ICAB urges proper IFRS 9 implementation to rebuild confidence in banking sector

The Institute of Chartered Accountants of Bangladesh (ICAB) has called for the effective and coordinated implementation of the International Financial Reporting Standard (IFRS) 9 to enhance transparency, strengthen financial stability, and restore public trust in the country's banking sector.

At a webinar titled "Implementing IFRS 9: Global Insights and Bangladesh Perspectives" organised by ICAB, held today (21 October), experts emphasised that by building technological resilience, reinforcing governance, and investing in data infrastructure, banks can not only ensure compliance but also strengthen their overall financial and operational sustainability.

Muhammad Mehedi Hasan, vice president of ICAB and partner, Rahman Rahman Huq, Chartered Accountants, presided over the webinar as the session chairman, according to a press release.

One of the key challenges discussed was the availability of empirical data. While default data is often accessible, recovery data remains sparse, limiting the discriminatory power of models and slowing down the implementation process of IFRS 9.

Another significant hurdle lies in incorporating forward-looking information, as many banks lack sufficient historical data to differentiate scenarios or make reliable probability-weighted estimates.

Addressing the session, NKA Mobin, president of ICAB, stated that the adoption and implementation of IFRSs are not merely a technical compliance exercise, but a cornerstone for enhancing transparency, strengthening financial stability, and 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," he said.

Mobin emphasised that effective implementation of IFRS 9 requires joint efforts from key regulators, including Bangladesh Bank, the Bangladesh Securities and Exchange Commission (BSEC), and the Financial Reporting Council (FRC).

He also stressed the crucial role of preparers—such as banking institutions, financial entities, and corporations—whose financial statements are directly impacted by this standard.

Delivering the keynote presentation, Rajith Perera, partner at Ernst and young and risk management leader of the Institute of Chartered Accountants of Sri Lanka, discussed the practical challenges encountered during the IFRS 9 implementation phase.

He observed that many banks lacked strong models for estimating Expected Credit Losses (ECL), and validation exercises revealed that existing models were often not sufficiently robust to produce accurate Probability of Default (PD) and Loss Given Default (LGD) estimates.

"In some cases, banks had no existing models at all, requiring the development of new methodologies from scratch," he added.

Another keynote speaker, Sk Ashik Iqbal FCA, partner at Nurul Faruk Hasan & Co, Chartered Accountants, noted that the introduction of IFRS 9 in Bangladesh comes at a time when the country's banking sector faces extraordinary challenges.

Non-performing loans remain stubbornly high, capital buffers are thin, and confidence is fragile.

At the same time, regulators are pressing forward with global standards to bring discipline and transparency.

"For many banks, the shift from the old incurred loss model to the expected credit loss (ECL) framework is not merely a compliance issue—it is a survival test," he said.

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.

According to Iqbal, the opportunity is clear: IFRS 9 can restore trust, improve provisioning discipline, and enforce better governance. But weak models, inconsistent default definitions, or poorly designed scenarios could add confusion instead of clarity, he cautioned.

To address these challenges, industry experts recommended a multi-dimensional approach—including investment in robust technology platforms to support automation, data integration, and real-time reporting.

They further advised banks to establish strong governance frameworks and oversight mechanisms, revisit portfolio segmentation strategies to better align with risk profiles and regulatory requirements, and strengthen data infrastructure to handle the increased granularity and frequency of reporting.