The Bangladesh Bank on Sunday decided to appoint an international consulting firm to conduct a detailed assessment of the crisis-hit banks in order to identify core issues causing problems and to undertake reforms.
BB鈥檚 Banking Sector Reform Taskforce issued regulations titled 鈥楽pecial Regulations of Bangladesh Bank, 2024鈥� regarding the matter on the day.
The Bangladesh Bank framed the regulation in line with the obligations set by the World Bank and the International Monetary Fund.
Officials said that the World Bank and IMF would select a consultancy firm from top global auditors, such as KPMG, Ernst & Young, or Deloitte, as the lenders will finance the review process.
The diagnostic assessment will focus on several critical areas, including the quality of assets, corporate governance practices, policy adherence, operational processes, and compliance with regulatory requirements.
This diagnostic approach is intended to provide a comprehensive understanding about the systemic weaknesses of the crisis-hit banks.
Bangladesh Bank highlighted that many banks are dealing with deteriorating asset quality, governance lapses, and violations of regulatory norms.
These issues have eroded public trust and affected the credibility of the banking system as a whole.
To address these challenges, the central bank decided to conduct a risk-based evaluation with the help of an independent and internationally recognised consulting firm, according to the regulations.
The regulations defined the consulting firm as one with significant expertise and experience in assessing banks outside its country of registration.
The assessment may be carried out in phases, with detailed terms of reference (ToR) agreed upon for each stage.
Bangladesh Bank will assign a dedicated department to coordinate the consulting firm鈥檚 activities with the scheduled banks involved in the assessment.
Upon completion, the consulting firm will submit its findings to the governor, who will forward the report to the central bank鈥檚 board for further action in accordance with applicable laws.
The central bank noted that the involvement of an international firm ensures the credibility and impartiality of the assessment, making it acceptable to both domestic stakeholders and international forums.
The findings from this initiative are expected to provide a roadmap for necessary reforms, contributing to the restoration of public confidence and the long-term stability in the banking sector.
