presentation -banking fair 2015
TRANSCRIPT
Md. Nazrul IslamJoint Director,
Banking Regulations and Policy DepartmentBangladesh Bank
November 25,2015
Banking Fair Bangladesh-2015
Background, Objectives
Importance of Supervision
Indicators of Supervision
Findings
Limitations and Path forward
2
Global Perspective:
Banking Supervision : key areas of attraction
To strengthen the global financial system-BIS
Weaknesses threaten financial stability both within that country and internationally.
Bangladesh Perspective:
Overall Supervision Concern
Fiscal cost for banks
3
To identify the key factors (external & internal) for effective banking supervision under the BCPs and other local scenarios.
To recommend the areas of improvement for the betterment of the systemic functionality.
4
Supervision and Banking
Sector’s Performance
Supervision and Effective Monetary
Policy
Supervision and Macro-economic
Stability
Supervision and Economic growth
5
NPL+
Wri
teoff
Total
Default G
ross N
PL t
o T
ota
l Loans
Gross
NPL
Capit
al To R
WA
CAR
& Recent
Banking
Scam
6
Year SCBs DFIs PCBs FCBs Total
2010 15.66 24.15 3.15 2.99 7.27
2011 11.27 24.55 2.95 2.96 6.12
2012 23.87 26.77 4.58 3.53 10.03
End of
june,2013 26.4 26.2 6.6 4.7 11.9
December
2013 19.8 26.8 4.5 5.5 8.9
March 2014 22.0 30.9 5.8 5.3 10.5
7Source: Published data
Types of Banks 2009 2010 2011 2012 2013(June)
SCBs 9.02 8.92 11.68 8.13 1.2
DFIs .36 -7.25 -4.49 -7.78 -9.0
PCBs 12.12 10.08 11.49 11.38 11.4
FCBs
28.13 15.63 20.97 20.56 20.3
Total 11.67 9.31 11.35 10.46 9.1
8
Source: Bangladesh Bank
9
10
Banking Sector & Financial Sector
Stability
Modified from Lewin’s Force Field
Restraining forces
Driving forces
Status quo
Desired
state
Time
Force-field Model of Change
Banking Sector & Financial Sector Stability
Modified from Lewin’s Force Field11
12
Force Field Analysis
Score Driving Forces Restraining Forces Score
3 Amended Legal Frameworks Supervision Friendly Legal
Framework 5
4 Organizational Motivation Socio-Political Environment 4
3 Skilled work force Supervisory Framework 5
3 International Best Practice Internal Governance Framework
and Market Discipline4
3 Standard Management
Informational System
Capital Adequacy and Managing
Material Risk4
4 Forward Looking Leadership Other Factors (Fragmented
Supervisory Points ,
Organizational supervisory
structure and Knowledge
management etc. )
5
20 27
1 (very weak influence), 5 (very strong influence)
External Legal framework Socio-Political Environment
Internal Supervision Framework: KM , Priority of risk ,
Principles Governance Framework: BB should monitor
internal Governance of Banks Capital Adequacy and Managing Material risk: Supervisory College, Develop Robust KM System
and Human resources (numbers, expertise and authority)
Supervision friendly Organizational Structure
13
Limitations
Time Constraints
Real data to measure Government Intervention
Comprehensive rigorous study- laws regulations, policies
Path forward
Supervision-top priority and built communication strategy with Monetary Policy
Factors should be identified with comprehensive study in future for BB’s main objectives
14
Thank you
15