A sector in a period of repair and reform
Bangladesh's financial sector includes scheduled banks, non-bank finance companies, insurers, capital market intermediaries, mobile financial service providers and microfinance institutions. Supervision is shared between Bangladesh Bank, BSEC, the Insurance Development and Regulatory Authority and the Microcredit Regulatory Authority.
Asset quality in parts of the banking system and governance failures at some institutions have drawn sustained regulatory and public attention. Strengthening bank governance, bringing loan classification closer to international practice and dealing with weak institutions are now central to the policy agenda. For well-run institutions, this period brings both higher expectations and the opportunity to stand apart on transparency.
Priorities for banks and finance companies
Asset quality comes first. Boards need a realistic view of classified and restructured loans, recovery prospects and the adequacy of provisions. Capital planning under the Basel III framework, liquidity management and the concentration of exposures to large borrower groups follow closely.
Governance is the second priority. Regulators and investors are looking at board composition, the role of independent directors, the handling of lending to related parties and large borrowers, and whether internal audit and compliance functions have the authority and resources to challenge management. Institutions that can show these arrangements work in practice will find it easier to attract deposits, funding and partners.
Financial reporting is a third priority. Investors and foreign lenders want to understand the gap between regulatory provisioning and an expected credit loss view under IFRS 9, and institutions that can explain that gap credibly are better placed when raising capital. Preparing the data, models and governance for expected credit loss measurement takes time and should begin well before any requirement takes effect.
Insurance, capital markets and digital finance
Insurers face scrutiny of claims settlement, investment of policyholder funds, solvency and the reliability of financial reporting. Brokers, merchant banks and asset managers must meet BSEC requirements on the protection of client money and on conduct. Mobile financial services and digital lending continue to widen access, with agent networks and app-based products bringing new fraud, cyber and anti-money laundering risks that need dedicated controls. Microfinance institutions, supervised by the Microcredit Regulatory Authority, face their own questions on portfolio quality, funding costs and the expense of serving rural borrowers.
Where RRH can help
RRH's Financial Statement Audits for financial institutions focus on loan classification, provisioning, valuation of investments and regulatory disclosure. Our Risk Consulting team supports internal audit, compliance reviews and governance assessments for boards and audit committees. Our IT Advisory team reviews core banking and digital channel controls, cybersecurity and alignment with Bangladesh Bank's ICT security expectations. Where an institution is preparing for a capital raise or a change of ownership, our advisory and tax teams can also provide independent valuation and due diligence.
Related RRH services: Financial Statement Audits, Risk Consulting and IT Advisory.