Bangladesh Bank has unveiled a structured regulatory framework to settle non-performing loan disputes through mediation, offering lenders and borrowers a formal route away from drawn-out litigation in the courts. Issued by the Banking Regulation and Policy Department-2, the policy sets out rigorous eligibility criteria to enlist professional mediation organisations across the country, aiming to expand the use of Alternative Dispute Resolution (ADR) and alleviate the immense backlog of cases in the Money Loan Courts (Artha Rin Adalat).
Under the new directives, commercial banks, financial institutions, and borrowers may seek mediation through any accredited firm before lodging a case, provided both sides agree. The mechanism also applies to disputes already stuck in litigation, allowing parties to pause legal battles and negotiate a mutually acceptable recovery agreement.
Organisations wishing to enlist as mediators must be registered under the Societies Registration Act 1860, the Partnership Act 1932, or the Companies Act 1994. Applicants must show at least three years of professional or business track record, hold a valid trade licence, and possess an active Taxpayer Identification Number (TIN). They are also required to provide three years of audited accounts and carry out all operational transactions through dedicated bank accounts.
Integrity safeguards form a core part of the selection process. Any organisation whose directors, board members, or chief executive have a history of loan default, bankruptcy, fraud, embezzlement, money laundering, corruption, or serious criminal convictions will be disqualified automatically. Candidates must score at least 70 out of 100 marks during central bank vetting to secure enlistment. Approvals remain valid for three years, with renewals subject to satisfactory performance and applications submitted at least 90 days before expiry.
Each enlisted body must form one or more specialist panels comprising a minimum of five practitioners, including at least one qualified accountant and one legal expert. Panel members must hold a decade of professional experience across banking, finance, law, auditing, or the judiciary. To safeguard neutrality and prevent external interference, politically influential figures are explicitly barred from these panels.
Bangladesh Bank will maintain direct oversight through unannounced audits, digital system reviews, and operational inspections. Enlisted firms must lodge annual reports within two months of each calendar year’s close. Any ethical breaches, hidden conflicts of interest, false declarations, or misconduct will prompt immediate sanctions, ranging from financial penalties to permanent cancellation of enlistment.
