sovereign Sukuk in December 2020, the government has raised more than BDT 530 billion through Shariah-based securities. The success of the first short-term issuance suggests that there is ample room to expand the sovereign Sukuk programme with diversified tenors and instruments.

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The Financial Sector Support Project II will focus on reinforcing the country's deposit protection system, enhancing Bangladesh Bank (BB)’s supervisory capacity, and laying the groundwork for bank resolution mechanisms and reforms of state-owned banks.

The project will increase the capital of the deposit protection fund while advancing key reform priorities, including improving the deposit protection framework, establishing an effective Emergency Liquidity Assistance (ELA) mechanism, developing bank restructuring strategies, and supporting reforms in state-owned banks, according to a World Bank press statement.

The Washington-based global lender also said that Bangladesh's banking sector continues to face significant challenges stemming from weak corporate governance, regulatory capture, and extensive related-party lending.

The non-performing loan (NPL) ratio stood at 32.6 per cent at the end of March 2026, substantially higher than the South Asian average of 7.9 per cent, while the system-wide capital-to-risk-weighted assets ratio remained negative 2.6 per cent at the end of December 2025.

“Bangladesh’s vision of attaining a trillion-dollar economy requires a stable and inclusive financial sector. But the banking sector—which accounts for about 90 per cent of total financial sector assets—faces mounting stress,” Jean Pesme, World Bank Division Director for Bangladesh and Bhutan said in the statement. “This project will help Bangladesh put in place a set of essential tools, systems, and safeguards needed to protect small depositors and support confidence, restore stability in the banking sector, allowing it to support economic growth and job creation.”

The project will also modernize the BB’s Information and Communications Technology (ICT) infrastructure to address rising cybersecurity risks and bridge critical gaps in sector-wide data and analytics. The upgrades are expected to strengthen the central bank's ability to monitor risks, implement data-driven and risk-based supervision, and enhance the resilience of the financial sector.

“The project, which forms part of a coordinated approach by development partners including the IMF and the Asian Development Bank, supports measures to bolster crisis preparedness and build the authorities’ capacity to manage banking sector stress,” said Toshiaki Ono, World Bank Senior Financial Sector Specialist and Task Team Leader of the project.

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Before taking up this role, Dr. Islam served as Executive Director (Grade-1) in charge of the Monetary Policy Department at Bangladesh Bank and was an active member of the Monetary Policy Committee, the Foreign Exchange Auction Committee, and the Money Market Operation Committee, according to a press statement.

Dr. Islam led efforts to modernize the monetary policy framework and played a pivotal role in adopting the interest rate corridor.

He also contributed to streamlining liquidity management as well as money market operations and instruments.

Dr. Islam served at Bangladesh Bank for more than thirty-three years, with experience spanning monetary and fiscal policy, exchange rate policy, and interest rate policy.

He has published more than 35 articles on money, credit, debt, exchange rates, banking, interest rates, and broader financial and macroeconomic issues in refereed journals in Bangladesh and abroad.

Dr. Islam holds a PhD in Monetary Economics. In 2013, he received the Bangladesh Bank Gold Medal Employees’ Recognition Award for outstanding performance.

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The directive, issued through a circular on Thursday with immediate effect, provides banks a transition period until March 31, 2026, to achieve full compliance.

Under the new instructions, authorized dealer (AD) banks must promptly notify customers through secure electronic channels upon receipt of inward remittance messages. Remittances received during banking hours are to be credited on the same business day, while those received after hours are to be credited on the next business day.

Banks have been advised to implement straight-through processing (STP) or risk-based expedited processing. Where essential information is available, beneficiary accounts may be credited even if some documentation or checks are pending, with remaining requirements completed afterward. If post-credit review is not feasible, banks must conduct pre-credit verification and settle transactions within three business days.

To further accelerate processing, BB has asked banks to reduce reliance on end-of-day NOSTRO account statements and instead use intraday credit confirmations. Banks are also encouraged to enhance reconciliation systems, ensuring reconciliation intervals generally do not exceed 60 minutes.

The circular emphasizes payment tracking and transparency, directing banks to use the Unique End-to-End Transaction Reference (UETR) to trace inward remittances from receipt to final credit. Banks have also been instructed to strengthen digital foreign exchange platforms, paving the way for the eventual discontinuation of Form C and Form C (ICT).

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The cut-off yield on Bangladesh Government Treasury Bonds (BGTBs) dropped to 10.51 per cent from 10.72 per cent, according to auction results.

“Most banks are parking excess liquidity in risk-free securities as private sector credit demand remains weak ahead of the upcoming national polls,” a senior BB official said, citing political uncertainty and cautious lending sentiment. He added that higher remittance inflows, alongside the central bank’s dollar purchases, have eased yields on government securities.

On the day, the government raised BDT 35 billion through BGTBs and BDT 5.0 billion via Three-Year Floating Rate Treasury Bonds (FRTBs), whose cut-off yield fell to 10.67 per cent from 11.08 per cent.

FRTB coupons are linked to the benchmark 91-day Bangladesh Compounded Rate (BCR), which is based on Treasury Bill auction results.

Market operators said BB’s dollar purchases injected local currency into the system, easing short-term borrowing costs. The central bank has bought a total of $3.55 billion directly from banks since July under the free-floating exchange rate arrangement.

