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Financial regulators move to beef up their efficiency

They sign a deal to share information regularly

Star Business Report
The central bank has taken a newer approach to financial regulations in the wake of rising complexities and irregularities in the sector.
Four financial regulatory agencies signed a memorandum of understanding yesterday to contribute to the efficiency and effectiveness of financial regulations.
The agencies are the Bangladesh Bank, Securities and Exchange Commission, Insurance Development and Regulatory Authority and Microcredit Regulatory Authority.
“From now, regulators will be able to share information and views. The move will boost coordination among the financial regulators," said BB Governor Atiur Rahman after the deal.
Though the activities of these regulators are interrelated, there was no formal coordination, which
often led to mismatch in policy formulation.
For example, the Insurance Development and Regulatory Authority in its 2010 laws barred an insurance director to become the same in other financial institutions such as banks and non-banks.
But banking companies law allows a director to become the same in insurance or non-bank financial institutions.
The BB is the regulator for the banks, but the SEC appears as the principal regulator for the banks listed in the stockmarket. The SEC is also the sole regulator for merchant banks and brokerage houses that are involved in some sorts of banking activities.
Similarly, the Insurance Development and Regulatory Authority is the insurance sector’s regulator, but again the SEC is their regulator in the stockmarket.
“The MoU will help ensure stability in the financial sector by formulating coordinated policies and regulatory reforms or the issues where responsibilities overlap," said the BB governor.
The BB in a statement said earlier that these regulators sat informally.
“A formal coordination was necessary for effective cooperation and collaboration among these regulators," said the statement.
Many countries have some sorts of councils as coordinating bodies for their financial regulators.
SM Moniruzzaman, executive director of the BB, said these regulators will sit quarterly to discuss the issues in the financial sector.
"Earlier, we tried to sit, but others were not bound to respond to our request. Now it is an agreement that these four regulators will discuss and share information among them,” he told The Daily Star.