Bangladesh Bank’s fresh guidelines for banks risk management

Staff Correspondent | Published: 00:05, Oct 10,2018 | Updated: 00:50, Oct 10,2018


Bangladesh Bank on Tuesday issued risk management guidelines afresh scrapping earlier one against the backdrop of the growing non-performing loans and increasing risk in the country’s banking sector.
The central bank’s off-sight supervision department issued the circular with a view to strengthen banks’ risk management system.
A BB circular issued in this regard on Monday said that the newly guideline would nullify the BB circulars which were issued in this regard on February 15, 2012 and September 9, 2015.
Each bank will have to prepare a comprehensive risk management guideline (CRMG) under the latest guidelines and considering its nature, size and complexities of business activities, said the BB circular adding that the new guidelines would come into effect immediately.
Banks will have to get approval on the CRMG from the board and must submit a copy of the CRMG to Bangladesh Bank, the BB guideline said.
The BB circular also instructed that the banks will have to review the guideline at least once a year for adapting with the changing environment.
Besides, banks must reconstruct its risk management organogram and appoint chief risk officer (CRO) as the head of risk management department (RMD) following the instructions of the revised risk management guidelines issued by BB.
For ensuring proper identification, measurement, timely treatment of risks and implementation of the said guideline, the banks are also instructed to submit a set of reports to the central bank as per the BB stipulated time.
Bank were asked to submit risk management reports for successive months of each quarter along with the minutes of monthly executive risk management committee (ERMC) meeting within the next month of the reporting quarter.
The BB circular also asked the banks to submit meeting minutes of board risk management committee within seven days of the meeting, board approved risk appetite statement (RAS) on yearly basis within first two months of the year, a soft copy of stress test report on half yearly basis along with CRMR, a review report of risk management policies and effectiveness of risk management functions with the approval of the board of directors by the end of second month following the end of each year.

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