| Bangladesh Banking Sector |
| The commercial banking system dominates Bangladesh's financial sector. Bangladesh Bank is the Central Bank of Bangladesh and the chief regulatory authority in the sector.
The banking system consists of four nationalized commercial Banks, around forty private commercial banks, nine foreign multinational banks and some specialized banks. |
| Bangladesh Bank |
Persuant to Bangladesh Bank Order, 1972 the Government of Bangladesh reorganized the Dhaka branch of then State Bank of Pakistan as the central bank of the country, and named it Bangladesh Bank with retrospective effect from 16th December, 1971. Bangladesh Bank was established as a body corporate vide the Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972).
The general superintendence and direction of affairs and business of the Bank are entrusted to a nine member Board of Directors which consists of the Governor as chairman, a Deputy Governor, three senior government officials and four persons having experience and proven capacity in the fields of banking, trade, commerce, industry or agriculture - all nominated by the government. |
The board, which is the highest policy making body, meets at least six times a year and at least once every quarter under the chairmanship of the Governor. The Governor, appointed by the government as the chief executive officer, directs and controls all the affairs of the Bank on behalf of the Board.
The broad objectives of the central bank are :
a) To regulate the issue of the currency and the keeping of reserves;
b) To manage the monetary and credit system of Bangladesh with a view to stabilizing domestic monetary value;
c) To preserve the par value of the Bangladesh Taka;
d) To promote and maintain a high level of production, employment and real income in Bangladesh; and to foster growth and development of the country's productive resources for the national interest |
| Commercial Banks |
The commercial banking system dominates the financial sector with limited role of Non-Bank Financial Institutions and the capital market. The bnking sector alone accounts for a substantial share of assets of the financial system. The banking system is dominated by the four State Owned Commercial Banks, which together controlle more than 30% of deposits and operates
* Ntionalized commercial banks are,Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank
* Private Commercial Banks include AB Bank Limited, BRAC Bank Limited, Eastern Bank Limited, Dutch Bangla Bank Limited, Dhaka Bank Limited, Islami Bank Bangladesh Ltd, Pubali Bank Limited, Uttara Bank Limited, IFIC Bank Limited, National Bank Limited, The City Bank Limited, United Commercial Bank Limited, NCC Bank Limited, Prime Bank Limited, SouthEast Bank Limited, Al-Arafah Islami Bank Limited, Social Investment Bank Limited. Standard Bank Limited, One Bank Limited, Exim Bank Limited, Mercantile Bank Limited, Bangladesh Commerce Bank Limited, Mutual Trust Bank Limited, First Security Bank Limited, The Premier Bank Limited, Bank Asia Limited , Trust Bank Limited, Shahjalal Bank Limited and Jamuna Bank Limited
Foreign banks are Citigroup, HSBC, Standard Chartered Bank, Commercial Bank of Ceylon, State Bank of India, Habib Bank, National Bank of Pakistan, Woori Bank, Bank Alfalah and ICB Islami Bank. |
| Specialized Banks |
Out of the specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit needs of the agricultural sector while the other two ( Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangtha (BSRS) are for extending term loans to the industrial sector[1].
The Specialized banks are Bangladesh Krishi Bank, Bangladesh Shilpa Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Shilpa Rin Sangstha,
Basic Bank Ltd (Bank of Small Industries and Commerce), Bangladesh Somobay Bank Limited(Cooperative Bank) and The Dhaka Mercantile Co-operative Bank Limited (DMCBL) |
| Financial Institutions |
Twenty-nine financial institutions(FIs) are now operating in Bangladesh. Of these institutions, 1(one) is govt. owned, 15 (fifteen) are local (private) and the other 13(thirteen) are established under joint venture with foreign participation.
The total amount of loan & lease of these institutions is Tk.99,091.80 million as on 31 December, 2007. Bangladesh Bank has introduced a policy for loan & lease classification and provisioning for FIs from December 2000 on half-yearly basis.
To enable the financial institutions to mobilize medium and long-term resources, Government of Bangladesh (GOB) signed a project loan with IDA, and a project known as ``Financial Institutions Development Project (FIDP)`` has started its operation from February 2000. Bangladesh Bank is administering the project. The project has established ``Credit, Bridge and Standby Facility (CBSF)`` to implement the financing program with a cost of US$ 57.00 million. |
| Bank Licensing |
Bank Company Act, 1991, empowers the central bank to issue licenses to carry out banking business in Bangladesh. Pursuant to section 31 of the Act, before granting a license, BB needs to be satisfied that the following conditions are fulfilled: "that the company is or will be in a position to pay its present or future depositors in full as their claims accrue; that the affairs of the company are not being or are not likely to be conducted in a manner detrimental to the interest of its present and future depositors; that, in the case of a company incorporated outside Bangladesh, the Government or law of the country in which it is incorporated Bangladesh as the Government or law of Bangladesh grants to banking companies incorporated outside Bangladesh and that the company complies with all applicable provisions of Bank Companies Act, 1991."
Licenses may be cancelled if the bank fails to comply with above provisions or ceases to carry on banking business in Bangladesh. |
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