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The country's accounting professionals have called for adoption and effective implementation of International Financial Reporting Standard (IFRS) 9, citing its critical role in restoring public trust and ensuring greater transparency in the country's banking sector.
They also underscored the need for robust modelling, reliable data systems, and stronger coordination between risk and finance functions to meet global financial reporting standards.
By building technological resilience, reinforcing governance, and investing in data infrastructure, banks can not only ensure compliance but also strengthen their overall financial and operational sustainability, they said at a Webinar on Tuesday.
The Institute of Chartered Accountants of Bangladesh (ICAB) organised the webinar titled 'Implementing IFRS 9: Global Insights and Bangladesh Perspectives', with Dr. Md. Kabir Ahmed, Deputy Governor of Bangladesh Bank, as the chief guest.
Muhammad Mehedi Hasan, Vice President of ICAB & Partner, Rahman Rahman Huq Chartered Accountants, presided over the event.
The experts pointed out key obstacles facing banks, including the lack of adequate empirical data, particularly recovery data, which limits discriminatory power of models and slows down the implementation process of IFRS 9.
Another significant hurdle lies in incorporating forward-looking information, as many banks lack sufficient historical data to differentiate scenarios or make reliable probability-weighted estimates, they added.
The weak correlation between macroeconomic factors and default rates in Bangladesh reduces the reliability of predictive modelling, the experts observed.
Dr. Kabir Ahmed described the adoption of IFRS 9 as a 'paradigm shift' for an emerging economy like Bangladesh.
"It enables financial institutions to be better prepared for potential future losses and more resilient to economic shocks," he said.
Dr. Ahmed reaffirmed Bangladesh Bank's commitment to working with ICAB to implement such critical standards to strengthen transparency and quality in financial reporting, stressing that regulatory and professional partnerships are crucial to designing practical and effective policies.
Addressing the session, ICAB President N K A Mobin said the adoption and implementation of IFRSs are not merely a technical compliance exercise, but a cornerstone for enhancing transparency, strengthening financial stability, and fostering international investor confidence.
"As the core and most relevant professional accountancy body in Bangladesh, ICAB considers it a sovereign duty to lead the discourse, build capacity, and facilitate a smooth transition to these global benchmarks," he added.
Mr. Mobin emphasized that effective implementation of IFRS 9 requires joint efforts from key regulators, including Bangladesh Bank, the Bangladesh Securities and Exchange Commission (BSEC), and the Financial Reporting Council (FRC).
He also stressed the crucial role of preparers -- such as banking institutions, financial entities, and corporations -- whose financial statements are directly impacted by this standard.
Delivering the keynote presentation, Rajith Perera, Partner at Ernst & Young and Risk Management Leader of the Institute of Chartered Accountants of Sri Lanka, discussed the practical challenges encountered during the IFRS 9 implementation phase.
He observed that many banks lacked strong models for estimating Expected Credit Losses (ECL), and validation exercises revealed that existing models were often not sufficiently robust to produce accurate Probability of Default (PD) and Loss Given Default (LGD) estimates.
"In some cases, banks had no existing models at all, requiring the development of new methodologies from scratch," he added.
Another keynote speaker, Sk. Ashik Iqbal, Partner at Nurul Faruk Hasan & Co. Chartered Accountants, noted that the introduction of IFRS 9 in Bangladesh comes at a time when the country's banking sector faces extraordinary challenges.
Non-performing loans remain stubbornly high, capital buffers are thin, and confidence is fragile, he pointed out.
At the same time, regulators are pressing forward with global standards to bring discipline and transparency, he added.
"For many banks, the shift from the old incurred loss model to the expected credit loss (ECL) framework is not merely a compliance issue -- it is a survival test," he said.
Unlike large international institutions with decades of credit data, most Bangladeshi banks are implementing IFRS 9 with patchy information systems, limited modelling expertise, and intense regulatory oversight, he said.
According to Mr. Iqbal, the opportunity is clear: IFRS 9 can restore trust, improve provisioning discipline, and enforce better governance. But weak models, inconsistent default definitions, or poorly designed scenarios could add confusion instead of clarity, he cautioned.
To address these challenges, industry experts recommended a multi-dimensional approach, including investment in robust technology platforms to support automation, data integration, and real-time reporting.
They further advised banks to establish strong governance frameworks and oversight mechanisms, revisit portfolio segmentation strategies to better align with risk profiles and regulatory requirements, and strengthen data infrastructure to handle the increased granularity and frequency of reporting.
Mohammad Abdul Ohab Miah, Council Member - ICAB & Financial Controller, Finance Division, BRAC Bank PLC, and Mohammad Monowar Hossain, Financial Controller, Standard Chartered Bank, also spoke.
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