The government has issued the ‘Deposit Protection Ordinance, 2025’ to enhance the protection of depositors and increase public confidence in the country's banking sector.
Considering the importance of financial sector stability during the dissolution of parliament, the president promulgated the ordinance using the power vested under Article 93(1) of the constitution. This ordinance repeals the existing ‘Deposit Insurance Act, 2000,’ and introduces a modern framework.
The information was revealed through a circular published on Sunday (November 23) by the Deposit Insurance Department of the Bangladesh Bank.
The primary objective of the new law is to ensure the protected return of deposits placed with both Bank Companies and Finance Companies.
New Department: A separate Deposit Protection Department will be established under the Bangladesh Bank to oversee the protection programme. This department will be responsible for collecting regular premiums, fund management, inspecting member institutions, settling claims, and conducting awareness programs.
Fund Structure: The ordinance mandates the formation of two separate Deposit Protection Funds for bank and finance companies. These funds will be managed using premiums collected from member institutions, fines, investment income, and other approved sources.
Governing Body: The administration of the funds will be overseen by the Bangladesh Bank's Board of Directors, which will act as the 'Trustee Board'.
Membership: Newly licensed bank and finance companies must submit an initial premium at a prescribed rate. All existing bank companies will automatically be considered member institutions under this law, while finance companies will be included from July 1, 2028. The law also includes provisions for the collection of risk-based premiums on a quarterly basis.
Coverage and Claim Settlement
The ordinance explicitly excludes certain classes of deposits from protection, including those belonging to the government, foreign entities, and international organizations. Conversely, deposits made by general individuals or institutions will be considered 'protectable' and will be secured up to a defined limit.
In the event of a bank or finance company's liquidation or resolution, the Deposit Protection Department will directly pay the secured deposits. If necessary, the protection process can also be managed by transferring assets and liabilities to a bridge bank or a third party through the resolution authority.
The Bangladesh Bank has also been empowered under this law to sign Memoranda of Understanding (MoU) with domestic and foreign regulators, exchange information, receive technical assistance, and conduct deposit protection activities in line with international standards.
Experts believe the implementation of this new law will increase the financial sector's capacity to manage risk and combat crises, providing depositors with greater protection.
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