HO Departments

Md. Humayun Kabir		Tel: 880-2-7124243
General Manager		email:
		Fax: 880-2-7125815

Circulars

Functions & Objectives

Bangladesh Bank, as the apex institution of banking sector in Bangladesh, is shouldering the responsibility of supervising the activities of commercial banks/Non-Bank Financial Institutions (NBFIs) under article 7(A)f of the Bangladesh Bank Order-1972 (Amendments upto 10th March, 2003), section 44 of the Bank Companies Act-1991, Section-20 of Financial Act, 1993 and Section-23(1)e of Money Laundering Prevention Act-2009. Article 7(A)f of the Bangladesh Bank Order-1972 (Amendments upto 10th March, 2003) read as ‘to regulate and supervise banking companies and financial institutions’. Above mentioned sections of the concerned laws have empowered Bangladesh Bank to examine the books of accounts and related documents/records of the banks/NBFIs with a view to ascertain their financial soundness and quality of portfolios so that banks/NBFIs operation cannot be detrimental to depositors’ interest in general and to the economy as a whole.

Department of Banking Inspection-2(DBI-2) conducts different types of inspection which may be summarized into the following three major categories:
		a. Comprehensive/Regular/Traditional inspection.
		b. Risk based or System inspection and
		c. Special inspection/Surprise inspection.
Comprehensive inspections are conducted on 13 State-owned Commercial Banks (SOBs) & Development Financial Institutions (DFIs) and 29 Non-Bank Financial Institutions (NBFIs) by this department, as per inspection program, prepared annually and approved by the Deputy Governor. Some key areas of comprehensive inspection are:-
	1.	Evaluation of assets giving emphasis on classification and provisioning;
	2.	Assessing capital requirement;
	3.	Verification of window-dressing relating to profit;
	4.	Review of liquidity position regarding maintenance of SLR & CRR;
	5.	Evaluation of loan operation, project financing ;
	6.	In-depth Analysis of large loans and concentration of credit;
	7.	Detection of fraud, forgery and action taken thereof;
	8.	Evaluation of management quality and customer services and
	9.	Compliance with various guidelines/instructions/circulars issued by Bangladesh Bank, National Board of Revenue, Registrar of Joint Stock Companies and Securities and Exchange Commission as well as respective banks/NBFIs.
Risk-based inspections on core risk areas are conducted on half-yearly basis in the banks/NBFIs. These inspections are conducted covering following key risk areas:-
		i) Credit Risk Management (CRM),
		ii) Internal Control and Compliance (ICC),
		iii) Asset-Liability Management (ALM) and
		iv) Information & communication Technology (ICT).
Special and surprise inspections are those which are conducted beyond routine programs, viz., scrutiny of interest subsidy and the cases relating to the sick industries. Special inspections are conducted regularly on different NBFIs against specific complain received from various quarters.
In addition, jobs assigned by higher authorities are carried out by this department. The Department also examines and monitors the compliance made by the banks/NBFIs, whether their actions are adequate/appropriate in respect of the implementation of the recommendations made in inspection reports.
The institutions under the jurisdiction of this department fall within 02 broad categories i.e. 04 State-owned Commercial Banks, namely- Sonali Bank Ltd., Janata Bank Ltd., Agrani Bank Ltd. and Rupali Bank Ltd. and 08 Specialized Institutions, namely - Bangladesh Development Bank Ltd., Bangladesh Small Industries and Commerce Bank Ltd., Ansar-VDP Unnayan Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Investment Corporation of Bangladesh, Grameen Bank and Karmasansthan Bank. Moreover, inspection on 29 Non-Bank Financial Institutions (NBFIs) is also conducted by the department.
An inspection team is required to, inter alia, evaluate the financial position, operational soundness and management quality of the banks/NBFIs. During Head Office inspection of a bank, its CAMELS rating is also taken into account, which is one of the determining factors of the frequency of inspection.