BD Post Report
Capital adequacy is the primary indicator of the banks’ financial fitness and stability. Banks are required to keep at least 11.81 percent capital adequacy ratio (CAR) which determines the adequacy of banks’ capital keeping in their risk exposures.
As of June, banks’ CAR stood at 10 percent, said ICC Bangladesh President Mahbubur Rahman at the closing ceremony of ICC workshop on Importance of Compliance in Trade Finance at a city hotel on Sunday.
Non-Performing Loans (NPL) is one of the issues that impacts capital adequacy of the industry specially the eight state-owned commercial and specialized banks. For decades, state-owned banks have been the prime leader to the large corporate borrowers particularly in the industrial sector of the economy, mentioned Rahman.
Since 2009, the government has injected Tk,14,505 crore into the state-owned banks but they are yet to show any sign of strengthening their capital base. On top of this, of the total loan banking sector loan amounted to Tk 7,527.30 billion, of which Tk. 803.07 billion or 10.67 per cent was bad debt. And if restructured or rescheduled loans were included, NPL in the banking sector goes up to 17 percent of total outstanding loans, he added.
To tackle the sector’s deep-rooted problems of corruption and poor risk practices further efforts are needed, he said. Bangladesh Bank must ensure following of regulatory measures by the commercial banks, he urged. ICC Bangladesh Banking Commission Chairman & CEO, Bangladesh International Arbitration Centre (BIAC) Muhammad A. (Rumee) Ali, in his speech said the non-compliance in trade financing risk is having an impact in Bangladesh’s overall risk rating. In fact, in Bangladesh it raises the cost of accessing trade finance product in international market. Therefore training like this must increase the efficiency of the concerned bank officials, he added.
Helal Ahmed Chowdhury, Supernumerary Professor, BIBM & former managing director, Pubali Bank Ltd opined that all the banks including the Bangladesh Bank should have appropriate yearly allocations for training their officials so that they can attend such workshop/training of international standard. He said risk management and compliance are more important in the financial industry than ever before. For us, they are also part of building genuine relationships with our customers.
ICC Bangladesh Secretary General Ataur Rahman also spoke on the occasion. Sudhakar Sanjeevi, Senior Officer, Internal Control Department, Rakbank, UAE conducted the workshop.
A total of 103 participants attended the workshop from 30 banks.
BD Post Report