Dhaka, Bangladesh (BBN) – Bangladesh has started preparations to implement the Basel-III framework for bank companies from 2014 in line with the global standard, officials said.
“The central bank has already started the ground work to implement the Basel-III for bank companies by 2014,” Executive Director of the Bangladesh Bank (BB), the country’s central bank said, adding that liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) are pros and cons of the Basel-III framework.
The BB is providing training to the commercial bankers about the LCR and NSFR, he added.
The LCR is a new liquidity standard introduced by the Basel Committee to ensure that a bank maintain an adequate level of unencumbered, high-quality liquid assets that can be converted into cash to meet its liquidity needs for 30 calendar days.
The NSFR is a new standard introduced by the Basel Committee aiming to limit over-reliance on short-term wholesale funding assessment of liquidity risk across all on and off-balance sheet items.
As part of the preparations, the central bank has been organizing a three-day-long training program on liquidity risk management tools since Sunday. It will continue on Tuesday.
“The BB is organizing the training program aiming to improve efficiency of the commercial bank officials about measuring, identifying and controlling of liquidity risks in line with the existing Basel-II and Basel-III frameworks,” Mr Sur noted.
The Basel-III is a new global regulatory standard on bank capital adequacy and liquidity agreed upon by the members of the Basel Committee on Banking Supervision.
The third of the Basel Accords was developed in response to the deficiencies in financial regulation revealed by the late-2000s financial crisis.
The Basel-III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage.
Bangladesh is now implementing the Basel-II accord to consolidate capital base of the banks in line with the international standard.
It has been prepared on the basis of three pillars: minimum capital requirement, supervisory review process and market discipline.
Three types of risks – credit risk, market risk and operational risk – have to be considered under the minimum capital requirement.
BBN/SSR/AD-20Dec11-7:16 am (BST)