Banking & Finance Law

Banking and Finance Law in Bangladesh is the legal framework that governs the activities of banks, financial institutions, lenders, borrowers, and all forms of financial transactions. It encompasses statutory provisions relating to loan agreements, secured transactions, mortgages, syndicated financing, debt recovery, and financial regulation. Core legislation includes the Bank Companies Act, 1991, Artha Rin Adalat Ain, 2003, Negotiable Instruments Act, 1881, the Registration Act, 1908, and a wide range of circulars issued by Bangladesh Bank regulating loan classification, refinancing, foreign exchange, and credit risk management. These laws collectively ensure transparency, financial discipline, and legal protection in commercial lending and borrowing. In Bangladesh, the administration and regulation of the banking and finance sector primarily fall under the Ministry of Finance, which supervises Bangladesh Bank and formulates national financial policy. The Ministry of Law, Justice and Parliamentary Affairs is responsible for legislative oversight, drafting of laws, court administration, and legal governance of banking-related litigation. Together, these ministries ensure that financial regulations align with national economic objectives while maintaining enforceable legal standards for lenders and borrowers. A significant part of Banking and Finance Law relates to mortgage transactions, where immovable property is pledged as security for loans. Mortgages must be properly drafted, stamped, and registered under the Registration Act, 1908, to be legally enforceable. Financial institutions often rely on mortgages, hypothecation, and charges as primary security for commercial or personal finance. Upon repayment, borrowers have the right to redemption, which involves proper discharge of registered mortgage documents. Many transactions also require properly executed Power of Attorney (PoA) instruments, enabling banks to act on behalf of borrowers in registering or enforcing securities. Debt recovery and banking disputes are adjudicated before the Artha Rin Adalat (Money Loan Courts) under Artha Rin Adalat Ain, 2003. These specialized courts deal exclusively with loan recovery suits filed by banks and financial institutions. The Artha Rin Adalat has the power to attach and auction mortgaged properties, enforce securities, and issue execution decrees for outstanding loan amounts. Appeals and judicial reviews from Artha Rin matters lie before the High Court Division of the Supreme Court of Bangladesh, ensuring judicial oversight. Additionally, cheque dishonour arising from loan defaults is prosecuted under the Negotiable Instruments Act, often before Magistrate Courts, with further appeals to higher courts. Bangladesh's financial sector also engages in syndicated lending, where multiple banks jointly finance large projects. These arrangements require careful drafting of syndication agreements, inter-creditor agreements, security sharing frameworks, and compliance with Bangladesh Bank's prudential guidelines. Syndicated finance typically involves complex securities—such as equitable mortgages, corporate guarantees, project charges, and assignment of receivables—requiring accurate legal documentation and registration.