Bangladesh Bank has urged the government to urgently enact two laws to tackle the banking sector’s mounting non-performing loans and distressed assets.The proposed laws are the Distressed Asset Management Act, 2026 and amendments to the Money Loan Court Act, 2003. In a letter to Finance Minister Amir Khosru Mahmud Chowdhury on August 31, Governor Mostaqur Rahman requested that the bills be placed before the ongoing parliamentary session.The central bank has proposed five major changes to speed up loan recovery, including setting up a High Court-level appellate tribunal, fixing reserve prices for auctioned assets, appointing separate recovery officers, reducing legal deadlines for case disposal and increasing the mandatory deposit for filing appeals.Under the proposed Distressed Asset Management Act, licensed distressed asset management companies would purchase troubled loans from banks and manage them through legally separate trusts. They could also restructure loans, enforce collateral, convert debt into equity and, in some cases, take control of defaulting companies after giving 60 days’ notice.Bangladesh Bank says transferring distressed loans off banks’ balance sheets would reduce pressure on lenders and allow them to focus on regular lending and other operations. According to central bank data, distressed assets in Bangladesh’s banking sector reached around Tk 11 lakh crore in 2025, equivalent to nearly 60 percent of total bank loans.
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