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For all latest news, follow The Daily Star's Google News channel, Fiscal and monetary authority can motivate banks for utilising these innovative options for the
For all latest news, follow The Daily Star's Google News channel, Fiscal and monetary authority can motivate banks for utilising these innovative options for the enhancement of capital through giving necessary policy supports. It is well accepted that the government may not inject capital to SCBs for unlimited period from the taxpayers' money. Banks, therefore, need to enhance their internal capacity to increase necessary amount of capital for covering risk exposure they undertake. In case of liquidity framework, Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) are actually framed as liquidity performance parameters. Through these ratios, banks can visualise well ahead of incurring liquidity problems and take necessary steps to address this problem without the help of the central bank. It is anticipated that banks of Bangladesh will not face major challenges in maintaining both ratios. Bangladesh Bank has already observed ability of banks in maintaining ratios on a trial basis almost for one year and found all banks with a few exceptions are capable to maintain these parameters. A few other factors like technology, skills development and governance are being considered as challenges in implementing Basel III. The revised approaches for using risk-weighted assets will be dependent on a number of computational requirements. Banks may need to upgrade their systems and processes to be able to compute an amount of risk-weighted assets as well as capital requirements based on revised guidelines. Apart from technological upgradation, higher specialised skills development in the supervised banks and within Bangladesh Bank is a challenge to ensure proper implementation of Basel III. Top management and human resource development policy of banks, thus, need to get tuned with this requirement. The central bank also needs to hone skills in regulating and supervising under the new system. The Basel Committee on Banking Supervision added a separate principle on corporate governance in its core principles in 2012. It is welcomed in Bangladesh in the sense that while strong capital gives financial strength, it cannot assure good performance unless good corporate governance exists. We need to fix and ensure this issue for the interest of having a strong financial sector like global community. We believe that banks of Bangladesh have the capacity to address these challenges for the full implementation of Basel III. If any lacking does exist, it is expected that banks will take required initiatives to bridge the gap
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