Banks seek more time for gradual rise of capital
FE Report | Tuesday, 8 July 2008
The Bangladesh Association of Banks (BAB) sought Monday more time for gradual rise of capital to Tk 4.0 billion by a bank.
"We want a breathing time to implement such capital requirement. We're not saying we won't do it, but it will be difficult for us. We want to do it gradually within a few years," BAB Chairman Nazrul Islam Mazumder said while addressing an inaugural function of its Research and Training Centre (RTC) at a city hotel.
Bangladesh Bank (BB) Governor Salehuddin Ahmed formally inaugurated the centre, expressing the hope that the central bank would help improve efficiency of the country's financial sector.
The central bank earlier proposed to the government to increase total capital of a bank to Tk 4.0 billion as a preparation to implement the Basel-II framework.
Under the proposals, a bank will have to raise its total capital - paid-up and reserve - to Tk 4.0 billion from existing Tk 1.0 billion by December 31, 2009.
The BB earlier instructed the commercial banks for raising their total capital - paid-up and reserve - to Tk 2.0 billion from the existing Tk 1.0 billion in two phases by June 2009.
The banks will have to enhance the capital by 50 per cent by June 2008 and the balance by the end of June 2009, according to the instructions.
The central bank has already asked the banks to adopt the Basel-II rules properly from January 1, 2010.
The new Basel accord has been prepared on the basis of three pillars: minimum capital requirement, supervisory review process and market discipline.
The BB governor appreciated the country's financial sector that has done remarkably well despite global financial sector turmoil.
"There is no adverse impact of global turmoil on our financial sector and that's why the (country's) economy bounced back to achieve a 6.2 per cent gross domestic product (GDP) growth," the central bank chief noted.
The BB governor reminded the bankers of giving importance to five factors to prepare themselves for the challenges that emerged out of inflationary pressure globally as well as financial crisis in the developed world and recessionary tendency in the United States.
The factors are core banking principle, risk management, corporate governance, accounting standards and standard practices for disclosure, and strong supervision and internal control.
Among other, former Chairman of the BAB Kazi Akramuddin Ahmed, Vice-Chairman of the BAB Muhammad A (Rumee) Ali, BAB member AKM Nurul Fazal Bulbul, Chief Executive Officer of the City Bank Limited K Mahmood Sattar and Senior Financial Markets Specialist of the SouthAsia Enterprise Development Facility (SEDF) M Hehan Rashid also spoke on the occasion.
UNB adds: Bangladesh Bank Governor Salehuddin Ahmed on Monday said he would consider examining the bankers' plea against any pressure on the rise of capital to Tk 4.0 billion by June 2009.
"I'll look into it," he told reporters, after a function at a local hotel where BAB chairman urged the BB Governor to allow them to increase the capital gradually.
"We want a breathing time to implement such capital requirement. We're not saying we won't do it, but it will be difficult for us. We want to do it gradually within a few years," BAB Chairman Nazrul Islam Mazumder said while addressing an inaugural function of its Research and Training Centre (RTC) at a city hotel.
Bangladesh Bank (BB) Governor Salehuddin Ahmed formally inaugurated the centre, expressing the hope that the central bank would help improve efficiency of the country's financial sector.
The central bank earlier proposed to the government to increase total capital of a bank to Tk 4.0 billion as a preparation to implement the Basel-II framework.
Under the proposals, a bank will have to raise its total capital - paid-up and reserve - to Tk 4.0 billion from existing Tk 1.0 billion by December 31, 2009.
The BB earlier instructed the commercial banks for raising their total capital - paid-up and reserve - to Tk 2.0 billion from the existing Tk 1.0 billion in two phases by June 2009.
The banks will have to enhance the capital by 50 per cent by June 2008 and the balance by the end of June 2009, according to the instructions.
The central bank has already asked the banks to adopt the Basel-II rules properly from January 1, 2010.
The new Basel accord has been prepared on the basis of three pillars: minimum capital requirement, supervisory review process and market discipline.
The BB governor appreciated the country's financial sector that has done remarkably well despite global financial sector turmoil.
"There is no adverse impact of global turmoil on our financial sector and that's why the (country's) economy bounced back to achieve a 6.2 per cent gross domestic product (GDP) growth," the central bank chief noted.
The BB governor reminded the bankers of giving importance to five factors to prepare themselves for the challenges that emerged out of inflationary pressure globally as well as financial crisis in the developed world and recessionary tendency in the United States.
The factors are core banking principle, risk management, corporate governance, accounting standards and standard practices for disclosure, and strong supervision and internal control.
Among other, former Chairman of the BAB Kazi Akramuddin Ahmed, Vice-Chairman of the BAB Muhammad A (Rumee) Ali, BAB member AKM Nurul Fazal Bulbul, Chief Executive Officer of the City Bank Limited K Mahmood Sattar and Senior Financial Markets Specialist of the SouthAsia Enterprise Development Facility (SEDF) M Hehan Rashid also spoke on the occasion.
UNB adds: Bangladesh Bank Governor Salehuddin Ahmed on Monday said he would consider examining the bankers' plea against any pressure on the rise of capital to Tk 4.0 billion by June 2009.
"I'll look into it," he told reporters, after a function at a local hotel where BAB chairman urged the BB Governor to allow them to increase the capital gradually.