| Bangladesh Bank is statutorily empowered (Bangladesh Bank Order 1972) to regulate and supervise banking companies and financial institutions of the country as one of its main functions. DEPARTMENT OF BANKING INSPECTION-1 (DBI-1) is one of those core departments of Bangladesh Bank, which are entrusted with the responsibility of carrying out that specific function of the Bank. This department plays particularly the supervisory role through on-site inspection of privately owned commercial banks inclusive of foreign banks and banks run under the principle of Islamic "Shariah". These on-site inspections are carried out in close coordination with related departments of Bangladesh Bank.
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| Commercial banking industry is the key component of the financial sector of Bangladesh. Smooth operation of the financial system of the country depends substantially on the soundness and stability of the commercial banking system. DBI-1 examines the books of accounts and related documents/records through on-site inspection of these banks mainly to ascertain financial soundness of the bank concerned, which ultimately protect the interest of the depositors - the major stake holder. Interaction with external auditor and review of the internal audit report of the concerned bank / branch for determining effectiveness of internal controls and status of compliance with regulations and adequacy of prudential norms and regulations are some other modalities of the on-site inspection.
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| Regular 'comprehensive' inspection as well as 'risk based' and 'special' inspection are the prime categories of activities of this department. The regular comprehensive inspections are conducted pursuant to Annual Inspection Program chalked out ahead of the beginning of each calendar year. The frequency, however, of the comprehensive inspections depends on the CAMELS (Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk) rating of the banks. The 'CAMELS' serves as a uniform basis for the identification of strength and weakness of the concerned financial institution. It provides meaningful information to help identify banks having problems and require closer supervision. Generally greater attention is attached to weaker ones, however, flexibility is allowed in the policy of frequency depending on the need to maintain safe and sound operation of the concerned bank. |
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| Risk-based inspection is conducted to examine the compliance of the Core Risk Management Guidelines issued by Bangladesh Bank as well as to evaluate and monitor risk management systems and control environment of the banks. The frequency of this inspection is annual and areas covered are risks associated with Credit, Internal Control and Compliance, Asset-Liability Management and Information Security System. Special inspections, on the other hand, are conducted beyond routine programs for any special purpose or conducted with the element of surprise as part of ensuring constant surveillance on the industry as a whole. |
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| Reports prepared by the inspection teams incorporating their findings and recommendations thereagainst are solely meant for compliance by the banks. Ensuring compliance of the recommendations through respective Compliance Unit is one of the core functions of the department as an essential part of having the whole process of inspection successfully and effectively accomplished. |
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| The department, through its policy unit, formulates operational inspection policy as and when required. Besides, this department is also entrusted with the responsibility of granting statutory approval to the Chartered Accountant firms willing to conduct professional auditing of financial affairs of commercial banks and financial institutions. Expertise from the professionals within and outside the Bank is employed in the process of according such approval. |
