Schedule banks will face penalty if they fail to manage their risks properly as per the central bank’s guidelines.
“The banks will be punished if they fail to execute their own risk management related activities like setting limit of ability to take the risks, identifying risk and measurement of risk,” said a Bangladesh Bank circular issued yesterday.
The circular contains a set of instructions to be followed by banks for strengthening their risk management with immediate effects.
Bangladesh Bank has also asked all the schedule banks to adopt a separate organogram for the risk management division, appointing efficient manpower.
According to BB circular, all the banks will have to appoint a Chief Risk Officer (CRO) equivalent to Assistant Managing Directors or Deputy Managing Director.
An officer with the rank of Executive Vice President or Vice President will be appointed as the head of risk management division, said the circular.
The risk management division will set a limit of taking risk for the respective banks on annual basis, the circular added.