The Finance Company Act 2023 is the principal statute. It replaced the Financial Institutions Act 1993 and uses the term finance company for what the market still often calls an NBFI. Bangladesh Bank licenses and supervises finance companies under the Act and issues regulations, circulars and guidelines that fill in the detail on capital, governance, products and reporting. Company law, foreign exchange law, anti-money laundering law and, for listed companies, securities regulation also apply. Because Bangladesh Bank updates its circulars frequently, we check the current instruments on every NBFI licensing matter rather than relying on older practice notes.

The regulator focuses on the sponsors and the plan. It wants to see sponsors and directors with clean credit and regulatory records, a verifiable and lawful source of capital, a realistic business plan with clear target segments and funding sources, and governance that can resist related party abuse. Risk management, internal control, IT systems and AML frameworks must be credible from day one. Bangladesh Bank also considers whether a new licence serves the sector at all. We help clients present each element clearly, with evidence, and test the application against the issues that have caused finance companies to fail.

Sometimes, but not automatically. Acquiring an existing finance company avoids the uncertainty of a new NBFI licensing process, yet the acquirer still needs Bangladesh Bank approval for the change in shareholding and board, and inherits the target's loan book, deposits, litigation and regulatory history. Some available targets are available precisely because they are in difficulty. Thorough legal and financial due diligence, protective transaction terms and a credible plan for the regulator are essential. We compare both routes with the client, including timing, capital, approval risk and the cost of remediating any inherited problems, before a decision is taken.

A finance company can accept term deposits within the limits Bangladesh Bank sets, but it cannot accept demand deposits or offer cheque facilities in the way a bank does. Minimum tenors, deposit product features and liquidity requirements are set by regulation and have changed over time. Deposit-taking is precisely the area where weak finance companies have caused the greatest harm, so supervisors examine it closely. We review product terms, marketing materials and treasury policies for compliance and help boards understand where NBFI licensing conditions and deposit regulation limit what the institution can offer its customers.

Foreign investment in finance companies is possible but closely controlled. Bangladesh Bank must approve the foreign sponsor as part of NBFI licensing or a change of control, and the investment must comply with foreign exchange rules on inward remittance, share issuance and later repatriation of dividends and sale proceeds. Since 23 August 2026, investment promotion functions formerly carried out by BIDA sit with Invest Bangladesh, which may be relevant to registration and facilitation. We advise foreign sponsors on legal structure, approvals, shareholder protections and the documents their home regulators or investment committees will expect to see.

They include maintaining minimum capital and capital adequacy, classifying and provisioning loans in line with Bangladesh Bank rules, observing single borrower and large exposure limits, managing liquidity, reporting to the Credit Information Bureau, and submitting periodic returns. Boards must follow corporate governance guidelines covering board size, independent directors, committees and related party transactions. AML and CFT obligations run alongside these, supervised by the BFIU. Listed finance companies also report to the BSEC and the Dhaka and Chittagong stock exchanges. We build compliance calendars and board reporting packs so that NBFI licensing conditions remain satisfied over the life of the licence.

Bangladesh Bank has a range of NBFI licensing and supervisory tools, from directions and penalties to removing directors or senior managers, appointing observers or administrators, restricting business and, in serious cases, steps towards restructuring, merger or winding up. The approach depends on the facts and the regulator's assessment of risk to depositors and the system. Directors can face personal consequences, and related criminal or Anti-Corruption Commission proceedings may follow where funds were misappropriated. We advise boards, shareholders and individual directors on their position, prepare responses and corrective plans, and represent clients in any related court proceedings or appeals.

Finance companies can generally use the Artha Rin Adalat Ain 2003, the specialised money loan court regime, to recover loans from defaulting borrowers, alongside enforcement of mortgages, guarantees and lease rights. The Commercial Courts Act 2026 and the mandatory pre-case mediation rules being rolled out under the Legal Aid Services (Amendment) Act 2026 may also affect how some disputes proceed, depending on the claim and district. Recovery strategy needs to be consistent with loan classification and write-off rules. We coordinate the regulatory side of NBFI licensing compliance with our litigation team so recovery decisions do not create new supervisory issues.