Bangladesh Bank has launched a new Risk-Based Supervision (RBS) framework, marking a major shift in how banks and financial institutions are regulated, as authorities seek to restore depositor confidence after years of stress in the sector, reports UNB.
The central bank on Sunday formally moved away from a traditional, compliance-driven oversight system to a supervisory model that prioritises institutions based on their individual risk profiles. Officials said the new approach will allow regulators to detect financial vulnerabilities earlier and intervene more decisively.
Under the RBS framework, Bangladesh Bank will abandon the “one-size-fits-all” model of supervision. Instead, banks and financial institutions will be assessed and monitored according to the scale and nature of risks embedded in their operations, including governance standards, asset quality and liquidity exposure.
To facilitate the transition, the central bank has completed a major internal restructuring. Thirteen existing departments have been reorganised into 17 specialised units, including 12 bank supervision departments that will provide targeted oversight using real-time data.
Five additional specialised units have been created to focus on digital banking, data analytics, payment systems and policy formulation. A separate department has also been established to monitor Anti-Money Laundering and Counter-Terrorist Financing activities, modelled on the Bangladesh Financial Intelligence Unit (BFIU), reflecting a stronger regulatory emphasis on financial integrity.
The launch of the framework was initially scheduled for January 1 but was postponed following the declaration of a state mourning over the death of former Prime Minister Begum Khaleda Zia.
Arif Hossain Khan, Executive Director and spokesperson of Bangladesh Bank, said the reorganisation process has been completed and full implementation of the RBS framework officially began on Sunday.
“This will be a far more rigorous supervisory regime,” he said, adding that oversight will now be driven by data accuracy and proactive risk assessment rather than routine compliance checks.
Central bank officials said findings under the new framework could trigger tough enforcement actions against weak institutions. These may include the removal of managing directors, dissolution of boards of directors and, where necessary, the application of the Bank Resolution Ordinance to deal with failing banks.
The reform is widely seen as a cornerstone of the interim government’s broader efforts to clean up the banking sector, curb mismanagement and rebuild public trust in the financial system after a period marked by loan defaults and governance failures.
Bd-pratidin English/ Jisan
