Photo : Collected

DHAKA, Oct 21, 2025 (BSS) – Experts at a webinar today laid emphasis on proper implementation of the International Financial Reporting Standards (IFRS) 9 for robust modelling, reliable data, and cohesive coordination between risk and finance functions.

They observed 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.

Speaking at the webinar titled “Implementing IFRS 9: Global Insights and Bangladesh Perspectives,” organized by the Institute of Chartered Accountants of Bangladesh (ICAB), industry professionals highlighted several critical challenges in implementing the standard. 

Muhammad Mehedi Hasan, Vice President-ICAB & Partner, Rahman Rahman Huq, Chartered Accountants, presided over the webinar as the session chairman.

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. Experts noted that the weak correlation between macroeconomic factors and default rates further reduces the reliability of predictive modelling.

As chief guest, Dr Md. Kabir Ahmed, Deputy Governor of Bangladesh Bank, said that for an emerging economy like Bangladesh—with its dynamic and expanding financial sector—the implementation of IFRS 9 represents a paradigm shift. It enables financial institutions to be better prepared for potential future losses and more resilient to economic shocks.

Addressing the session, N K A Mobin FCA, 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 emphasized 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 & 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.

Another keynote speaker, Sk. Ashik Iqbal FCA, Partner at Nurul Faruk Hasan & Co., Chartered Accountants, noted that “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.