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    BB Moves To Bolster Nbfis

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    Mainul Razeeb
    The Bangladesh Bank has introduced the Basel II framework on a trial basis for non-bank financial institutions from January 1, 2011 in order to strengthen their capital base and minimize risks. The central bank drafted guidelines for applying the Basel Accord for Financial Institutions to NBFIs and will implement them fully starting in January 2012 after receiving feedback from the NBFIs. The Bangladesh Bank aims to boost the financial strength and management efficiency of NBFIs through the use of global best practices for risk management and capital requirements under the Basel II framework.

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    BB Moves To Bolster Nbfis

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    Mainul Razeeb
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    The Bangladesh Bank has introduced the Basel II framework on a trial basis for non-bank financial institutions from January 1, 2011 in order to strengthen their capital base and minimize risks. The central bank drafted guidelines for applying the Basel Accord for Financial Institutions to NBFIs and will implement them fully starting in January 2012 after receiving feedback from the NBFIs. The Bangladesh Bank aims to boost the financial strength and management efficiency of NBFIs through the use of global best practices for risk management and capital requirements under the Basel II framework.

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    The Bangladesh Bank has introduced the Basel II framework on a trial basis for non-bank financial institutions from January 1, 2011 in order to strengthen their capital base and minimize risks. The central bank drafted guidelines for applying the Basel Accord for Financial Institutions to NBFIs and will implement them fully starting in January 2012 after receiving feedback from the NBFIs. The Bangladesh Bank aims to boost the financial strength and management efficiency of NBFIs through the use of global best practices for risk management and capital requirements under the Basel II framework.

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    24 views1 page

    BB Moves To Bolster Nbfis

    Uploaded by

    Mainul Razeeb
    The Bangladesh Bank has introduced the Basel II framework on a trial basis for non-bank financial institutions from January 1, 2011 in order to strengthen their capital base and minimize risks. The central bank drafted guidelines for applying the Basel Accord for Financial Institutions to NBFIs and will implement them fully starting in January 2012 after receiving feedback from the NBFIs. The Bangladesh Bank aims to boost the financial strength and management efficiency of NBFIs through the use of global best practices for risk management and capital requirements under the Basel II framework.

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    of 1

    BB moves to bolster NBFIs

    Jan 3, 2011, by Hindustan Times

    Bangladesh, Jan. 3 -- Siddique Islam

    Non-banking financial institutions (NBFIs) have come under Basel-II framework on a test-run basis from January 1 this year as part
    of the central bank's move to consolidate their capital base and minimise inherent risk.

    The central bank has already introduced draft guidelines on 'Basel Accord for Financial Institutions (BAFI), which will come into
    force from January 01, 2012 with its subsequent supplements and revisions.

    "We took the move to boost financial base of the NBFIs and ensure their management efficiency in the long run through using the
    best global best practices," a senior BB official told the FE Sunday.

    He also said the BB has introduced the draft BAFI on a pilot basis from January this year in line with its action plan for
    implementation of Basel-II in the NBFIs, which are popularly known as leasing companies.

    Under the action plan, one-to-one meeting with all of the country's 29 NBFIs will be held from April to August this year for analysing
    their feedback to finalise the guideline.

    According to the BB guidelines, the business of financial institutions has become more complex and the risks inherent with the
    activities of the NBFIs are required to address properly for the smooth functioning of the industry.

    "With a view to identifying and managing these risks, a robust risk management as a strong capital base is a vital requirement," it
    said.

    The Basel-II framework, the most widely used accord which sets the benchmarks for banks and other financials institutions across
    the globe - has come into effect for all Bangladeshi commercial banks from January 2010.

    The framework is based on three mutually reinforcing pillars: ensuring minimum capital requirement (MCR), supervisory review
    process (SRP) and market discipline.

    The accord outlines the level of capital required by a NBFI against credit, market and operational risk based on the risk profile of the
    organisation.

    "The primary objective is neither to raise nor to reduce regulatory capital for the financial institutions. However, the capital
    requirements for a specific financial institution may increase or decrease depending upon its own risk profile," the central bank said.

    An NBFI"s capital ratio will be calculated by dividing the total capital by the sum of risk-weighted assets of credit risk, market risk
    and operational risk under MCR, adequate capital will be calculated under the SRP and transparency of the activities of financial
    institutions towards stakeholders will be ensured through market discipline.

    "We expect that the guidelines will be able to make the regulatory requirements more appropriate and assist the NBFIs to implement
    the instructions more efficiently," the BB official added. Published by HT Syndication with permission from The Financial Express.
    For any query with respect to this article or any other content requirement

    Read more: http://news.reportlinker.com/n04118933/BB-moves-to-bolster-NBFIs.html#ixzz1KqAfpNri

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