Written by The Banking Post
The Bangladesh Bank (BB) has issued a comprehensive guideline on the Internal Control Management System (ICMS), introducing a new regulatory framework to strengthen governance, risk management and internal controls across the country’s banking sector.
The new guideline, issued on Tuesday, replaces the Guidelines on Internal Control and Compliance in Banks introduced in September 2016. It aligns Bangladesh’s banking regulations with the latest Global Internal Audit Standards and the Basel Core Principles for Effective Banking Supervision.
“A sound and effective ICMS is essential to ensuring the safety, stability and resilience of the country’s banking sector,” the central bank said in the guideline.
It noted that rapid technological changes, evolving financial products and increasing regulatory expectations require banks to adopt stronger governance and control frameworks to protect depositors’ interests and maintain public confidence.
The guideline introduces a comprehensive framework covering governance, risk management, compliance, internal audit, data analytics, information systems audit, Shariah audit and other modern control mechanisms.
A key feature is the formal adoption of the Three Lines of Defence model, alongside stronger independence and accountability for internal audit and compliance functions. It also reinforces the oversight responsibilities of banks’ boards of directors and senior management.
The ICMS sets minimum internal control standards for all scheduled banks operating in Bangladesh, including conventional banks, Islamic banks and Islamic banking branches and windows.
The central bank has asked banks to review their existing internal control frameworks and align their governance, risk management and reporting systems with the new requirements. It also encouraged banks to adopt more advanced control systems based on their size, complexity and risk profile.
According to the BB, effective implementation of the guideline will strengthen compliance culture, improve operational efficiency, enhance transparency and reporting quality, mitigate emerging risks, and support the long-term stability and sustainable growth of the banking sector.
