Bank’s net asset will be decreased by 40pc if IFRS followed

Staff Reporter :
If the International Financial Reporting Standard (IFRS) properly followed in Bangladesh, banks’ net asset will be decreased by 40 per cent because of defaulted loans are being dragged on over the years, said the chairman of Financial Reporting Council (FRC), Dr. Md Hamid Ullah Bhuiyan.
As most banks in the country don’t follow the International Financial Reporting Standards (IFRS) while following the central bank’s directive, the actual picture of the financial health of the banks remains covert.
“We have been requesting the central bank to make it mandatory for banks to follow the IFRS. But nothing positive has been done yet. Implementing IFRS-9 will reflect the correct figure of the bank’s net asset and we expect all companies to implement the IFRS in full scale”.
While addressing as chief guest Dr. Hamid said this, at a press conference organized by Capital Market Journalists Forum (CMJF), in the capital’s CMJF auditorium on March 20.
The FRC is an independent oversight body to bring trust, creditworthiness, transparency and accountability in the audited reports and accounting as financial reporting of the publicly listed companies with the purpose to regulate the financial reporting process followed by the public interest entities.
With very little possibility to get back the fund, the classified loans are being carrying forwarded years after years. It is being rescheduled paying 2 percent only. But with this 2 percent interest income or principal does not return to the bank.
But regularly these types of loans are rescheduled. This is being done so that defaulters can take loans from other banks, chairman of FRC identified.
Regarding capital market, Dr. Hamid said, using unreal financial statements, companies manipulate the capital market.
“Many weak companies go through initial public offerings or IPOs. Most of the time, there are three consecutive years of increasing profits prior to the IPO. But after the IPO, profits fell consistently,” he revealed.
Company having the annual revenue of Tk 50 crore or more, will be considered a public interest company. There are about 3,400 such companies in the country. Apart from this, there are 2,500 micro-credit institutions. These all will also come under FRC, he added.
The press conference was presided by Ziaur Rahman, the President of CMJF while Secretary of the same forum Abu Ali moderated the program.