Issued via BRPD Circular Letter 25 on July 29, 2026, the central bank’s directive for banks mandates that borrowers submit an affidavit and proof of suit withdrawal alongside their applications. However, it lacks any written guarantee or defined timeframe for approval once the legal challenges are dropped, leaving borrowers exposed to the risk of losing their legal standing without securing financial relief. In contrast, DFIM Circular Letter 16, issued on August 17, 2026, for finance companies, structures the process in steps: the lending institution first evaluates the commercial viability of the business, issues a formal consent letter, and only then requires the withdrawal of litigation. Furthermore, conditions attached to the approved policy support cannot be altered once the affidavit is submitted.
Tackling stuck loans remains a critical priority for the banking sector, where legal delays have severely constrained liquidity. According to data from the Taskforce on Economic Reforms, over 72,500 cases involving more than BDT 1.78 trillion were pending in Money Loan Courts as of February 2024, while bank loans under high court stay orders reached BDT 1.82 trillion by the end of 2025. A prime example of such prolonged litigation is the dispute between Janata Bank and Green Tannery over an BDT 180 million loan initiated in 2004; the case underwent 104 hearings and remained unresolved by 2026 due to an eight-year stay order, preventing the bank from recovering funds while leaving the business stalled.
Financial experts and industry insiders have expressed mixed views regarding the regulatory dichotomy. Mosleh Uddin Ahmed, Managing Director of Shahjalal Islami Bank, defended the stringent approach for banks, noting that borrowers facing legal action must demonstrate genuine commitment to repayment rather than delaying through courts. Meanwhile, Dr. Md. Ezazul Islam, Director General of the Bangladesh Institute of Bank Management (BIBM), suggested that the central bank might have relaxed terms for finance companies to help distressed institutions recover funds faster, adding that Bangladesh Bank could review the policy if the business community raises legitimate operational concerns. Central Bank Executive Director and Spokesperson Arif Hossain Khan acknowledged the structural differences between the two types of institutions, stating that the rationale behind the varying treatment for identical default scenarios warrants further internal discussion.
