Bangladesh Bank has issued a binding directive instructing non-bank finance companies across the country to deny policy support and financial stimulus to any corporate borrower actively engaged in litigation against the state, the regulator, or lending institutions. Under the mandate, delinquent borrowers seeking debt restructuring or state-backed recovery assistance must unconditionally withdraw all pending writ petitions and legal actions before their requests receive consideration.
Signed by Abul Kalam Azad, Director of the central bank’s Financial Sector Support Department, the official circular was dispatched directly to the managing directors and chief executive officers of every licensed finance company operating in the country.
Over recent years, the central bank has rolled out an array of financial stimulus packages, soft loan facilities, and credit restructuring frameworks administered through non-bank financial institutions. These measures were crafted to nurse struggling enterprises back to health, preserve employment, inject liquidity into the real economy, and stabilize a fragile financial system. However, regulatory audits revealed a recurring contradiction: numerous corporate entities were eagerly accepting public concessions while simultaneously maintaining aggressive court challenges against the government, Bangladesh Bank, and their primary lenders.
This dual strategy created severe congestion across the judicial system, particularly in commercial benches and money loan courts (Artha Rin Adalat). Central bank officials noted that defaulting corporate debtors frequently leveraged high court writ petitions as tactical delaying mechanisms. By securing temporary stay orders against default notices, these entities effectively stalled asset recovery proceedings while continuing to lobby for tax concessions and interest waivers intended exclusively for bona fide distressed businesses.
To plug this systemic loophole, the central bank now requires the complete dismissal of all related lawsuits prior to the granting of any regulatory relief. Finance companies must verify that applicant entities have taken concrete steps to withdraw all outstanding cases against public authorities and lending institutions before approving incentive applications.
To establish compliance, applicants must submit a legally binding affidavit confirming that no pending litigation remains against the government, Bangladesh Bank, or the lending institution. This sworn statement must feature an itemised schedule of all legal actions officially withdrawn from the courts.
To ensure fairness once corporate borrowers relinquish their day in court, the central bank incorporated a protective safeguard for compliant businesses. Once a client submits a verified affidavit, the financing company cannot unilaterally alter, escalate, or modify the pre-approved terms of the financial relief package. The agreed concessions must be delivered precisely as initially sanctioned.
Exercising statutory authority under Section 41 of the Finance Company Act 2023, Bangladesh Bank confirmed that this regulatory measure takes immediate effect across the entire non-bank financial sector.
