The new basel-iii capital accord: capability of the banks in adapting and adopting the new regime in Bangladesh

The paper aims to explore a comprehensive understanding and grab the concept about transition of second accord of Basel norms to the subsequent regulation i.e. Basel III and to study whether the effects are favorable or adverse for banks to comply with Basel-III norms effectively. The major concern for the banking sector of Bangladesh is that implementation of Basel III will cause banks to raise capital appreciably and thus strengthen their existing capital formation. In recent economic scenarios, banking business is found highly exposed to risks and capital been aligned with risks and has got more importance in this connection. The focus of this paper is on the practice and adoption of international practices for capital measurement namely Basel regime; transition of Basel II to Basel III framework in Bangladesh to examine the changes that commercial banks have to go through in terms of capacity building to follow, adopt and comply with this new regulation. This paper investigates the issues, challenges and implication of Basel III implementation in Bangladesh. To achieve the objectives of the study, data have been collected from secondary sources only. Secondary data have been taken from different publications, annual reports of Bangladesh Bank, articles on newspapers etc. According to The findings of the study, The CRAR of banking industry shows a negative trend in first three years (2015, 2016, and 2017) of the 05 years transitional implementation plan of Basel 3 regime as set by Bangladesh bank. Aggregate CRAR maintained by all banks in the industry was 10.84 percent, 10.80 percent and 10.80 percent in 2015, 2016 and 2017 respectively. Thus, it gives a clear picture that adoption of new regulations caused a significant change in capital position of the banking industry and it has been in decreasing trend which puts extra pressure on banking sector, regulators and the economy towards the achievement of a sustained, resilient and stable capital management of banks under Basel III.