A study on the Implementation of Basel III: Bangladesh Perspective

Abstract

The purpose of this study is to find out the current guidelines for the banking industry from the Basel Committee on Banking Supervision (BCBS). After 2007 financial crisis, BCBS has concentrated to develop world banking industry; as a result they introduced Basel III from Basel II for world banking industry. The goal of Basel III is to minimize the risk from loans and strength of capital framework. The other objectives of the paper are to find out the process, how banking industry will strengthen their capital framework, how much banks should keep capital against loan and advances and how to supervise their loan activities & to find out the structure of market discipline. This paper is basically qualitative in nature. From this paper it has been found that every bank follows Basel III accord, bank must keep 4.5% minimum common equity Tier-1, minimum Tier-1 Capital ratio is 5.5% to 6%, minimum total capital ratio is 10%. Every bank is required to maintain 2.5% capital conversation buffer comprised to common equity Tier 1 capital and minimum capital requirement is 10%. For supervisory activities banks should follow sound capital valuation, internal control review, and comprehensive valuation of risk, nursing and reporting.