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

Bangladesh Bank has ordered finance companies to withhold policy support and incentive packages from borrowers who have pending writ petitions or other cases against the government, the central bank, or the concerned finance company.

The directive, issued in a circular letter today (17 August), requires borrowers to withdraw such cases before their applications for policy support or incentives can be considered. The letter, signed by Abul Kalam Azad, director of Bangladesh Bank's Financial Sector Support-related department, was sent to the managing directors and chief executive officers of all finance companies.

The central bank said it has introduced various initiatives to restructure distressed businesses, restore the financial sector, create employment and support sustainable economic growth. Under these initiatives, finance companies provide borrowers with various forms of policy support and incentives.

However, some borrowers have continued litigation against the government, Bangladesh Bank and the concerned finance companies even after receiving such support, creating a backlog of cases in the financial sector, the circular said.

Finance companies have therefore been instructed to consider applications for existing or future incentive packages and other policy support only after the relevant cases are withdrawn.

Borrowers must also withdraw pending cases when seeking policy consent or an In-Principle Sanction Letter and submit an affidavit declaring that no cases against the government, Bangladesh Bank or the concerned finance company remain pending. The affidavit must also list the cases that have been withdrawn.

However, finance companies cannot change the terms of any policy support or incentive already approved after receiving the affidavit and must implement the approved support according to the policy consent.

Bangladesh Bank issued the directive under Section 41 of the Finance Company Act, 2023, and it took effect immediately.

Sukuk allocation revised

Separately, Bangladesh Bank has revised the allocation of Sukuk among investor categories to widen participation in the Islamic securities market. The new allocation will apply to Sukuk issued by the government and other eligible entities.

Under the revised arrangement, 50% of each issue will go to Shariah-based banks, finance companies and insurance companies; 30% to Islamic branches and windows of conventional banks; 10% to individual investors; and the remaining 10% to other institutional investors, including conventional banks, finance companies and insurance companies, provident funds, corporate institutions, gratuity funds and mutual funds.

If demand from any category exceeds its quota, allocation will be made proportionately among applicants in that category.

The new circular cancels the previous circular issued on 4 August 2025 and takes immediate effect.