TIB slams Bank Resolution Act 2026, warns of ‘rehabilitation of bank looters’

Transparency International Bangladesh (TIB) has strongly criticised the newly enacted Bank Resolution Act, 2026, warning that it could enable previously identified bank looters to regain control without accountability.

In a press statement issued today (13 April), the anti-corruption watchdog said a provision allowing former shareholders of failed or merged banks to reclaim ownership risks turning the banking sector back into a haven for corruption and plunder.

TIB said the move undermines efforts to address long-standing governance failures, irregularities, and mismanagement in the sector, and instead perpetuates a culture of impunity.

Referring to changes from the earlier "Bank Resolution Ordinance, 2025," the organisation noted that the previous framework barred individuals responsible for a bank's collapse from returning to ownership, even if they repaid all funds. However, Section 18(a) of the new law reverses that restriction.

TIB Executive Director Iftekharuzzaman said the provision effectively guarantees impunity rather than ensuring justice.

"Whatever justification the government may offer, this decision does not ensure legal accountability for those who looted the banking sector; instead, it effectively rewards them on a massive scale, making it self-defeating," he said.

He warned that the end of authoritarian governance does not necessarily eliminate abuse of power, adding that the sector may again fall prey to "policy capture" and kleptocratic practices under a "winner-takes-all" approach.

Raising concerns over the financial terms, Iftekharuzzaman questioned how former owners of crisis-hit banks could regain control by paying only 7.5% upfront, with the remaining 92.5% payable over two years at 10% interest.

He also questioned whether such owners could realistically inject fresh capital, repay depositors and creditors, and restore regulatory compliance.

TIB expressed doubts over Bangladesh Bank's ability to enforce post-reacquisition conditions, citing potential conflicts of interest and weak oversight.

The organisation warned that, under the pretext of stabilising banks and protecting depositors, the law could trigger further loan defaults and deepen insolvency risks, ultimately shifting the burden onto the public.

"If ownership is returned to former shareholders without proper legal accountability, no qualitative improvement will occur in the banking sector," Iftekharuzzaman said.

TIB also questioned whether the law aligns with the government's electoral commitment to reform financial institutions, or serves the interests of a "vested syndicate."

The organisation urged the government to reconsider the provision and prioritise accountability in banking sector reforms.