What Changes Are Coming to Bank Deposit Insurance in Bangladesh?

The Bangladesh Bank (BB) has prepared a new Deposit Protection Ordinance with a view to strengthening the financial safety of depositors. According to the ordinance, the depositors will get a maximum of Tk 2 lakh if a bank is liquidated which is twice the existing limit of Tk 1 lakh under the Bank Deposit Insurance Act-2000. The payout limit will be re-examined every three years.

A Deposit Protection Fund Authority will be set up in the BB to run a segregated fund derived from premiums charged by the financial institutions. The fund will secure the timely protection of the money of the depositors. Deposits above Tk 2 lakh have to be claimed from the liquidator.

The new regulation also provides a seven-day payout period for secured deposits and tax relief on fund returns. Also, fines will be levied on institutions that do not pay premiums in a timely manner.

A Deposit Protection Department will be established in BB to manage the system. The system will be regulated by a seven member board headed by the governor of BB. Deposit limits, investment policy and risk based premiums will be regulated. The central bank can also take the help of the government during times of shortages of funds.

These reforms seek to enhance depositor confidence and financial stability of Bangladesh’s banking system, making it more protected against bank failure.