B Mirror Report : Bangladesh Bank (BB) has produced a comprehensive framework outlining the country’s banking sector’s transition to a risk-based supervision (RBS) regime, with full implementation beginning in January 2026.

In a circular issued on Sunday, the central bank directed all commercial banks to comply with the new framework, outlining the operational, supervisory and reporting arrangements that will apply once the RBS system comes into effect.

BB said the move comes against the backdrop of increasing globalization of financial services, rapid technological advancement, product innovation and growing interconnectedness among financial institutions, all of which have significantly increased the complexity and risk profile of banking operations. Traditional compliance-based supervision, which largely focuses on rule-checking and historical data, is no longer sufficient to proactively address these evolving risks, the circular noted.

“In this context, Bangladesh Bank has decided to implement risk-based supervision, which is expected to strengthen forward-looking risk assessment, enhance risk governance, promote accountability and a prudent risk culture across banks, and support sustainable innovation while safeguarding overall financial stability,” the circular said.

Under the framework, all scheduled banks operating in Bangladesh will be required to operate and strengthen their systems, internal controls and governance structures in line with supervisory expectations outlined in an earlier Supervisory Policy and Coordination Department (SPCD) circular issued on October 23, 2025. The RBS regime will cover all business lines, functions and activities that have a material impact on a bank’s overall risk profile.

Supervisory assessments will be based on a structured evaluation of inherent risks, including credit, market, operational, legal and regulatory, strategic, money laundering and terrorist financing (ML/TF), technological and other emerging risks. The framework will also assess the effectiveness of banks’ risk governance, internal controls, risk management systems and mitigation measures.

According to BB, supervision under RBS will be forward-looking, with an emphasis on early identification of emerging risks. It will be continuous in nature, combining off-site monitoring with targeted on-site reviews, and proportionate to a bank’s size, complexity and systemic importance.

To support the new supervisory approach, Bangladesh Bank has undertaken a major restructuring of its supervisory organogram. The reorganization aims to create a single-point supervisory interface for each bank, eliminate duplication in data submission and promote a more coordinated and risk-focused supervisory process.

As part of the restructuring, BB has established 17 supervisory departments—12 bank supervision departments (BSD-1 to BSD-12) and five specialized supervisory departments. Existing inspection- and function-based departments have been streamlined and integrated into the new RBS-aligned structure, which will take effect from next month.

Under the new system, each BSD will be responsible for the full supervision of its assigned banks through a dedicated supervisory team. These teams will conduct continuous supervision, both off-site and on-site, covering all key areas, including foreign exchange operations and complaint management, while maintaining updated risk profiles and ensuring timely supervisory interventions.

Among the specialized units, the Supervisory Data Management and Analytics Department (SDAD) will serve as the central hub for supervisory data collection, validation and sectoral risk analysis. The Technology Risk and Digital Banking Supervision Department (TRDS) will oversee technology-related risks, while the Anti-Money Laundering and Terrorist Financing Prevention Department (AMLD) will supervise ML/TF risks. The Payment Systems Supervision Department (PSSD) will focus on risks related to payment and settlement systems.

Under the RBS framework, each bank will also be assigned a lead bank supervisor, who will act as the primary point of contact, coordinate supervisory activities, maintain continuous dialogue and monitor follow-up on supervisory actions.

For a smooth transition, Bangladesh Bank has adopted a phased approach to consolidating supervisory data, gradually bringing all reporting under a single platform to reduce redundancy and duplication.