Cenbank orders finance firms to withhold policy support, incentives from litigant borrowers

Bangladesh Bank ordered finance companies to withhold policy support and financial incentives from borrowers with pending legal cases against the government, the central bank, or the finance company itself. The directive, issued August 17 by the Financial Sector Support department, requires borrowers to withdraw all litigation before applications for restructuring packages or incentives can be approved. The central bank cited a backlog of cases in the financial sector and said borrowers must submit affidavits confirming no cases remain pending to qualify for existing or future support programs.

The order applies to various relief initiatives designed to restructure distressed businesses and support economic growth. Finance companies cannot modify terms of already-approved support packages but must implement them according to policy consent once litigation is withdrawn.

Separately, Bangladesh Bank revised Sukuk (Islamic securities) allocation rules to increase market participation, directing 50 percent to Shariah-based institutions, 30 percent to Islamic windows of conventional banks, 10 percent to individual investors, and 10 percent to other institutional investors.