News Title : Supervisory framework for key regulators developed

News Date : 2015-10-24

-Siddique Islam
A coordinated supervision framework has been developed for the first time for an allied body of key regulators to work for ensuring stability in the entire spectrum of country's financial sector, officials said. The framework was formulated by a working group in line with a memorandum of understanding (MoU) reached between the regulators. The framework empowers them to raise their policies for pre-or post-discussion in a technical group meeting. The working group comprises members from each of the regulators: Bangladesh Bank (BB), Registrar of Joint Stock Companies and Firms, Bangladesh Securities and Exchange Commission (BSEC), Microcredit Regulatory Authority, Insurance Development and Regulatory Authority (IDRA) and Department of Cooperatives (DoC) and the Bangladesh Telecommunications Regulatory Commission (BTRC). In their opinion the group members gave emphasis on the conditionality of the regulators in line with the MoU for preparing the framework. "The framework has already been approved at a coordination council meeting among the regulators for taking coordinated efforts to minimise any risk that might leave a destabilising impact on the financial sector," a BB senior official told the FE recently. Under the new framework of modalities, the coordination council may advise the agencies or regulators for any possible changes in regulatory policy, guidance or decisions on regulation that may impact on the objectives of the other. They will be allowed appropriate time for consultation. However, each agency may consult another agency in relation to relevant policy issues and also media releases that may be of interest to, or will have an effect on other agencies, it added. A technical group has also been formed, headed by an executive director of the central bank, for reviewing any policy issues before placing in the coordination-council meeting, the central banker added. "A report titled Coordinated Supervision Framework for Bangladesh Financial System will be released through the coordination council's next meeting, scheduled for October 29," the official noted. He also said it is a new innovative supervisory mechanism in Bangladesh under which financial regulators would be interlinked for achieving better benefit from the coordination. Such supervision, indeed, is a supervision mechanism of coordinated approach for regulators in the financial system towards achieving a sound supervision framework, the central banker added. Talking to the FE, another BB official said it is felt necessary to put in place a robust prototype of integrated framework with a view to increasing degree of regulatory comfort, particularly as regards the concerns related to the contagion risks that could have systemic consequences. "Separate regulatory mechanism of financial supervisors has met the requirement of economic and financial development as a whole, but problems emerged from the absence or duplication or overlapping of regulations and a lack of consensus in regulatory standards," the BB official observed. He also said it is imperative to set up a mechanism that is both relatively separate and cooperative to solve these problems and that maintains the operational efficiency of the whole financial system. "Indeed, strengthening policy coordination among the regulators is an important step toward improving supervision over the country's financial system as well as warding off potential financial risks," the central banker observed.

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