WB urges BB to coordinate, expedite IT components execution

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FE Report
The World Bank (WB) has urged the central bank to coordinate and speed up implementation of the information technology (IT) components and to formulate a comprehensive project plan that identifies all the dependencies.
"The current global financial crisis has underscored not only the importance of a sound legal and regulatory framework, but also the need to have legal rules for cross-border insolvency and crisis management," the WB said in an information note Sunday.
Bangladesh Bank (BB) has taken measures to complete its automation process through implementation of the IT-related components within the stipulated timeframe, officials said.
"We're now working to implement the ongoing Central Bank Strengthening Project (CBSP) along with IT components by December 31, 2011," a BB executive director told the FE.
He also said there is no alternative but to implement the automated system in the central bank to bring dynamism in its overall activities.
The implementation of the WB-funded four-year project started in 2003. Being unable to complete the major components of the project on scheduled timeframe, the BB had earlier sought two years' extension time from the WB, which is providing US$ 37 million, out of the total project cost of US$ 46.13 million.
But the pace of implementation has been slow even during the extended time, making the central bank, to some extent, digitally handicapped.
The WB is supporting the government initiative through CBSP so that the BB can play its role effectively as the country's monetary authority, bank regulator and supervisor, the WB information note said. The Financial Sector Assessment Programme (FSAP) findings show that the Bangladesh Bank Order (BBO) and Banking Companies Act (BCA) do not have adequate provision to cope with the changing global financial situation.
"There is thus an urgent need to improve the provisions of BBO and BCA," the WB said, adding that the BB needs to ensure that it has legal power to own and supervise payment systems including the automated clearing house and securities depository.
The FSAP, a joint International Monetary Fund (IMF) and WB effort introduced in May 1999, aims to increase the effectiveness and promote soundness of the financial systems in the member countries.
"There is a need to strengthen the country's regulatory and supervisory framework through development of the crisis management and liquidity support framework," the WB recommended.
The WB note also said the crisis management framework of the central bank needs to include insolvency and creditors rights assessment for the corporate sector.