Abstract
This paper on the compliance status of Basel-II of a state owned bank will provide a detailed picture of risk management of bank as well as a gross picture of Basel-II implementation status in Bangladesh. This study will also indicate any shortfall of bank in terms of Basel-II compliance and offer suitable recommendations.. In this Paper, I have divulged the calculation of eligible capital, total risk exposure, risk weighted assets and capital adequacy ratio for Agrani Bank Limited. Following the standardized approach to calculate risk weighted assets. I have also shown the impact of Basel II adoption and problems regarding its implementation in banking industry of Bangladesh.
Highlights
At present in banking industry, banks face different risks during the dealings of its banking activities
After intense analysis of the capital adequacy status, supervisory review process and market disclosure of ABL, following findings have been deduced: ABL in 2013, Capital Adequacy Ratio was 10.05% which was enough according to the regulatory requirement (10%)
For 2013 their tier-1 to RWA ratio was 5.67% which is higher than the regulatory requirement of Basel (4%). for that there is no requirement has been fixed by Bangladesh bank, they only give some guideline for choosing the element of tier-1 and Tier-2 capital
Summary
At present in banking industry, banks face different risks during the dealings of its banking activities. Appropriate policies, procedures and systems should be implemented at each financial institution for identifying, measuring, monitoring and controlling credit risk effectively. As Bank deals with the depositors’ money, it must have some safety precaution when giving loan. To prevent such failure international accords like Basel I, Basel II are formulated. Pillar II defines the process of supervisory review of a financial institution's risk management framework. Bangladesh Bank is required to design policies that will facilitate smooth transition to Basel II. I have shown the impact of Basel II adoption and problems regarding its implementation in banking industry of Bangladesh
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