Banking sector needs services of techno-human resources
FE Report | Thursday, 10 July 2008
Bangladesh Bank (BB) Governor Dr Salehuddin Ahmed Wednesday stressed the need for engaging the services of techno-human resources in banking sector to combat multiple risks facing the financial sector.
He said application of high tech information technology, complex business transactions, derivatives and various swaps has been significantly increasing the risks in the banking sector.
"In order to address those and similar innovative transactions, the banking community needs the services of techno-human resources," BB Governor added.
He was addressing a seminar on International Financial Reporting Standard-7(IFRS-7) as chief guest organised by the Institute of Chartered Accountants of Bangladesh (ICAB) at its auditorium in the city.
The BB Governor said international convergence of capital standard is required for strengthening of international banking system and to ensure a level playing field.
He said Bangladesh Bank is aiming to adopt BASEL II and added: "One important aim of Basel 11 initiatives is international convergence of capital standard. Capital is very important for banks as it is a business not on money of the people. Capital is a cushion against their business loss, it promotes public confidence and measures soundness and stability."
Mr Salehuddin said like in many developing countries, implementation of Basel II is a challenging issue for the banking sector in Bangladesh as well.
"Smooth transition to Basel II requires implementation of Basel Core Principles (BCPs) and the introduction of related risk management practices. Since October 2003, the BB has introduced risk management practices in the banking sector focusing on five core risk areas such as credit risk, asset and liability/ balance sheet risk, foreign exchange risk, internal control and compliance risk and money laundering risk," he added.
He however said the central bank has formed two types of committees for implementing Basel Core principles.
Dr Salehuddin said risk management and its disclosures are very important in the current context and it is widely discussed in the international banking arena.
"This is mainly due to the simple fact that the banks are doing business with depositors' money, which is repayable 100 per cent. Fund is invested in risky investments," he added.
He said in order to judge the financial health of the bank, it is necessary to see whether they are investing the money cautiously or not.
"All stakeholders including regulators and depositors are interested to know how a bank is performing," he added.
He said a number measures have been taken and are in the process of implementation to bring about quality in accounting and auditing practices in the country adding" ICAB has an important role as the body of the professional accountants."
The BB Chief also said the country's banking sector has achieved a robust growth over the last few decades and the preparation of financial statements in compliance to the relevant accounting standards has become all the more important than-ever.
"In this context the role of accounting standards and disclosure under IFRS 7 in the preparation of Financial Statements of Banks is relatively more important now than ever," he added
Dr Salehuddin said in the context of the present global scenario in respect of the convergence of the accounting and auditing standards the role of' IFRS 7 in the disclosure and preparation of financial statements of' banks is of paramount importance.
"It is, anticipated that by the year 2012 only one set of' standards will be used by the global capital market stakeholders, accountants, auditors and other users," he added.
The International Accounting Standard Board (IASB) has issued international financial reporting standard 7 (IFRS7) superseding the IAS -30. The IFRS 7 was issued on August 18 in 2005 and its effective period was earmarked from the beginning or after January 2007.
This IFRS is relating to 'financial instruments: disclosures' combines the disclosures requirements arising from IAS 30 and IAS 32 in a completely new standard.
The objective of IFRS is to provide disclosures that enable users to evaluate the significance of financial instruments relating to an entity's financial position and performance, and the nature and extent of risks appearing from the financial instruments to which an entity is exposed, and how those risks have been managed or are to be managed.
BB Governor said to fulfil these objectives, IFRS 7 requires both quantitative and qualitative disclosures.
He also said IFRS is not only applicable for the banks, this is applicable for all entities dealing with financial instruments.
He also said a true financial picture of a corporate entity, especially the banks, will go a long way to develop our capital market (stock market etc.).
Md Shadat Hossain, member council of the ICAB presented the keynote speech in the seminar and ICAB president Md Humayun Kabir gave the welcome address at the seminar
He said application of high tech information technology, complex business transactions, derivatives and various swaps has been significantly increasing the risks in the banking sector.
"In order to address those and similar innovative transactions, the banking community needs the services of techno-human resources," BB Governor added.
He was addressing a seminar on International Financial Reporting Standard-7(IFRS-7) as chief guest organised by the Institute of Chartered Accountants of Bangladesh (ICAB) at its auditorium in the city.
The BB Governor said international convergence of capital standard is required for strengthening of international banking system and to ensure a level playing field.
He said Bangladesh Bank is aiming to adopt BASEL II and added: "One important aim of Basel 11 initiatives is international convergence of capital standard. Capital is very important for banks as it is a business not on money of the people. Capital is a cushion against their business loss, it promotes public confidence and measures soundness and stability."
Mr Salehuddin said like in many developing countries, implementation of Basel II is a challenging issue for the banking sector in Bangladesh as well.
"Smooth transition to Basel II requires implementation of Basel Core Principles (BCPs) and the introduction of related risk management practices. Since October 2003, the BB has introduced risk management practices in the banking sector focusing on five core risk areas such as credit risk, asset and liability/ balance sheet risk, foreign exchange risk, internal control and compliance risk and money laundering risk," he added.
He however said the central bank has formed two types of committees for implementing Basel Core principles.
Dr Salehuddin said risk management and its disclosures are very important in the current context and it is widely discussed in the international banking arena.
"This is mainly due to the simple fact that the banks are doing business with depositors' money, which is repayable 100 per cent. Fund is invested in risky investments," he added.
He said in order to judge the financial health of the bank, it is necessary to see whether they are investing the money cautiously or not.
"All stakeholders including regulators and depositors are interested to know how a bank is performing," he added.
He said a number measures have been taken and are in the process of implementation to bring about quality in accounting and auditing practices in the country adding" ICAB has an important role as the body of the professional accountants."
The BB Chief also said the country's banking sector has achieved a robust growth over the last few decades and the preparation of financial statements in compliance to the relevant accounting standards has become all the more important than-ever.
"In this context the role of accounting standards and disclosure under IFRS 7 in the preparation of Financial Statements of Banks is relatively more important now than ever," he added
Dr Salehuddin said in the context of the present global scenario in respect of the convergence of the accounting and auditing standards the role of' IFRS 7 in the disclosure and preparation of financial statements of' banks is of paramount importance.
"It is, anticipated that by the year 2012 only one set of' standards will be used by the global capital market stakeholders, accountants, auditors and other users," he added.
The International Accounting Standard Board (IASB) has issued international financial reporting standard 7 (IFRS7) superseding the IAS -30. The IFRS 7 was issued on August 18 in 2005 and its effective period was earmarked from the beginning or after January 2007.
This IFRS is relating to 'financial instruments: disclosures' combines the disclosures requirements arising from IAS 30 and IAS 32 in a completely new standard.
The objective of IFRS is to provide disclosures that enable users to evaluate the significance of financial instruments relating to an entity's financial position and performance, and the nature and extent of risks appearing from the financial instruments to which an entity is exposed, and how those risks have been managed or are to be managed.
BB Governor said to fulfil these objectives, IFRS 7 requires both quantitative and qualitative disclosures.
He also said IFRS is not only applicable for the banks, this is applicable for all entities dealing with financial instruments.
He also said a true financial picture of a corporate entity, especially the banks, will go a long way to develop our capital market (stock market etc.).
Md Shadat Hossain, member council of the ICAB presented the keynote speech in the seminar and ICAB president Md Humayun Kabir gave the welcome address at the seminar