The country’s banking sector is lagging far behind that of the neighbouring countries in implementing the Basel III capital rules that are due to come into full force in 2019.
Bangladesh Bank (BB) adopted the Basel Accord first in 1996 and now Bangladeshi banks are following the third phase of the guideline from January 2015 to January 2019.
Switzerland-based Basel Committee on Bank Supervision (BCBC) introduced the first edition of Basel Accord in 1988 which indicates supervisory guidelines that regulator authorities impose on both wholesale and retail banks.
According to a study report, prepared by Bangladesh Institute of Bank Management (BIBM), Bangladeshi banks maintained 10.8 percent capital adequacy ratio (CAR) by the end of 2016, the lowest in the region. In South Asia, Pakistan maintained the highest 16.2 percent CAR followed by Sri lanka 14.3 percent while India scored 13.3 percent on their way to achieve the third phase of Basel Accord by January1, 2019.
Bangladesh Institute of Bank Management (BIBM) on Thursday unveiled a report on the latest status of commercials banks on implementation of Basel Accord in the country. The survey report also revealed that the central bank submitted the previous edition of Basel Accord in 2010 despite the instability in global economy during 2007-09.
BIBM Prof Nelah Ahmed presented the keynote paper titled ‘Impact of Adopting Basel Accord in Banking Sector in Bangladesh’ at a BIBM seminar held at its office at Mirpur in Dhaka.
According to the BIBM survey, among 57 banks, 50 banks have crossed the mark of Basel standard of 10 percent while 7 banks fallen short of target. Some 15 banks have performed well by crossing 16 per cent mark by end of last year.
The study, however, identified the state-owned commercial banks’ performance worsening as the collective score of banks is 5.86 pc, almost half of the Basel framework of 10.
Addressing the seminar as chief guest, BB Deputy Governor Abu Hena Mohammad Razee Hassan said that banks are implementing the global standard of Basel framework and most of the banks’ capitals are increases. The resilience of banks becomes larger which means the guideline makes banks more absorbent. BB deputy governor also expressed his desired that all banks will be able to submit their reports with good performance in third phase of Basel Accord by 2019 January.
Earlier in the seminar, BIBM Prof Shah Mohammad Ahsan Habib presented a research paper on risks of the banks during the disaster. Meghna Bank Managing Director Mohammed Nurul Amin said, “Our banks have enough capital liquidity although some state-owned banks experienced capital shortfalls. We are very hopeful to complete the target by end of next year as we proved in 2010 when the global economy was instable.”
Dhaka University Finance department Prof Mahmud Osman, Pubali Bank former Managing Director Helal Ahmed Chowdhury, Bangladesh Development Bank Managing Director Manjur Ahmed, BIBM Director Prashanta Kumar Banerjee also addressed the seminar while BIBM Director General Prof Toufic Ahmad Choudhury chaired over the session.