Readiness of the Banking Sector in Bangladesh for IFRS 9 Expected Credit Loss Implementation: A Comparative Perspective from Pakistan, Nepal, and Sri Lanka
Main Article Content
Abstract
Bangladesh Bank has required banks to move from a rule-based loan classification and provisioning regime to an
IFRS 9 expected credit loss (ECL) framework by 2027. This study draws lessons for Bangladeshi banks from
three South Asian jurisdictions that adopted ECL earlier: Sri Lanka (2018), and Nepal and Pakistan (both 2024).
Using a descriptive, comparative design built entirely on publicly available data, the study examines the gross
impairment rates and profitability of the four leading local commercial banks in each country before and after
adoption, and sets these series alongside GDP growth, inflation and unemployment. Average gross impairment
rates were higher after adoption in all three countries, rising from 2.60% to 4.42% in Sri Lanka, from 3.26% to
4.48% in Nepal and from 3.75% to 4.18% in Pakistan, while average profitability was lower. The adoption-year
increase was uniform across banks in Sri Lanka and Nepal but not in Pakistan, where adoption had been deferred
repeatedly. Impairment movements were directionally consistent with macroeconomic conditions, though not
monotonic, and dispersion across banks points to the role of bank-level data, modelling and governance
preparedness. Drawing on regulatory documents and the preparatory measures reported in the comparator
countries, maps these lessons to the phased implementation timeline set by Bangladesh Bank and propose policy
priorities on data infrastructure, modelling capacity, macroeconomic scenario guidance, training, phased transition
and internal coordination. Because the evidence is descriptive, drawn from a small sample with short postadoption windows, the findings are indicative rather than causal
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