Bangladesh Bank has issued a firm regulatory directive instructing all licensed non-bank finance companies across the country to withhold policy support, debt restructuring, and financial stimulus from corporate borrowers actively suing state authorities or lending institutions. Under the new mandate, defaulting corporate entities seeking state-backed financial relief must unconditionally withdraw all pending writ petitions and legal actions from the courts before their applications receive formal consideration.
The binding circular was signed by Abul Kalam Azad, Director of the central bank’s Financial Sector Support Department, and dispatched directly to the chief executive officers and managing directors of every non-bank financial institution in Bangladesh.
Over recent years, the central bank has introduced a series of soft loan facilities, interest waivers, and liquidity support frameworks designed to help distressed businesses recover, safeguard employment, and stabilise the national economy. However, official reviews uncovered a persistent contradiction: a significant number of corporate entities were accepting public concessions while simultaneously maintaining aggressive litigation against the government, Bangladesh Bank, and their own primary lenders.
This practice generated severe congestion in the legal system, particularly within commercial benches and money loan courts (Artha Rin Adalat). Central bank officials observed that defaulting corporate debtors frequently used high court writ petitions as tactical delaying mechanisms. By obtaining temporary stay orders against default notices, these entities successfully stalled asset recovery efforts while continuing to seek financial concessions intended exclusively for bona fide distressed businesses.
To eliminate this regulatory loophole and clear judicial bottlenecks, the central bank now mandates the complete withdrawal of all related lawsuits prior to granting any policy assistance. Finance companies are required to verify that applicant entities have formally dismissed all cases against public authorities and lending institutions before approving any stimulus support.
As a mandatory compliance measure, applying borrowers must submit a legally binding affidavit confirming that no litigation remains pending against the state, Bangladesh Bank, or the lending institution. This sworn declaration must include an itemised list detailing every legal action officially withdrawn from the courts.
To protect compliant businesses that surrender their legal claims, the central bank incorporated a safeguard clause preventing institutions from altering agreed arrangements. Once a borrower submits the verified affidavit, the financing company is strictly prohibited from modifying or escalating the pre-approved terms of the relief package, ensuring that agreed concessions are delivered exactly as sanctioned.
Exercising statutory authority under Section 41 of the Finance Company Act 2023, Bangladesh Bank confirmed that the directive takes immediate effect across the entire non-bank financial sector.