The Basel-II accord went into effect in Bangladesh beginning January of this year alongside the Basel-I to consolidate capital base of the banks. The banks are now allowed to follow both Basel-II and Basel-I frameworks for 2009 to calculate their capital adequacy and the banks will have to implement the Basel-II framework beginning January 2010 according to Bangladesh Bank. Whereas, according to Financial Stability Institute (FSI) survey, conducted 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 of time over 2007-2015.

ICCB President Mahbubur Rahman told these while inaugurating a day-long ICC workshop on Globalization of Basel II: Its Implementation in Bangladesh organized by International Chamber of Commerce Bangladesh for the bankers on Tuesday, August 11.

ICCB President Mahbubur Rahman mentioned that Basel II has resulted in the evolution of a number of strategies to allow banks to make risky investments, such as the sub prime mortgage market. Higher risks assets are moved to unregulated parts of holding companies. He added that Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations. The Basel accords are a series of recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision (BCBS). The name for the accords is derived from Basel, Switzerland, where the committee that maintains the accords meets.

Most of the large and internationally active banks (except US Banks) belong to the developed countries already implemented the Basel II. Major multilateral lending institutions such as the World Bank would also implement them. Implementation of Basel II in advanced countries and multilateral lending institutions who are the major lenders to the developing economies would impact their economy, Mahbubur Rahman cautioned.

Further he alerted the participants that most of the countries implementing Basel II have experienced a shortage of skilled people in the industry who can understand and implement the sophisticated Basel II requirements. So, there is an almost certain likelihood that the banks in Bangladesh may also face a similar constraint. A good number of trainings and workshops can help ease this pressure, he added.

Mamun Rashid, Chairman ICCB Standing Committee on Banking, Technique and Practices emphasized the need of rating of financial institutions for implementation of Basel II. He mentioned that considering the requirement of skilled people in the financial institutions ICCB is relentlessly trying to upgrade the banking professionals to various new approaches. Timothy D. Rees Citigroup Basel II Program Director for the Asia Pacific Region and Arman Aziz, Resident Vice President, Citibank N. A. who conducted the workshop also spoke at the inaugural session. ICCB Vice President Latifur Rahman and ICCB Board Member and former Advisor to the care Taker Government Mahbub Jamil also attended the inaugural session.

Some 70 participants from banks attended the workshop. A similar workshop was conducted in Chittagong yesterday (August 10) where some 41 participants attended.