Anybody would face Taka 0.5 million fine or two years imprisonment or both for provoking any mental patient to commit crime.
The punishment was proposed in the draft of National Mental Health Act-2017.
The draft was approved at the Cabinet meeting at the Prime Minister's Office (PMO) in Dhaka on Wednesday.
Prime Minister Sheikh Hasina presided over the meeting.
The draft also proposed stringent punishment for setting up and operating mental hospital without license.
Briefing reporters after the meeting, Cabinet Secretary Md. Shafiul Alam said the new law will replace the 105-year old "The Lunacy Act 1912".
According to the draft law, Shafiul Alam said, the law clearly defined who would be considered as mental patient.
"A person suffering from mental disabilities, or is not able to realise own potentiality, or a drug addicted person not able to run his or her normal livelihood, would be defined as mental patient," the draft said.
The government would constitute a directorate for carrying out mental health related activities coherently in the country, the draft said.
Besides, a three-member review and monitoring committee will be formed in every district under Deputy Commissioner where Civil Surgeon and Deputy Director of the Social Services of the district will act as members.
Shafiul Alam said, guardian of the patients can apply before the committee to get support for the treatment of mental patients. The review committee would take step within a month of receiving such application.
BSS says, the law also has provisions for setting up and operating hospitals and institutes under private sector for the treatment of the mental patients and providing quality services in this field, the cabinet secretary said.
Shafiul Alam said running of a mental hospital without any license would be a punishable offence for which an operator may face Taka 0.5 million penalty or a three-year imprisonment or both.
The meeting also approved the draft of an Agreement on Trade, Promotion and Economic Cooperation to be signed between Bangladesh and the Czech Republic.