In politics and finance, some things happen quietly at midnight. Others happen loudly in parliament. And then some events appear without a clear explanation, such as Section 18(A) in the Bank Resolution Ordinance 2025.
One day, the law was meant to discipline reckless bank owners. The next day, it allowed them to return, subject to conditions. The clause allows former owners of failed banks to regain control by paying 7.5 per cent of the public funds used to rescue them upfront.
In other words, if a bank collapses and the government intervenes, previous owners may return after paying a portion of the recovery cost. Naturally, this raises several questions:
Why was the clause inserted at the last moment?
Reports suggest the clause appeared just before the bill was placed in parliament, without recommendation from the review committee or support from Bangladesh Bank. This raises questions about the legislative process and whether the clause was introduced through standard scrutiny or expedited consideration.
Who determined the 7.5 per cent threshold?
Why 7.5 per cent? Why not 5 per cent or another level? The basis for the figure is not publicly explained. It is unclear whether the percentage reflects a defined financial model, policy calculation, or administrative decision.
What is the policy implication?
Consider a scenario where a business group runs banks into difficulty through weak lending practices. Loans default, depositors lose confidence, and the government injects funds. If the same owners can return after paying 7.5 per cent, it raises questions about whether the system promotes accountability or allows repetition.
What message does this send to future bank owners?
The framework may influence behaviour. If losses are absorbed by the state and ownership can later be regained at a reduced cost, incentives for prudent governance may weaken.
Who benefits from the arrangement?
Taxpayers finance the rescue. Depositors face uncertainty. Regulators manage the risks. Former owners retain a pathway to regain control. The distribution of outcomes raises questions about balance and fairness.
What happens if the same people return?
Past experience suggests that governance structures, lending practices, and institutional weaknesses may persist if ownership remains unchanged. This increases the risk of recurring financial stress.
Is this reform or restoration?
The original aim of the Bank Resolution Ordinance 2025 was to protect the banking system from irresponsible ownership. The addition of Section 18(A) introduces a parallel objective, where rehabilitation and accountability intersect.
Perhaps the most important question is this: If a system allows those linked to failure to return, can the crisis be considered fully resolved, or is it only temporarily contained until similar conditions emerge again?
The author is a C-suite executive and an associate professor.
Views expressed in the article are his own and do not reflect those of any organisation.
