Regulatory Alerts2025-01-23
Added
Implementation of ECL-based Loan Classification and Provisioning under IFRS 9
Bangladesh Bank mandates all scheduled banks in Bangladesh to implement an Expected Credit Loss (ECL) methodology for loan classification and provisioning under IFRS 9 by 2027, replacing the current rule-based system. Banks must establish an implementation team led by the Managing Director or CEO, prepare a time-bound action plan approved by the Board of Directors by March 2025, and submit specific progress reports to the Banking Regulation and Policy Department at defined intervals through January 2028. The roadmap requires banks to develop borrower databases from January 2022, conduct training programs, finalize automated models by June 2026, and progressively pilot IFRS 9 implementation across branches covering 25%, 50%, 75%, and finally 100% of their total loan portfolio. Additionally, banks are required to prepare parallel provisional financial statements on a half-yearly basis starting December 2026 and submit quarterly implementation status summaries to their Boards and the regulator.