BB pushes for legal reforms: What are the amendments in major laws
These measures are a direct response to the "family dominance" of ousted prime minister Sheikh Hasina and her cohorts which crippled the sector, most notably by conglomerates like the S Alam Group
Bangladesh Bank's far-reaching reforms under the interim government — from revealing the actual extent of defaulted loans to stabilising the foreign exchange market and tightening monetary discipline — signal a clear turning point for the banking sector and are set to influence its future governance.
As part of this overhaul, the central bank has formulated at least six key legislative drafts aimed at dismantling the culture of impunity that allowed influential families and political figures to hollow out the financial system over the last two decades.
Central to this mission are proposed amendments to the Bank Company Act and the Bangladesh Bank Order, which seek to curb the dominance of business conglomerates and establish the central bank's autonomy.
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Grip of death
The proposed draft of the Bank Company Act introduces stringent limits on board representation to prevent a repeat of the systemic collapses seen during the Sheikh Hasina regime.
Under the new rules, the number of directors from a single family and its affiliates on a bank board will be slashed from five to two. Furthermore, a director's continuous term will be halved from twelve years to six.
These measures are a direct response to the "family dominance" of ousted prime minister Sheikh Hasina and her cohorts which crippled the sector, most notably by conglomerates like the S Alam Group.
Such entities allegedly gained control of multiple banks to siphon off thousands of crores of taka, much of which was reportedly laundered abroad.
To further ensure professional management, the central bank also proposes barring political figures from bank boards and restricting any single individual from holding significant stakes in multiple banks.
Reduce state control
In a bid to shield the regulator from political interference, the draft amendment to the Bangladesh Bank Ordinance 2025 proposes significant changes to key appointments.
Under the new mandate, the president will appoint the governor and deputy governors, and the governor's post will be upgraded from the status of a secretary to that of a minister.
The amendment also seeks to reduce state control over the central bank's board. While the current board includes three government representatives, the final draft proposes retaining only one, ensuring that the institution can make financial decisions based on economic necessity rather than political convenience.
Safety and debt recovery
Beyond structural governance, BB has already moved to implement the Bank Resolution Ordinance and the Deposit Protection Act. These laws have already facilitated the merger of five weak banks while raising the insurance coverage ceiling to protect small depositors.
To address the mountain of bad loans or non-performing loans, the central bank has introduced the Distressed Asset Management Ordinance and proposed updates to the Money Loan Court.
These reforms aim to treat general and "wilful" defaulters with equal severity and speed up the settlement of long-pending recovery cases.
Despite the central bank board's approval and pressure from the International Monetary Fund (IMF) to expedite these changes, the government has reportedly been responding slowly to the final review of the Bank Company Act and the Bangladesh Bank Order.
Bangladesh Bank sources indicate that the swift implementation of these laws is essential to restoring public trust and ensuring that the recent stabilisation of the foreign exchange market also translates into long-term financial health.
