The New Nation - Internet Edition

Dr. Salehuddin Ahmed, Governor, Bangladesh Bank

At the outset, I thank ICMAB for arranging the workshop on "Emerging Changes in the Financial Sector of Bangladesh". The subject is very close to my heart and also to all the stakeholders working for the development of the country. One has to agree that no economy can grow and improve the living standards of its population in the absence of a well functioning and efficient financial sector. Improvement of the financial sector can create a conducive environment to enable the poor and disadvantaged to get the benefits of accelerated growth.

The financial sector of Bangladesh is composed of Bangladesh Bank (BB, the central bank), scheduled banks (or, deposit money banks, DMBs), non-bank financial institutions (NBFIs), insurance companies, micro-finance institutions (MFIs), credit rating agencies and stock exchanges. Direct regulatory and supervisory responsibility over DMBs and NBFIs rest with BB.

As in many other developing countries, implementation of Basel II is a challenging issue for banking sector of Bangladesh. Compliance of Base Core Principles (BCPs) requires providing a solid foundation for the eventual implementation of the New Accord. Recently BB has also carried out a self assessment of the extent of Compliance of BCPs. The findings show that it is now a largely compliant of Basel principles.

Since the New Accord requires substantial prior risk management practices in the banking sector, BB issued five separate guidelines on five core risk areas in banking in 2003. It provides a basic foundation for smooth implementation of the New Accord. The risk areas include credit risk, asset and liability/balance sheet risk, foreign exchange risk, internal control and compliance risk and money laundering risk. Since the Accord is complex and may affect different banks in varying degrees, careful and compatible strategies need to be developed. This deserves inclusion of market participants in the decision making process.

A fair representation of financial position of a bank is required by its stakeholders for making their economic decisions. This is significantly influenced by the accounting standard. In line with international norms, Bangladesh Bank introduced international accounting standards (lAS-30) in the banking sector of Bangladesh in 2000. This requirement has brought transparency in the affairs of bank balance sheet by disclosing many sensitive issues such as volume of bad debts, amount of bad debt provisions, shortfall in provision, earning per share, cash flow position, banking risks including contingencies and future losses, maturity mismatch of asset and liabilities, credit facilities allowed to the bank directors. In order to bring more disclosure in the financial statements of banking companies, BB is continuously updating this requirement from time to time in line with International Accounting and Reporting Standards.

On the above backdrop the role of the professional accountants more particularly the management accountants as member of the bank management team has become very prominent. The Management Accountants with their trained mind of accounting, finance, commerce, regulatory framework with analytical ability can better serve the banks in order to assist the management in discharging its obligations to the stakeholders, regulators and above all the society.

In the age of globalisation and trade liberalisation accountants play a vital role in financial discipline and transparency and thereby managing organisational, productivity and profitability of the organisations both in public and private sector. It is not only the cost and management accounts of the company but the total human resource pool of the organisation specially in the strategic level that makes the difference between doing things effectively and efficiently.

Corporate Performance Management provides visibility into how well a company is maintaining its strategic focus. Key performance indicators allow a company to see in what areas it is executing well, and what areas require improvement.

As we know that corporate performance management is the area of business intelligence involved with monitoring and managing an organisation's performance, according to key performance indicators such as revenue, return on investment, overhead, and operational costs. For online businesses, corporate performance includes additional factors such as page views, server load, network traffic and transactions per second. Corporate performance is also known as business performance management or enterprise performance management.

Under the current context the risk in banking has increased significantly due to change of the status of the banks from deposit collector and investors to a large service provider. Application of high tech information technology, complex business transactions like securitisation, derivatives, various swaps, etc creating substantial risk for the banking institutions. In order to address those and similar innovative transactions, the banking community needs the services of techno-human resources. I personally believe that the accountants are the right professionals to handle the above transactions comfortably.

The Cost and Management Accountants (CMAs) are the future oriented visionary professionals, the integral part of the management teams. The expectations of the society to the CMAs are more. I hope the professional Cost and Management Accountants will play their appropriate role for public interest by the demand of time.

It is indeed a great pleasure to know that the Institute of Cost and Management Accountants of Bangladesh (ICMAB) is giving award to some financial institutions of the country for their best corporate performance for the first time.

Of course this initiative will encourage the banks and financial institutions to increase their performance to the international level.

I congratulate the winners of the award and would like to take the opportunity to express my sincere and heartfelt thanks to ICMAB for arranging such a timely event of Awarding Best Corporate Performance Award.

The strategies that have been initiated and the reform programmes that have been undertaken in the financial sector of Bangladesh, with support and help from all concerned would not only help the economy to grow at a faster rate but also pave the way for Bangladesh to become a member of the "middle income group country" by the end of the next decade.

(Speech of Dr. Salehuddin Ahmed, Governor, Bangladesh Bank at the workshop on 'Emerging Changes in the Financial Sector of Bangladesh' on the 15th Dec'07arranged by the Institute of Cost and Management Accountants of Bangladesh (ICMAB)