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 are for strengthening the banking systems globally and this objective should not be lost. Developing Economies like ours need to be prepared and adapted to the changing global conditions and the norms for matching our economy with that of developed ones. The impact of implementation of Basel II on the banks, the industry and the society should be carefully evaluated.