Quality credit rating a must in maintaining capital adequacy
Rising NPL a serious threat to the financial sector
Our Correspondent | Tuesday, 29 January 2019
CHATTOGRAM, Jan 28: A senior official of Bangladesh Bank (BB) has called upon the bankers to strengthen capital adequacy of banks by improving quality of bank portfolio and risk management standard through credit rating from External Assessment Institutions (ECAI) approved by the central bank.
Executive Director of Bangladesh Bank Chattogram region SM Rabiul Hassan said this while addressing a bankers' gathering in Chattogram as the chief guest on Sunday night.
CRISL, the leading credit rating agency of the country, organised the meet.
Rabiul Hassan said there has been a phenomenal growth of deposits and advances in banks over the last few years. But the issue of non-performing loan (NPL) poses a serious threat to the financial sector.
He urged the bankers to deal seriously with the NPL issue so that this could in no way undermine the strength of the real sector growth as well as the financial sector because bankers sit in the first line of the defense.
Muzaffar Ahmed, president & CEO of CRISL, presented the keynote paper on "Bank's Capital Adequacy through Credit Rating under Current Context" at the event.
In the presentation he explained in details the importance of quality credit rating in the context of falling capital adequacy ratios in banks.
Mr Ahmed emphasized that without portfolios of high quality the provisioning requirement will dilute the major portion of profitability. He urged the bankers to stress on quality investment instead of working on business target on the branches.
He further emphasized that the bankers' efficiency should not be based on the annual branch profitability. Rather it should be based on how much profit is earned by using less capital. He responded to different queries of the bankers on various issues.
M Mohiuddin, chairman of the CRISL, Md Asaduzzaman Khan, executive director and Sarwat Amina, executive vice president, among others, spoke on the occasion.
More than 120 bankers of different banks in Chattogram attended the discussion session.
Established in 1996, CRISL is the pioneer in credit rating practices in the country, and provides training and conducts researches alongside rating services.