Bangladesh Bank has announced that depositors will be eligible to receive an immediate payout of up to Tk 2 lakh if any bank or financial institution shuts down or enters resolution. The announcement was made on Sunday  through a circular issued by the central bank’s Deposit Insurance Department.

According to the circular, the government has introduced the Deposit Protection Ordinance, 2025 to strengthen public confidence in the financial sector and ensure better security of deposited funds. With Parliament currently dissolved, the President enacted the ordinance under Article 93(1) of the Constitution to address an urgent situation. The new ordinance replaces the Bank Deposit Insurance Act of 2000, bringing a modernized legal framework into force.

The ordinance outlines that the key objective is to guarantee the safe return of general deposits kept in banks and financial institutions across the country. To implement this, Bangladesh Bank will establish a dedicated Deposit Protection Department, responsible for collecting premiums, managing funds, inspecting member institutions, disbursing insured deposits, and conducting public awareness programs.

Under the new law, two separate protection funds will be created—one for banks and another for financial institutions. These funds will be built from premiums, penalties, investment income, and other sources. The Bangladesh Bank Board will administer the funds, serving as the trustee board.

Newly licensed banks and financial institutions must submit an initial premium to join the scheme. All currently operating banks will automatically become members, while financial institutions will be included from 1 July 2028. The ordinance also introduces risk-based quarterly premium collection.

While certain deposits belonging to government, foreign, and international bodies will remain outside the protection scheme, deposits of individuals and general institutions will be insured within the prescribed limits. In cases of liquidation or resolution, depositors will receive an immediate payout of up to Tk 2 lakh. Bangladesh Bank may also facilitate repayments through a bridge bank or a third party if necessary.

Additionally, the ordinance empowers Bangladesh Bank to follow international standards, sign MOUs with foreign regulators, exchange information, and seek technical assistance.

Experts say the new legal framework will enhance crisis management and strengthen risk mitigation within the country’s banking sector, offering depositors greater security than before.