New Deposit Protection Ordinance Enacts Safeguards for Depositors’ Interests

On 23 November, the government of Bangladesh officially approved the Deposit Protection Ordinance, 2025, a landmark law aimed at ensuring economic stability and protecting depositors’ interests. This new ordinance is set to play a crucial role in safeguarding the financial assets of depositors within the country, especially in the case of bank liquidations.

The draft of the ordinance was approved during a meeting of the Advisory Council, chaired by Chief Adviser Muhammad Yunus, at the Chief Adviser’s Office. Speaking at a press briefing after the meeting, Chief Adviser’s Press Secretary Shafiqul Alam stated, “This new ordinance will serve as a critical step towards ensuring financial security and the protection of depositors in Bangladesh.”

One of the major provisions in the ordinance is a significant increase in the insured deposit amount. Under the previous Bank Deposit Insurance Act, 2000, the maximum insured amount was Tk 100,000 (roughly £800). However, under the new law, this cap has been doubled to Tk 200,000 (approximately £1,600), which will benefit around 93% of depositors across the nation.

According to Alam, the ordinance comprises six chapters and 33 sections, and one of its key features is the establishment of two separate funds: the Bank Company Deposit Protection Fund and the Finance Company Deposit Protection Fund. These funds will remain completely separate from each other, and no borrowing or lending will occur between them.

Key Features of the New Ordinance:

• New Premium Requirement: Newly licensed banks and financial institutions must deposit their initial premiums within 30 days of being licensed.

• Membership Inclusion Deadline: All new and existing financial institutions must join the Deposit Protection Fund by 31 July 2028.

• Minimum Premium Rate: A minimum premium rate of 0.50% of capital will apply, or a rate determined by the Trustee Board.

• Investment Strategy: The ordinance stresses the need for safe investments, diversification, and liquidity management for the fund.

In addition to this, the maximum insured amount per depositor will now be Tk 200,000 (approximately £1,600), and the Trustee Board will have the authority to review this amount every three years.

Furthermore, the settlement period for claims on insured deposits has been dramatically reduced from 180 working days to just 17 working days, making the claims process far more efficient.

With the introduction of this law, the government aims to ensure economic security, boost public confidence, and strengthen the banking sector in Bangladesh, creating a more robust financial system that will benefit both consumers and institutions alike.

Table of Key Data from the Ordinance: