Bangladesh Bank

Department of Banking Inspection 4

Name & Designation Email Telephone Fax
Md. Khurshid AlamDeputy Governor
S.M. Abdul HakimExecutive Director

Bangladesh Bank is empowered vide Bangladesh Bank Order 1972 and Section 44 of the Bank Companies Act, 1991 to regulate and supervise the banking companies and financial institutions of the country. The Department of Banking Inspection-4 (DBI-4) is one of the core departments of Bangladesh Bank, which is entrusted with the responsibility of supervising the performance of selected private commercial banks that are operating in the country with special emphasis on regulatory and supervisory compliances. This department conducts on-site inspections periodically, however on-site surveillance receives more emphasis in its way of operations.

At present DBI-4 supervises the activities of the following 11 Private Commercial Banks (PCBs):

01 United Commercial Bank PLC 07 Eastern Bank PLC
02 BRAC Bank PLC 08 The City Bank PLC
03 Mercantile Bank PLC 09 Modhumoti Bank PLC
04 Southeast Bank PLC 10 Meghna Bank PLC
05 Mutual Trust Bank PLC 11 Padma Bank PLC
06 One Bank PLC

Stability and soundness of the country's financial service industry mostly depends on the smooth operations of the financial system. With a view to ensuring stability in the financial system, DBI-4 examines the books of accounts and related documents/records through on-site inspection of aforementioned banks' head offices and branches as per schedule or on a surprise basis whenever necessary mainly to ensure the safety of the depositors' money. Moreover, the inspectors examine the books of accounts and related documents/records of these banks on a sample basis in order to ascertain their financial soundness, quality of portfolios, management efficiency and risk exposure so that their operations cannot be detrimental to depositors' interest and to the economy as a whole. Findings of inspections/unearthed irregularities are monitored closely through submission of compliance report with supporting documents, as and when required.

    In broad spectrum, functions of DBI-4 can be categorized into following 3 types of on-site inspections:
  • A) Comprehensive/Regular Inspection,
  • B) Core Risk Inspection and
  • C) Special Inspection.
A. Comprehensive Inspection:
    Comprehensive inspections are conducted as per inspection program prepared annually. Some key areas of comprehensive inspection are:
  1. Evaluation of assets giving emphasis on classification and provisioning;
  2. Assessment of regulatory capital requirement;
  3. Verification of window-dressing relating to profit;
  4. Review of liquidity position;
  5. Evaluation of loan operation;
  6. In-depth analysis of large loans and concentrated of credit;
  7. Detection of fraud, forgery and actions taken against thereof;
  8. Evaluation of quality of corporate governance and customer services and
  9. Compliance required as per various guidelines/instructions/circulars issued by Bangladesh Bank as well as other regulatory authorities (e.g. Ministry of Finance, National Board of Revenue, Registrar of Joint Stock Companies and Firms, Bangladesh Securities and Exchange Commission, etc.).
B. Core Risk Inspection:
    This department conducts risk based inspections covering following key risk areas:
  1. Credit Risk Management (CRM);
  2. Internal Control and Compliance (ICC);
  3. Asset-Liability Management (ALM) and
  4. Information and Communication Technology (ICT).
C. Special Inspection
Special inspections are carried out in addition to routine inspection programs as per requirements, i.e requirements from other departments (i.e. BRPD, DOS etc.) or as per instructions of appropriate authority.

After completion of inspection program, inspection reports are prepared by the inspection teams incorporating their findings and recommendations which are solely meant for compliance by the concerned banks. Based on the findings of the inspection, banks are assigned supervisory ratings using the CAMELS supervisory model. Officials examine and monitor the compliance of findings of inspections and evaluate the banks' actions whether those are adequate enough in respect of the recommendations given in the inspection reports. On various circumstances banks are informed the major areas of supervisory concern that need immediate rectification. If necessary, supervisory discussions are held to ensure drawing up of specific, time-bound and achievable action plan. Moreover, a specific unit, namely Enforcement and Implementation Unit (EIMU) is assigned for intense monitoring of the compliance status of the banks.