Banking Industry and Risk Management

 Banking Industry and Risk Management

 Risk management within the banking sector of Bangla Desh may be a comparatively newer apply, however enhanced potency is being found within the governance of those banks. The urban center committee is guiding the world\'s banking sector concerning risks issue. just like the central banks of different countries, Bangla Desh is following numerous urban center pacts viz. Basel-I, Basel-II and different core risk pointers enforced by the Bangla Desh Bank (BB).

The money sector in numerous economies as well as Bangla Desh is undergoing a monumental modification resolving under consideration world events like the continued banking crisis across the world. The recent recession within the us has highlighted the necessity for banks to include the idea of risk management into their regular agenda. numerous aspects of skyrocketing international competition introduced within the banking sector of our country by foreign banks, increasing freeing, introducing innovative merchandise, and money instruments likewise as innovation in delivery channels have highlighted the necessity for banks\' risk management.

Bangladesh\'s banking sector has been creating nice advancements in technology, quality, amount likewise as stability and per se, they need began to expand and diversify at a fast pace. the overall deposit and advance of banking sector went up the maximum amount as Tk nine,908 billion with forty seven banking firms. The external sector has mature up as high as $72 billion comprising $24 billion export, $36 billion import and $12 billion non-resident Bangladeshi remittal. However, such enlargement free from risks particularly at the onset of skyrocketing globalization and alleviation. Banking risk plays a significant half within the earnings of a bank. the upper is that the risk, the upper the return; thus, it\'s most essential to take care of parity between risk and come back.

In Basel-I, solely credit risk was thought-about, however in Basel-II along side credit risk, operation risk and market risk are brought into thought. Beside these risks, there area unit another risks in banking sector viz, money risk, concentration risk, rate risk, currency risk, equity risk, trade goods value changes risk, liquidity risk, legal risk, name risk and profit risk. In early 2003 and 2004, the shot issued pointers on six core risks to fulfill risk management within the banking sector. These area unit Credit Risk Management, quality Liability Risk Management, exchange Risk Management, control and Compliance Risk Management, opposed concealing Risk Management and knowledge Technology Risk Management.

When the total world was exposed to acute money recession in 2008 and 2009, it heavily affected the planet economy. Our banking sector wasn\'t severely affected owing to simplicity and insignificant size of the economic system in Bangla Desh. Following succeeding implementation of core risk management pointers by the shot, all banks area unit following these pointers properly and a few of our banks have already established separate division particularly Risk Management Division, headed by Chief Risk Officer. Some banks have tightened their risk management policy, particularly credit risk, through putting in of Credit Risk Management Division. Some banks area unit following centralised banking model from branch-based banking model and separated their business unit from credit approval unit.

In spite of varied risk management measures and tools, some money scams have occurred in several banks. Export-related scams with 2 massive teams area unit the 2 burning examples that have rocked our banking sector. owing to trade goods value fluctuation risk, a number of the teams from Chittagong, have already lost their cash and area unit troubled to survive within the market.

About 19.29 per cent appreciation folks dollar against our native currency (rate of dollar stood at Tk eighty four.45 on Jan twenty nine, 2012 up from Tk seventy.79 on Jan two, 2011) caused Brobdingnagian loss to a number of our native firms. Recent trend of depreciation (Tk eighty four.45 to Tk seventy nine.00 per USD) folks dollar against our native currency might cause losses to a number of our firms. Non-performing loan (NPL) quantitative relation of the banking sector has gone up to ten.03 per cent in December quarter with total NPL Tk 427.26 billion that reveal that credit risk in our banking sector must be taken care of properly. Evidently, risk management tools and techniques of our banking sector must be tightened more and revisited meticulously so our banking sector will stay unhurt in time to return.