BB to help banks comply with Basel-II framework

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Siddique Islam
The Banglaseh Bank (BB) has started reviewing the guidelines on risk-based capital adequacy for banks aiming at helping all commercial banks comply with the Basel-II framework.
"We're now reviewing the guidelines considering the bankers' recommendations on different issues including the percentage of minimum capital required of the banks," a senior official of the Bangladesh Bank told the FE Monday.
He also said the central bank earlier discussed the issues with the banks separately to know their actual position on adoption of Basel-II accord.
The central bank has taken the move against the backdrop of only 22 commercial banks being able to comply with the minimum capital required (MCR) under Basel-II framework out of 48 banks, the BB officials said.
The MCR has been set to 10 per cent with the risk-weighted assets of the banks or Tk 4.0 billion of total capital which is higher that would be treated as MCR of the banks under the Basel-II accord.
The Association of Bankers, Bangladesh (ABB) has recommended to the central bank to bring down the MCR to 9.0 per cent from the existing 10 per cent in terms of the risk-weighted assets of the banks.
The Basel-II accord came into force in Bangladesh from January 1 this year to consolidate capital base of the banks in line with the international standard.
Bangladesh is now following Basel-II for the banks' capital adequacy requirement. Risk-based capital ratio was 8.0 per cent when it was first adopted in 1996. Later in 2002, the ratio was increased to 9.0 per cent.