Bangladesh Bank is set to establish a Bank Restructuring and Resolution Fund (BRRF) aimed at strengthening financial stability and facilitating the restructuring of failing banks. The fund seeks to raise up to Tk 40,000 crore, reducing reliance on government taxpayer support and enabling banks to recover independently.
The concept of this fund is inspired by the European Central Bank’s resolution framework, under which banks contribute a portion of their deposits to a dedicated fund. In Bangladesh’s model, commercial banks will pay an annual premium of 0.25% of deposits—equivalent to 25 poisha per Tk 100—which is substantially higher than the existing 0.07% deposit insurance premium. Over the next few years, this fund could accumulate between Tk 30,000–40,000 crore, giving the central bank the capacity to intervene independently in cases of severe financial distress.
Governor of Bangladesh Bank, Ahsan H. Mansur, emphasised:
“Bank resolution is a continuous process. We have established a dedicated Bank Resolution Division to identify early signs of weakness and intervene through restructuring, mergers, or orderly closure.” Currently, five banks are undergoing restructuring with government support amounting to approximately Tk 20,000 crore.
Simultaneously, the central bank plans to liquidate nine non-bank financial institutions (NBFIs). Since these institutions fall outside the deposit insurance scheme, the government will provide Tk 5,000 crore in compensation to affected depositors.
Projected Fund Contribution and Timeline:
| Annual Premium Rate | Expected Fund Size | Timeframe |
|---|---|---|
| 0.25% of deposits | Tk 30,000 crore | 5 years |
| 0.25% of deposits | Tk 40,000 crore | Long-term target |
The fund will primarily invest in government securities. Banks will pay risk-based premiums according to size and financial health. Late payments will incur fines, and repeated delays may result in restrictions on deposit acceptance.
Expert Perspectives:
Muhammad A. (Rumi) Ali, former deputy governor, warned that stronger banks supporting weaker ones could mask governance issues.
Mustafizur Rahman, CPD, welcomed the initiative, noting that similar frameworks in Europe and the U.S. have reduced government expenditure.
Syed Mahbubur Rahman, MD of Mutual Trust Bank, suggested that the 0.25% premium may be low and emphasised the need to improve governance, limit political interference, and reduce non-performing loans for success.
Sohel R. K. Hossain, MD of Bank Asia, described the measure as positive, highlighting the importance of risk-based and transparent implementation.
Experts agree that while the fund alone cannot resolve structural problems in the banking sector, it represents a significant step toward financial stability and reduced dependence on government bailouts.