Some imperative issues and challenges in implementing Basel II for developing economies with special reference to Bangladesh

Abstract

In June 2006, Basel Committee on Banking Supervision issued a comprehensive document on New Capital Adequacy Framework to replace the 1988 Basel Accord and to foster a strong emphasis on risk management and to encourage ongoing improvements in banks’ risk assessment capabilities. This paper attempts to explore some significant issues and challenges in Basel II implementation for the developing economies like Bangladesh. There are many possible negative impacts of an unchecked implementation of Basel II. The paper also tries to find out what Basel II norms should be applied - and to what extent - to ensure the survival and growth for the developing economies. The norms of Basel II intend to strengthen the banking systems globally and this objective should not be lost. Developing Economies - like Bangladesh Economy - need to be prepared and adapted according to the changing global conditions and according to the norms for matching the economies with the capabilities of developed ones. The impact of implementation of Basel II on the banks, the industry and the society should be carefully evaluated.