What is the impact of Basel II on banks in Bangladesh

Basel-II for FI1

Under the new framework, banks will need to provide capital for credit risk based on the risk associated with their loan portfolios. If a bank has high-quality credit exposures (for example, if the majority of its credit exposures are in the ‘AAA’ and ‘AA’ categories) it will save capital on account of credit risk; the difference is apparent in the illustration below. Conversely, a bank with relatively lower rated credit exposures will need to provide more capital.