Cenbank introduces ADR policy to speed up loan recovery, ease court backlog
The policy was issued under Section 45 of the Bank Company Act, 1991 and Section 41 of the Finance Company Act, 2023.
Bangladesh Bank has introduced a comprehensive policy to expedite the recovery of defaulted loans and reduce the backlog of financial disputes in courts through alternative dispute resolution (ADR).
The central bank issued the "Alternative Dispute Resolution (ADR) Mediator Institution Enlistment Policy, 2026" yesterday (20 August), directing all scheduled banks, finance companies and intermediary institutions operating in Bangladesh to comply with the guidelines.
The policy was issued under Section 45 of the Bank Company Act, 1991 and Section 41 of the Finance Company Act, 2023.
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Under the policy, Bangladesh Bank will enlist qualified and experienced mediator institutions to establish a modern and sustainable ADR framework for resolving financial disputes and strengthen public confidence in mediation.
Eligible institutions must be registered under the Societies Registration Act, 1860, the Partnership Act, 1932, or the Companies Act, 1994, and have a valid trade licence, Tax Identification Number (TIN) and at least three years of professional or business experience.
Their members, board directors and chief executive officers must not be bankrupt, loan defaulters or convicted of serious offences such as fraud, corruption, embezzlement or money laundering.
Each enlisted institution must have a dedicated ADR unit and at least one mediator panel with a minimum of five members, including an accountant and a legal expert. Politically Exposed Persons (PEPs) will not be eligible to serve as mediators.
A mediator must have at least 10 years' experience in banking, finance, law, accounting, auditing or judicial services, with no conflict of interest with the parties involved.
Enlisted institutions must organise at least two ADR training programmes and one skills-development workshop annually. Each mediator must also complete at least 20 hours of Continuing Professional Development (CPD) each year.
The institutions must maintain facilities for confidential and virtual hearings, as well as a digital Case Management System and adequate cybersecurity and data-recovery systems.
Bangladesh Bank will assess applications on a 100-mark scale, with a minimum of 70 marks required for enlistment. Initial enlistment will be valid for three years.
The central bank will have the authority to inspect enlisted institutions and impose warnings, financial penalties, suspension or cancellation of enlistment for serious irregularities, corruption or policy violations.
