Bangladesh Bank (BB) is set to implement risk-based supervision (RBS) from January 2026 and has urged the country’s commercial banks to take necessary measures to prepare for the transition.
As part of the shift from decades-old compliance-based inspections, senior officials of the central bank held a meeting with banking executives to discuss the new framework.
The meeting, chaired by Bangladesh Bank Deputy Governor Md Zakir Hossain Chowdhury, included a presentation from the Supervisory Policy and Coordination Department (SPCD) clarifying the preparation-related circular issued last month regarding RBS.
Mr Chowdhury explained that the purpose of the meeting was to address any confusion or concerns the bank executives may have had about the preparations for RBS.
“All banks, except the five Islamic ones undergoing mergers, will come under RBS to restore discipline in the banking sector,” he added.
Unlike traditional compliance-based supervision, RBS takes a forward-looking, process-based approach, which allows for early identification and mitigation of key risks. It involves a dynamic and flexible supervisory process, focusing on the assessment of inherent risks, internal control effectiveness, and overall risk governance within banks. This helps determine each bank’s composite risk profile and the level of supervision required according to their specific risks.
An anonymous central banker, who attended the meeting, shared that RBS had already been piloted at around two dozen banks. Further pilots at other banks will be completed within the coming month.
A senior banking executive, who wished to remain anonymous, welcomed the central bank’s move but pointed out that some banks, which are not fully prepared, may struggle to implement RBS within the set timeframe.
“There are three main tasks—forming the RBS coordination committee, conducting a gap analysis, and preparing an action plan—that need to be completed. These are relatively simple and should be achievable within a month,” said the experienced banker.
According to the circular on preparations, Bangladesh Bank will carry out targeted supervisory reviews to assess the progress made by banks against their action plans. These reviews will help to address any gaps identified and will inform future risk profiling and supervisory planning.
Banks have been encouraged to view the supervisory expectations as both a regulatory requirement and an institutional development opportunity.