Dr. A.K.M. Mashiur Rahman, Advisor to the Prime Minister for Economic Affairs said that bank interest rate is still high relating to inflation and high interest rate itself has a risk. He suggested for lowering interest rate for furtherance of investment in the country. The Advisor told these in a Dialogue on Globalization of Basel II: Its Implementation in Bangladesh organized by International Chamber of Commerce-Bangladesh on Sunday, August 9. He was speaking the Dialogue as the Chief Guest.

He mentioned that under the Basel II Framework, it is intended to promote a more forward-looking approach to capital supervision that encourages banks to identify the risks they may face, today and in future, and to develop & improve their ability to manage those risks. He added that quality of the borrowers is very much significant for proper capital supervision.

He called upon the businesses to proceed carefully considering the uncertainty and inadequate knowledge about the subject of banking regulation and protection. He also added that the rescheduling of loan distorts the interest rate in the credit market. He appreciated the Bangladesh Bank’s introduction of quarterly reporting system and told that it might have effect on regulating the financial market.

In the Dialogue ICCB President Mahbubur Rahman said, since the financial crisis that started in mid-2007, an important source of losses and of the build up of leverage occurred in the trading book. A main contributing factor was that the current capital framework for market risk does not capture some key risks. With that in mind and as part of its strategic response to address weaknesses revealed by the financial market crisis, the Basel Committee has reviewed Basel II and has developed a series of proposed enhancements to strengthen the framework.

Mahbubur Rahman added that Basel II consists of three pillars. Pillar I sets out minimum capital requirements, Pillar II defines the process of supervisory review of a financial institutions’ risk management framework and Pillar III determines market discipline through improved disclosure. Implementation of this New Accord is a challenge for many developing countries including Bangladesh..

Regarding the trading book proposals, the Committee proposes an implementation date for Basel II is no later than 31 December 2010. But according to Financial Stability Institute (FSI) survey in 2004 and a follow-up survey in 2006 on implementation of Basel II in non-Basel Committee member countries, 84 percent of all respondents worldwide intend to adopt Basel II between 2007 and 2015. In Asia, 100 per cent of respondents intend to implement Basel II at some point over 2007-2015. This is quite striking given that a fairly large number of low-income countries are located in Asia, ICCB President informed.

Mamun Rashid, Chairman of the ICC Standing Committee on Banking Technique and Practices in his welcome speech stated that until proper importance and accountability of the stakeholders can be ensured the implementation of Basel II is not possible.

Timothy D Rees, Citigroup Basel II Program Director of Asia Pacific Region, Sydney, Australia made the presentation on Globalization of Basel II : Its Implementation in Bangladesh.

ATM Nasiruddin, Former Executive director, Bangladesh Bank and Dr, Toufic Ahmed Choudhury, Director, Bangladesh Institute of Bank Management took part in the Dialogue as Panelists. KM Abdul Wadood, Deputy General Manager, Bangladesh Bank and Ahmed Kamal Khan Chowdhury, Deputy Managing Director, Prime Bank Limited participated the Dialogue as discussants. A large number of business leaders, MDs/CEOs of banks and corporate bodies, senior officials of banks and financial institutions also participated.