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yesterday advised banks to lower interest rates to boost investment.
"The bank interest rate is still high in relation to inflation and the
high interest rate is a risk in itself," Rahman said. The adviser was
speaking as the chief guest at a dialogue on "Globalisation of Basel
II: Its Implementation in Bangladesh", organised by the
International Chamber of Commerce- Bangladesh (ICC-B) at Dhaka Chamber
of Commerce and Industry (DCCI). Under the Basel II Framework, Rahman
said, it is intended to promote a more forward-looking approach to
capital supervision that encourages banks to identify the risks they
may face today and in future, and to develop and improve their
ability to manage risks. Rahman added that the quality of the
borrowers is significant to proper capital supervision. He called
upon businesses to proceed carefully considering the uncertainty and
inadequate knowledge on the subject of banking regulation and
protection. A rescheduling of loan distorts the interest rate in the
credit market, he added. Rahman appreciated Bangladesh Bank's
introduction of quarterly reporting system and said it might have an
effect on regulating the financial market. At the dialogue, ICCB
President Mahbubur Rahman an important source of losses and a
build-up of leverage occurred in the trading book since the financial
crisis started in mid- 2007. A main contributing factor was that the
current capital framework for market risk does not capture some key
risks, he said. Bearing that in mind and as part of its strategic
response to address weaknesses revealed by the financial market
crisis, the Basel Committee has reviewed Basel II and has developed a
series of proposed enhancements to strengthen the framework. Basel
II consists of three pillars, including setting out minimum capital
requirements, defining the process of supervisory review of a
financial institution's risk management framework and determining
market discipline through improved disclosure. "Implementation of this
new accord is a challenge for many developing countries, including
Bangladesh," said the ICCB president. Mamun Rashid, chairman of the
ICC Standing Committee on Banking Technique and Practices, said the
implementation of Basel II is not possible without proper
implementation and accountability of the stakeholders. Timothy D
Rees, Citigroup Basel II programme director of Asia Pacific, Sydney,
made a presentation. ATM Nasiruddin, former executive director of
Bangladesh Bank, Dr Toufic Amed Choudhury, director of Bangladesh
Institute of Bank Management, and Ahmed Kamal Khan Chowdhury, deputy
managing director of Prime Bank Ltd, were also present.
