BB gives administrators sweeping powers over troubled banks

Bangladesh Bank (BB) has introduced detailed rules for appointing temporary administrators to troubled banks and finance companies, giving them broad powers to protect critical operations, assess financial conditions and facilitate the resolution of failing institutions.

The central bank issued the “Regulations for Temporary Administration under the Bank Resolution Act, 2026” on August 6.

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The rules apply to scheduled banks, including digital banks, and finance companies undergoing immediate corrective measures or the resolution process.

Under the regulations, the Bank Resolution Department will nominate one or more qualified persons as administrators or assistants. They may be Bangladesh Bank officials or outsiders, but must have no conflict of interest with the institution concerned.

Neither an administrator nor any family member can be a debtor, creditor, shareholder or other interested party of the institution. If an administrator acquires any direct or indirect financial or other interest after appointment, they must notify the Bank Resolution Department within 24 hours.

Administrators, in consultation with the department, can take measures to keep critical functions running. They may also replace key management personnel and temporarily perform the duties of the chairman, director or chief executive officer, where necessary.

For institutions under immediate corrective measures, administrators must appoint an independent auditor to assess their actual financial condition.

The audited financial statements and report must be submitted within three months of appointment, unless the department sets another deadline.

Within one month of submitting the report, the administrator must also submit a plan to preserve or restore the institution’s financial health.

For institutions undergoing resolution, administrators must prepare a list of assets and liabilities and submit it within two months of appointment. Within one month of that submission, they must recommend the most effective resolution option.

The regulations also require administrators to investigate suspected financial crimes through forensic audits. If directors or officials are found to have been involved in offences under the Bank Resolution Act, administrators must take legal action against them, without prejudice to other proceedings.

Administrators must maintain records of all decisions and actions, preserve confidentiality and submit quarterly progress reports to the Bank Resolution Department. At the end of the process, assets and liabilities may be transferred to a new board and management, a bridge bank, a transferee or a liquidator.

A final report on the temporary administration must be submitted within three months of its completion.

Bangladesh Bank will determine administrators’ remuneration, while the institution under administration will bear all related expenses, subject to conditions set by the central bank.

The regulations also require Bangladesh Bank to publish notice of an administrator’s appointment on its website and that of the institution concerned, as well as in one widely circulated Bengali and one English national daily, by the next working day.

The new rules repeal the temporary-administration provisions under the Regulations for Bank Resolution, 2025, but actions already taken under those provisions will be deemed to have been taken under the new regulations.