Bangladesh Bank has been empowered to temporarily take control of any troubled bank or financial institution, including non-compliant Islamic banks, under a newly gazetted ordinance.

The Bank Resolution Ordinance, approved by the interim government’s Advisory Council on April 17 and published on Friday, allows the central bank to transfer shares to government entities and impose sweeping measures, including suspending operations, replacing management, or forming bridge banks to manage distressed institutions.

Officials say the central bank may intervene if a bank is deemed non-viable, nearing bankruptcy, or unable to meet depositor obligations. A new dedicated resolution department will be set up within the Bangladesh Bank to manage such processes.

Top executives—such as managing directors and chairmen—can now be held personally liable for fraudulent use of a bank’s funds, and may be forced to repay misused assets or face legal action, the ordinance states.

The ordinance also establishes a seven-member Banking Sector Crisis Management Council, chaired by the central bank governor. The council will design crisis-response strategies and oversee bank resolution procedures.

In extreme cases, the central bank may petition the court for the liquidation of a bank and appoint a liquidator. The ordinance mandates that depositors must be repaid within seven working days of licence cancellation, while other liabilities must be cleared within two months.

Violations of the ordinance could result in financial penalties of up to Tk 500,000, with an additional Tk 5,000 for each day of continued non-compliance.