BANGLADESHBANK

HEADOFFICE

Departmentof
OffsiteSupervision

POSTBOXNO.325
DHAKA1000

08Bhoishak,1417
DOSCircularNo.01Date:
21April,2010
ChiefExecutives
AllScheduledBanks/FinancialInstitutionsinBangladesh.

DearSir,

GuidelinesonStressTesting

Youareawarethatmeasuring,monitoringandcontrollingvarioustypesofrisksisvitalfor

ensuring the health of a financial institution as well as of the whole financial system. Financial
institutions around the world are increasingly employing sophisticated techniques for managing
risks.StressTestingisoneofsuchtechniquesthathavebeenusedtodeterminethereactionsof
different financial institutions under a set of exceptional, but plausible assumptions through a
seriesofbatteryoftests.Atinstitutionallevel,stresstestingtechniquesprovideawaytoquantify
the impact of changes in a number of risk factors on the assets and liabilities portfolio of the
institution.

In order to further strengthen the countrys financial system, Bangladesh Bank (BB) has
also designed a stress testing framework for banks and FIs to proactively manage risks. For this
purpose, and to ensure consistency, BB has prepared a Guideline for banks and FIs. This model
guideline initially focuses on Simple Sensitivity and Scenerio Analysis. But with the increasing
knowhowandavailabilityofmoredatathismodelwillundergofurtherrefinementovertime.

AllbanksandFIsareadvisedtocarryoutthestresstest,asperattachedguidelines,from
thehalfyearendingJune2010.TheyshallalsosubmitareportintheformatattachedasAnnexII
totheguidelines,within45daysofthecloseof30June2010,alongwithasoftcopy.Banksshall
submit their reports to the Department of Offsite Supervision and the FIs shall submit their
reportstotheDepartmentofFinancialInstituionsandMarkets(DFI&M).Subsequently,thestress
test shall be carried out on half yearly basis i.e. on June 30 and December 31 on each year and
resultsshallbesubmittedtotheDOSandDFI&Mwithin45daysofthecloseofeachhalfyear.

Pleaseacknowledgereceipt.

Enclosure:AsAbove.Sd/

(S.K.SurChowdhury)
GeneralManager
Phone:7120376