Risk-Based Supervision: BB asks banks to get ready ahead of January roll-out
Business Desk :
The Bangladesh Bank (BB) plans to implement risk-based supervision (RBS) from January 2026 and has asked the country’s commercial banks to take necessary measures in this regard.
As part of the shift from the decades-old compliance-based inspections, the central bankers concerned held a meeting with the bank executives.
At a recent meeting chaired by Bangladesh Bank Deputy Governor Md Zakir Hossain Chowdhury, the Supervisory Policy and Coordination Department (SPCD) shared a clarification of last month’s preparation-related circular regarding RBS, media reports.
Chowdhury said they had called the meeting to know if the bank executives had any confusion or needed any clarification regarding RBS preparations.
“All banks, excluding the five Islamic ones facing merger, will come under RBS to restore discipline in the banking sector,” he said.
He said RBS, in contrast to the traditional compliance-based supervision, adopts a forward-looking and process-based approach for enabling early identification and mitigation of key risks.
It assumes a dynamic and flexible supervisory process, focusing on the assessment of inherent risks, the effectiveness of internal controls, and the overall risk governance within banks to determine their composite risk profiles and the level of supervisory intensity tailored to their unique risk profiles.
Seeking anonymity, a central banker who attended the meeting said they had earlier piloted RBS at around two dozen banks.
The piloting at other banks would be completed within the coming month, he said.
“I think we will be able to introduce RBS at banks from January next year,” he added.
On condition of not disclosing his identity, a senior bank executive hailed the central bank’s move, but said it would be difficult to implement RBS within the stipulated time at a number of banks lacking readiness.
“There are three things – forming the RBS coordination committee, doing the gap analysis, and preparing an action plan – that need to be done. These are simple and can be done in a month,” the experienced banker said.
According to the preparedness-related circular, the Bangladesh Bank will conduct targeted supervisory reviews to assess progress made by the banks against the submitted action plan in order to address the gap against supervisory expectations, and consider these efforts in future risk profiling and supervisory planning.
Banks are encouraged to treat the supervisory expectations as both a regulatory expectation and an institutional development opportunity.