Written by The Banking Post
Bankers have welcomed the central bank’s risk-based supervision (RBS) mechanism effective from January next, saying that the updated supervision model will help strengthen the banking industry further.
They said it will not only help detect various types of possible risks but also prescribes different categories of solutions considering the nature of the risks of the banks.
Earlier on July 07, the central bank governor Dr Ahsan H. Mansur made the announcement of launching the RBS in all banks from January, 2025.
Managing director and chief executive officer of Mutual Trust Bank (MTB) PLC Syed Mahbubur Rahman hailed the move, saying that the opportunity has now been created to do both on-site and off-site supervision simultaneously.
Currently, he said, the regulator conducts these two types of supervisions separately and some 17 departments of the central bank used to take information from a bank on supervision purposes.
In the existing supervision system, the experienced banker said, the regulator normally prescribes a set of medicines whatever the disease is.
“But in the RBS, it will be possible to identify risks of the banks and the regulator will be able to give bank-specific solutions, which are required,” he said.
The MTB’s top executive said banking regulator of many countries all over the world has been using the system. “When we do internal auditing, we do it based on risks…not applying the earlier system,” he added.
Though implementation of the RBS will be time-consuming, bankers said, it will be very effective if the central bank can execute it properly.
Managing director of Shahjalal Islami Bank PLC Mosleh Uddin Ahmed said the central bank will take control of the core banking solution (CBS) of a bank under the RBS system. So, the regulator will get access to the bank’s data, which will facilitate them to take quick decision.
He said it will also help establish governance in banking system because many things were kept hidden under the existing supervision. “It is not possible in the RBS.”
On the other hand, he said, the data to be used in the RBS will be accurate and supervision will be perfect as well.
Responding to a question, the BB Governor told The Banking Post correspondent on Monday’s press briefing that top executives of the commercial banks have agreed over implementation of the RBS, which will basically assist them strengthen their banking operations through proper detection of the risks.
“We are going to launch the RBS for the protection of the depositor’s interests. So, there is nothing to oppose it, ” the governor responded.
In fact, RBS is the advanced overseeing technique, which will be used to detect the nature of risks with proper assessment before chalking out solutions accordingly.
