Dhaka, Oct. 4 -- The government is preparing a new legal framework titled the 'Distressed Asset Management Act, 2026' to expedite the recovery of defaulted loans and manage long-stuck assets across banks and non-bank financial institutions.

Stakeholder feedback on the draft law has already been gathered by the Ministry of Finance.

Under the proposed legislation, specialized companies will be granted legal authority to seize and sell pledged or mortgaged assets if borrowers fail to clear their outstanding debts within the stipulated deadline.

The law will also allow licensed entities to purchase defaulted loans and distressed assets, restructure them, execute securitization, and, if necessary, take over the management and operational co...