Implementation of Basel III accords in Mutual Trust Bank: risk based capital adequacy ratios requirement of Bangladesh Bank

Abstract

This internship report is based on my successful completion of a twelve-week program at Mutual Trust Bank Limited (MTB) in Group Finance from January 13th to April 13th, 2021. It is a prerequisite for BRAC University's BBA program. I mostly worked in the Finance division's Regulatory Reporting and Accounts Payable departments. This internship report is based on my successful completion of a twelve-week program at Mutual Trust Bank Limited (MTB) in Group Finance from January 13th to April 13th, 2021. It is a prerequisite for BRAC University's BBA program. I mostly worked in the Finance division's Regulatory Reporting and Accounts Payable departments. The Bangladesh Bank (BB) is the governing body for all of Bangladesh's commercial banks. BB has adopted the Risk Based Capital Adequacy guideline pertaining to Basel III to comply with the worldwide standard for banking sector regulation (Basel Accord). This rule must be followed by all banks. Starting January 1, 2015, they will report to BB. The Basel Committee on Banking Supervision (BCBS) implemented Basel III reforms to strengthen the banking sector's ability to absorb shocks. These shocks emerge from financial and economic stress, regardless of the cause, minimizing the chance of a finance-to-real-economy spillover. The guidelines are divided into three sections or pillars: 1. minimum capital to protect against credit risk, market risk, and operation risk; 2. evaluating financial stability in relation to the bank's risk level and capital growth strategy; 3. Disclosures of the company's risk, equity, and managerial positions. Credit risk, market risk, and operational risk are the three primary risks that a commercial bank confronts. Credit risk, on the other hand, is the risk associated with the possibility that a bank's borrowers would default on their obligations when interest rates, foreign currency rates, or equity prices shift in an unfavorable way, the bank is exposed to market risk. The internal factors creates operational risk, which occurs when thought controls, personnel, or systems fail.