Bangladesh Bank Announces ADR Mediator Institution Policy for Loan Recovery
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TL;DR
- Bangladesh Bank announced a new ADR mediator institution enlistment policy for expediting loan recovery.
- Institutions and mediators must meet strict eligibility and governance standards.
- Policy aims to reduce court backlog in the financial sector.
- Bangladesh Bank will supervise, audit, and enforce the new framework.
Overview
On August 20, 2026, Bangladesh Bank introduced the 'Alternative Dispute Resolution (ADR) Mediator Institution Enlistment Policy, 2026' to modernize loan dispute resolution processes. The policy sets out strict requirements for institutions and mediators, targeting improved loan recovery and reduction in court case backlogs.
What Happened
Bangladesh Bank introduced the 'ADR Mediator Institution Enlistment Policy, 2026' on August 20, 2026.
The policy requires all scheduled banks, finance companies, and intermediary institutions in Bangladesh to comply immediately.
It establishes a process for enlisting qualified mediator institutions to handle financial sector disputes.
Applicant institutions must meet criteria related to legal registration, professional standards, and governance. Mediator panels must include experienced professionals from banking, law, and accounting, with exclusion of Politically Exposed Persons.
Enlisted institutions must maintain mediation infrastructure, run training programs, and adhere to annual reporting and compliance checks by Bangladesh Bank.
Context
Bangladesh's financial sector faces mounting defaulted loans and growing court case backlogs.
Existing dispute settlement mechanisms were viewed as inefficient, prompting regulatory intervention and the formal adoption of ADR procedures by the central bank.
Why It Matters
- This policy introduces enforceable standards intended to strengthen ADR in Bangladesh's financial sector.
- The approach seeks to accelerate resolution of defaulted loans and combat significant case backlogs in the courts.
- Implementation could build public trust in mediation and professionalize financial dispute resolution in Bangladesh.