Bangla Press Desk: The Bangladesh Bank has issued detailed regulations governing the appointment, powers, and responsibilities of temporary administrators assigned to troubled banks and financial institutions.
The new rules, titled the “Regulations for Temporary Administration under the Bank Resolution Act, 2026,” grant administrators broad authority to maintain critical operations, evaluate financial health, replace key management, and execute resolution plans for failing institutions.
Approved by the central bank’s board of directors, the regulations took effect immediately on 6 August.
They apply to all scheduled banks, digital banks, and finance companies subject to prompt corrective action or formal resolution under the 2026 Act.
To prevent conflicts of interest, the rules strictly prohibit anyone with direct or indirect ties to an institution from serving as its administrator.
Candidates, and their immediate family members, cannot be debtors, creditors, shareholders, or interested parties in the firm.
Immediate family is defined as a spouse, parents, children, siblings, and dependents.
The central bank also barred individuals holding assets that create competitive or personal conflicts that could compromise an administrator’s impartiality.
An administrator must disclose any direct or indirect financial or other interest in the institution to the Bank Resolution Department.
If such an interest is acquired after appointment, it must be disclosed within 24 hours. The same requirements apply to associates.
If such interests are not disclosed, whether knowingly or unknowingly, the decision of the Bank Resolution Department on the matter will be final.
Administrators may come from inside or outside BB
The Bank Resolution Department will nominate one or more qualified persons as administrators or associates.
They may be Bangladesh Bank officials or outsiders. If the nominee is a BB employee, the Human Resources Department will assign the person to the concerned institution at the request of the Bank Resolution Department.
For outsiders, the department will make necessary arrangements with their organisations before appointment.
Administrators and associates will work under the supervision and control of the Bank Resolution Department.
Their leave, performance evaluations and related matters will also be coordinated by the department.
BB will determine their remuneration, while the bank or finance company under administration will bear all temporary administration costs, including remuneration, subject to conditions set by the central bank.
If an administrator or associate becomes unsuitable for the assigned duties, the Bank Resolution Department may appoint a replacement.
BB must publish notice of an administrator’s appointment by the next working day on its website and that of the concerned institution.
The appointment must also be published in at least one widely circulated Bangla and one English national daily.
The administrator’s tenure will be determined under Section 19(2) of the Bank Resolution Act.
The Bank Resolution Department may extend the tenure when necessary, with the extension also requiring public disclosure.
Administrators get wider powers
In consultation with the Bank Resolution Department, administrators may replace key management personnel when necessary to keep an institution’s critical functions operational.
They may also temporarily perform the duties of the chairman, director or chief executive officer.
For institutions under immediate corrective action, administrators must appoint an independent auditor to determine the institution’s actual financial condition.
Audited financial statements and reports must be submitted within three months of appointment unless another deadline is set by the department.
Within one month of submitting the audit report, the administrator must submit a plan to preserve or restore the institution’s financial condition.
The administrator must then operate the whole or part of the business in line with the plan and take steps to restore sound and prudent management.
Administrators must preserve and manage all information and documents, maintain confidentiality and keep a register of all decisions and actions taken during temporary administration.
They must submit quarterly progress reports to the Bank Resolution Department and a final report within three months after the temporary administration ends.
For institutions undergoing resolution, administrators must prepare a list of assets and liabilities under Section 21 of the Bank Resolution Act and submit it within two months of appointment or within a period specified by the department.
Forensic audits to identify wrongdoing
The regulations require administrators to take steps to identify directors and officials involved in offences under Sections 54 and 59 of the Bank Resolution Act through forensic audits.
The audits may investigate fraud, corruption, financial irregularities, asset misappropriation, abuse of power and other financial crimes.
The rules define a forensic audit as an independent and systematic process to identify responsible individuals and collect, preserve and assess evidence suitable for legal or judicial proceedings.
Both local and foreign audit firms can conduct the audits, covering financial records, accounts, transactions, data, information systems and related activities.
If responsible individuals are identified, legal action must be taken under the Bank Resolution Act, without affecting proceedings under other laws.
At the end of the resolution process, administrators must transfer assets, liabilities and control, where applicable, to a new board and management, bridge bank, transferee or liquidator through proper procedures.
They must also assist transferees, as directed by the Bank Resolution Department, in managing operations, assets and liabilities and continuing necessary business activities.
Associates appointed to assist administrators will also be accountable for failing to perform their assigned duties.
The rules on the appointment, tenure and termination of administrators will also apply to associates.
