Bangladesh Bank has instructed all scheduled banks to adopt a risk-based supervision framework that prioritises early detection and mitigation of risks instead of relying solely on compliance checks.
According to a circular issued on Sunday, banks must complete full readiness for implementing the new supervision framework by December 2025, as the central bank plans to roll it out from January 2026.
By that time, each bank will have to submit a self-assessment report and a board-approved readiness plan to Bangladesh Bank, which will later conduct targeted supervisory reviews to assess their preparedness.
The central bank has planned to replace traditional compliance-based oversight with a more proactive, risk-focused system.
Each bank must form a Risk-Based Supervision (RBS) coordination committee by October and conduct a detailed gap analysis of its risk management, governance, and internal control systems by November.
The central bank also directed banks to prepare a board-approved action plan and realign their organisational structures to ensure the independence of risk management, compliance, and internal audit functions by the end of the year.
Under the new framework, banks with higher risk exposure will face more intensive regulatory scrutiny, while those maintaining sound governance and strong capital positions will be monitored with less frequency.
Bangladesh Bank asked banks to upgrade their management information systems (MIS) to ensure accurate and timely data reporting and to hold awareness sessions for board members and senior management on RBS principles.
All risk management manuals and reporting processes must be updated in line with the framework.
Banks that fail to show adequate progress may face enhanced supervision or specific corrective actions, the central bank warned.
Officials said the introduction of risk-based supervision comes amid persistent concerns over rising default loans, weak internal governance, and flaws in risk assessment across the banking sector.
The initiative aims to strengthen early warning mechanisms, promote a stronger risk culture, and hold boards and management more accountable.
Risk-based supervision, already practiced in advanced countries, takes a forward-looking approach by profiling banks according to their risk exposure and operational soundness.
It allows regulators to allocate oversight resources more effectively, improving supervisory efficiency and supporting long-term financial stability.
