Dhaka, Bangladesh (BBN)- Non-banking financial institutions (NBFIs) will come under the Basel-II accord from January 2012 aiming at consolidating capital base of the financial institutions, officials said on Thursday.
“We’ve taken the move to strengthen financial base of the NBFIs and ensure management efficiency in the long run through maintaining the global practice,” a senior official at the Bangladesh Bank (BB), the country’s central bank, told BBN in Dhaka.
The BB official also said the NBFIs would calculate minimum capital requirement under the Basel-II on test basis from January 1, 2011 using the draft guideline.
“Now it has become obvious for the financial institutions to implement the advices as prescribed in the Basel accord, which will act as a guide to develop a risk-adjusted asset and liability portfolio and capital structure,” the central bank said in a circular.
The BB circular also said risk is the vital issue that the financial institutions need to address properly to ensure sustainable growth in the financial market.
It has also prepared an action plan for implementation of the Basel-II framework properly.
The Basel-II will be implemented with three specific approaches -standardized approach, standardized rule-based approach and basic indicator approach – as initial steps
The standardized approach will be used for calculating risk-weighted amount against credit risk supported by external credit assessment institutions.
The standardized rule-based approach will measure market risk and the basic indicator approach for the operational risk.
Under the action plan, one-to-one meeting with all NBFIs will be held from April to August next year for analyzing their feedback to finalise the guideline.
Currently, 29 NBFIs are running their business across Bangladesh.
BBN/SS/SI/AD-06Aug10-12:50 am (BST)