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Local Banks Can Review Health Through Global Consulting Firms

Local Banks Can Review Health Through Global Consulting Firms

The international consultancy firm will suggest appropriate corrective measures necessary in the public interest

The Bangladesh Bank has formulated regulations allowing local banks to appoint international consultancy firms to conduct comprehensive assessments of their financial health.

“Bangladesh Bank Special Regulations, 2024” was approved recently at the 438th meeting of the board of directors of the central bank.

In a notice published today, the banking regulator said the aim of the regulations was to enable banks to undertake a comprehensive risk-based assessment through any competent international consultancy firm.

The international consultancy firm will suggest appropriate remedial measures necessary in public interest and for the betterment of the condition and condition of banks and banking policies.

The regulation specifies that the consultancy firm would diagnose the health of banks, including conducting reviews of asset quality, corporate governance, policies of the concerned bank, procedures, processes, compliance with laws and regulations and any other assessment if necessary.

The new regulations state that the Bangladesh Bank will appoint a designated department to coordinate the activities of the international consultancy with the scheduled banks with regard to comprehensive assessment.

The consultancy firm will submit a report to the central bank governor in accordance with the contract documents, he said.

The governor will submit the report to the board to take necessary action in accordance with applicable laws, it added.

After the installation of the interim government, the central bank reconstituted the board of directors of 11 banks.

The majority of the boards of directors were dominated by the business conglomerate S Alam Group.

Ahsan H Mansur, the new central bank governor, recently said the banking regulator would conduct forensic audits at a dozen crisis-hit banks to assess their financial situation.

More than a dozen banks have now become very weak as business tycoons affiliated with the Awami League and influential circles took huge amounts of loans from the banking sector and laundered them abroad.