“Such interventions are gradually rebuilding the country’s foreign exchange reserves,” a central banker noted. Reflecting these efforts, gross forex reserves rose to $33.18 billion on January 1 from $32.80 billion on December 24, while BPM6 calculations showed reserves at $28.51 billion from $28.11 billion.

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Ahsan Zaman Chowdhury, managing director and CEO of Trust Bank, has been elected secretary general, according to a press release.

The newly elected leadership will serve a two-year term covering 2026–2027. The committee was elected at ABB’s 28th annual general meeting, held recently.

Mr Arefin brings more than 31 years of banking experience and has been leading City Bank for the past seven years. He previously served as ABB’s interim chairman for seven months and currently chairs the SWIFT Members & Users Group in Bangladesh.

Mr Chowdhury began his banking career in 1986 at AB Bank before joining Eastern Bank in 1998. He has been serving as managing director and CEO of Trust Bank since July 2024.

Three vice-chairmen were also elected: Hassan O Rashid, managing director and CEO of Prime Bank; Mohammad Ali, managing director and CEO of Pubali Bank; and Mohammad Mamdudur Rashid, managing director and CEO of United Commercial Bank.

Tarek Reaz Khan, managing director and CEO of NRB Bank, was elected treasurer, while Mirza Elias Uddin Ahmed, managing director and CEO of Jamuna Bank, was elected joint secretary.

In addition, the AGM elected 12 managing directors and chief executives of banks as members of ABB’s board of governors.

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Prior to this elevation, he served as Senior Executive Vice President and Chief Financial Officer (CFO) of the bank, according to a press statement.

 In addition to overseeing core financial functions, he held leadership responsibilities for the Payment & Settlement Division (PSD), Common Services Division (CSD), and the Branding & Product Development Department.

Mr. Sadeq is a Fellow Chartered Accountant (FCA) of the Institute of Chartered Accountants of Bangladesh (ICAB). He holds a Master’s degree in Accounting from Jagannath University and has maintained a strong academic record.

He began his professional career in 2002 with Hoda Vasi Chowdhury (HVC), Chartered Accountants, where he built a solid foundation in auditing, financial control systems, regulatory compliance, and corporate governance.

He commenced his banking career with One Bank and joined Shahjalal Islami Bank in 2006 in the Financial Administration Division. Since then, he has played a pivotal role in the bank’s strategic growth and in strengthening its financial governance framework. Demonstrating strong leadership across finance, operations, treasury, risk management, and business functions, he was appointed CFO in 2015 and later promoted to Senior Executive Vice President through sustained performance excellence and strategic acumen.

With over two decades of extensive experience in the banking sector, Mr. Sadeq is widely recognized as a seasoned finance professional. His areas of expertise include financial planning and analysis, taxation, regulatory reporting, capital planning, asset–liability management, risk management oversight, and capital markets.

Under his leadership as CFO, Shahjalal Islami Bank achieved first position (Gold Award) for the Best Presented Annual Report in Bangladesh for consecutive years, as recognized by ICAB, ICMAB, and ICSB. The bank also secured first position (Gold Award) among SAARC countries from the South Asian Federation of Accountants (SAFA), a prestigious recognition reflecting excellence in corporate governance, transparency, and accountability.

An avid reader and passionate traveler, Mr. Sadeq has participated in numerous training programmes, workshops, seminars, and webinars both at home and abroad. He is a regular trainer at the Shahjalal Islami Bank Training Institute as well as at the training institutes of other banks and financial institutions.

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Mr. Kabir brings over 30 years of distinguished and active experience in the banking industry. Throughout his career, he has held several senior leadership roles, including Head of Credit, Chief Business Officer, Head of Credit Administration, and Head of Branch, contributing significantly to multiple areas of banking operations.

He began his professional journey as a Probationary Officer at National Bank PLC. Subsequently, he served at EXIM Bank PLC, Jamuna Bank PLC, Southeast Bank PLC, and Community Bank PLC, earning a strong reputation for professionalism, integrity, and effective leadership.

Mr. Kabir has participated in numerous professional and management development programs, workshops, and seminars, both at home and abroad.

He completed his Honours and Master’s degrees in Finance and Banking from the University of Dhaka, and later earned an MBA from the Department of Management Studies at the University of Dhaka, further strengthening his academic and professional foundation.

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The central bank said the approval is a key component of the banking sector reform programme launched in September 2024 to restore governance, strengthen accountability, and bring discipline to the financial system.

Under the Bank Resolution Ordinance 2025, EXIM Bank, First Security Islami Bank, Global Islami Bank, Social Islami Bank, and Union Bank were declared failed institutions and placed under resolution, with administrators appointed on November 5.

The central bank of Bangladesh issued a letter of intent and a no-objection certificate for establishing Sammilito Islami Bank on November 9.

As per the BB’s merger roadmap, the new bank will have a paid-up capital of BDT 350 billion — BDT 200 billion to be injected by the government as equity, and BDT 150 billion to come from the deposit-insurance trust fund and institutional deposits.

The combined non-performing loans of the five banks stand at around BDT 1.47 trillion, representing 77 per cent of their total loan portfolios.

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