The Institute of Chartered Accountants of Bangladesh (ICAB) has strongly backed the proper and comprehensive implementation of International Financial Reporting Standard (IFRS) 9 to enhance transparency, strengthen financial stability, and restore public trust in the country's banking sector.
The call came from industry experts and regulators at an ICAB-organized webinar titled "Implementing IFRS 9: Global Insights and Bangladesh Perspectives" on Tuesday.
They stressed that effective IFRS 9 adoption requires robust technological resilience, reinforced governance, and significant investment in data infrastructure to ensure both compliance and long-term financial sustainability.
Paradigm Shift for Bangladesh's Financial Sector Dr. Md. Kabir Ahmed, Deputy Governor of Bangladesh Bank and Chief Guest at the event, highlighted the transformative nature of IFRS 9 for an emerging economy like Bangladesh.
"For an emerging economy like Bangladesh—with its dynamic and expanding financial sector—the implementation of IFRS 9 represents a paradigm shift," Dr. Ahmed stated.
He said that the standard enables financial institutions to be better prepared for potential future losses and more resilient to economic shocks.
ICAB President N K A Mobin FCA echoed this sentiment, emphasizing that adopting IFRSs is "not merely a technical compliance exercise" but a fundamental requirement for fostering international investor confidence.
"As the core and most relevant professional accountancy body in Bangladesh, ICAB considers it a sovereign duty to lead the discourse, build capacity, and facilitate a smooth transition to these global benchmarks," Mobin said.
He also stressed that effective implementation demands joint efforts from key regulators, including the Bangladesh Bank, the Bangladesh Securities and Exchange Commission (BSEC), and the Financial Reporting Council (FRC), as well as the preparers of financial statements.
ICAB and FRC Sign MoU to strengthen financial statement verification with DVS
Data gaps and weak models despite the clear benefits, experts at the webinar highlighted several critical challenges unique to the Bangladeshi context:
While default data is often accessible, recovery data remains sparse. This data gap limits the discriminatory power of models and significantly slows down the implementation of IFRS 9, which governs the accounting for financial instruments, particularly expected credit losses (ECL).
Forward-Looking Information: Many banks lack sufficient historical data to differentiate future economic scenarios or make reliable probability-weighted estimates for loss predictions.
Rajith Perera, Partner at Ernst & Young and Risk Management Leader of the Institute of Chartered Accountants of Sri Lanka, noted that many banks lack strong models for estimating ECL, with validation exercises often revealing models that are not robust enough to produce accurate Probability of Default (PD) and Loss Given Default (LGD) estimates.
Sk. Ashik Iqbal FCA, Partner at Nurul Faruk Hasan & Co., Chartered Accountants, described the shift from the old incurred loss model to the Expected Credit Loss (ECL) framework as a "survival test" for many banks.
"Unlike large international institutions with decades of credit data, most Bangladeshi banks are implementing IFRS 9 with patchy information systems, limited modelling expertise, and intense regulatory oversight," Iqbal cautioned.
He warned that weak models, inconsistent default definitions, or poorly designed scenarios could add confusion instead of clarity.
Recommendations for Implementation To overcome these hurdles, industry professionals recommended a multi-dimensional approach focused on:
Technology Investment: Investing in robust technology platforms to support automation, data integration, and real-time reporting.
Governance Frameworks: Establishing strong governance frameworks and oversight mechanisms.
Portfolio Review: Revisiting portfolio segmentation strategies to better align with risk profiles and regulatory requirements.
Data Infrastructure: Strengthening data infrastructure to handle the increased granularity and frequency of reporting required by the new standard.
The session was presided over by Muhammad Mehedi Hasan, Vice President-ICAB & Partner, Rahman Rahman Huq, Chartered Accountants.