The decision follows weeks of uncertainty, during which the Bangladesh Cricket Board (BCB) repeatedly insisted it would not play its scheduled matches in India, citing safety concerns following soured political relations between the neighbours.
Bangladesh had asked the ICC to move their games to the tournament co-hosts, Sri Lanka, instead, but the governing body rejected the demand, dismissing any security threat to the team.
Scotland, the highest-ranked non-qualifier, are now set to take Bangladesh's place in Group C, which features England, Italy, Nepal and West Indies, the BBC reported.
Reuters has contacted the ICC, BCB and Cricket Scotland for comment.
Protests near Bangladesh high commission
Last month, hundreds of people protested near Bangladesh's High Commission in New Delhi after Hindu factory worker Dipu Chandra Das was beaten and set on fire in Bangladesh's Mymensingh district by a crowd that accused him of making derogatory remarks about Prophet Muhammad.
A total of 12 people were arrested in connection with his death.
The incident worsened relations between India and its neighbour, with ties already strained after Bangladesh's former Prime Minister Sheikh Hasina fled to New Delhi following protests against her.
Political tensions have spilled into cricket.
Bangladesh bowler Mustafizur Rahman was dropped from this year's Indian Premier League despite signing with its Kolkata franchise. Bangladesh responded by banning IPL broadcasts in the country and demanding to play World Cup matches in Sri Lanka.
The standoff mirrors previous tensions in South Asian cricket.
For the Champions Trophy last year, the Indian cricket board (BCCI) stuck to its policy of not touring Pakistan because of the strained political ties between the bitter neighbours, who play each other only in ICC events.
Like for the 2023 Asia Cup in Pakistan, a 'hybrid model' was agreed on under which India were allowed to play their Champions Trophy matches in Dubai to salvage the tournament.
Under the agreement running until 2027, Pakistan will play in a neutral venue for any ICC event, including the T20 World Cup, where they are scheduled to play their matches in Sri Lanka.
The 20-team World Cup is set to begin on February 7.