Bangladesh Bank (BB) has drafted a Deposit Protection Ordinance, proposing a maximum payout of Tk 200K per depositor in the event of a bank liquidation.

The limit, which replaces the existing Tk 100K cap under the Bank Deposit Insurance Act-2000, will be reviewed every three years.

The draft ordinance, now open for public feedback, includes the formation of a Deposit Protection Authority within BB. This authority will operate independently from the central bank’s regulatory functions and oversee a dedicated Deposit Protection Fund, financed through premiums from banks and financial institutions.

Depositors with balances exceeding the protection limit must claim the excess amount through the liquidator. The ordinance also mandates a seven-day payout window for secured deposits and grants tax exemptions for the fund’s earnings.

A seven-member board, chaired by the BB governor, will oversee the deposit protection system, including setting premium rates, fund allocations, and reviewing the coverage limit.

The Deposit Protection Fund will be financed through initial, annual risk-based, and special premiums from banks, penalties from member institutions, and investment profits. In case of a deficit, the central bank may levy special premiums, seek government financial assistance, or secure loans.

BB will also create a separate fund for depositors of non-bank financial institutions. The draft stipulates that institutions failing to pay premiums on time will have the amount deducted directly from their accounts by the central bank.