Banking Structure of Bangladesh Bank Management Coursework
Banking Structure of Bangladesh Prepared for Dr. Toufic Ahmad Choudhury Director General of Bangladesh Institute of Bank Management (BIBM) Visiting aculty Institute of Business Administration (IBA) !ni"ersity of Dhaka
Prepared by #afis !ddin Mehran ($%&') Md. aad ikder ($%&'*) +arashar aha ($%&*,) Md. -unayed asan ($%&/,) Ahnaf Tahmid ($%&,,')
BBA 21st Batch
Institute of Business Administration(IBA) !ni"ersity of Dhaka
Date of Submission: 24 th August, 21!
"etter of #ransmittal 24th August, 21!
Dr. Toufic Ahmad Choudhury Director General of Bangladesh Institute of Bank Management (BIBM) Visiting aculty Institute of Business Administration (IBA)0 !ni"ersity of Dhaka Sub$ect: "etter of transmittal for the %n&estment Policy Statement '%PS( Assignment
ir1 2e ha"e 3re3ared this formal re3ort as 3art of our Bank Management course4ork. The title of our 3a3er is 5Banking tructure of Bangladesh6. The re3ort has 7een 3re3ared under your su3er"ision and there7y0 no 3art of it can or 4ill 7e re"ealed to any e8ternal 7odies unless and until you 3ermit other4ise. 2e certify to you that the 3a3er has ne"er 7een and neither 4ill it e"er 7e0 re3roduced for any other course. 2e ho3e that 2e ha"e 7een a7le to fulfill the course re9uirements successfully through the su7mission of this re3ort. 2e ha"e 3ut in our 7est efforts to contri7ute to4ards its com3letion and ho3e that it 4ill reach the standards you ha"e set for us. 2e ha"e tried our 7est to make the re3ort as com3rehensi"e as 3ossi7le 7ut if any discre3ancy or incongruity attracts your eyes0 4e 4ould a33reciate it "ery much if you notify us and hel3 us get rid of our mistakes. :ours sincerely0 #afis !ddin Mehran ($%&') Md. aad ikder ($%&'*) +arashar aha ($%&*,) Md. -unayed asan ($%&/,) Ahnaf Tahmid ($%&,,') BBA 21st Batch %nstitute of Business Administration'%BA( )ni&ersity of Dhaka
Table of Contents Introduction......................................................................................................................................; inancial ector of Bangladesh.......................................................................................................; The Banking tructure of Bangladesh.............................................................................................' The Central 7ank< Bangladesh Bank<.......................................................................................... The su7ordinate Banks of Bangladesh Bank............................................................................... ,.
cheduled Banks<..........................................................................................................
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tate =4ned Commercial Banks (=CBs)<......................................................................
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3eciali>ed Banks (DBs)<...............................................................................................*
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+ri"ate Commercial Banks (+CBs)<..................................................................................*
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Con"entional +CBs<..........................................................................................................*
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Islamic hariah 7ased +CBs.............................................................................................*
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oreign Commercial Banks (CBs)<.................................................................................*
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#on&cheduled Banks<..................................................................................................*
Bi7liogra3hy..................................................................................................................................../
Introduction Banks can 7e defined as an esta7lishment authori>ed 7y a go"ernment to acce3t de3osits0 3ay interest0 clear checks0 make loans0 act as an intermediary in financial transactions0 and 3ro"ide other financial ser"ices to its customers.
o0 7anks 3erform a lot of function however, the core function of a bank only include
taking deposits in form cash from surplus units of the economy & giving out loans to the deficit units of the economy. All the other services provided by banks are ancillary or off balance sheet activities. Bangladesh is a de"elo3ing country. Banking sector 3lays a 3i"otal role in the economic de"elo3ment of the country. Banking system of a country can 4ell 7e said as a 7arometer of its economic 3ros3erity. 2ell&de"elo3ed 7anking system is indis3ensa7le for modern trade and commerce. #o4&a&days0 7anks not only act as custodian of 3u7lic money 7ut also are indis3ensa7le as "ital agent for maintenance of sound financial 3osition of a country.
Financial Sector of Bangladesh The financial system of Bangladesh is com3rised of three 7road fragmented sectors< ,. ormal ector ?. emi&ormal ector @. Informal ector The sectors ha"e 7een categori>ed in accordance 4ith their degree of regulation. The formal sector includes all regulated institutions like Banks0 #on&Bank inancial Institutions (Is)0 Insurance Com3anies0 Ca3ital Market Intermediaries like Brokerage ouses0 Merchant 7anks. The semi*formal sector includes those institutions 4hich are regulated other4ise 7ut do not fall under the urisdiction of Central Bank0 Insurance Authority0 ecurities and 8change Commission or any other enacted financial regulator. This sector is mainly re3resented 7y 3eciali>ed inancial Institutions like ouse Building inance Cor3oration (BC)0 +alli arma ahayak oundation (+)0 ama7ay Bank0 Grameen Bank etc.0 #on&Go"ernmental =rgani>ations.
The informal sector includes 3ri"ate intermediaries 4hich are com3letely unregulated. (inancial ector of Bangladesh0 ?,')
So, the banking system of Bangladesh falls under the category of Formal Sector. Bangladesh has a mi8ed 7anking system com3rising nationali>ed0 3ri"ate and foreign commercial 7anks. Bangladesh Bank is the central 7ank of the country and is in charge of monetary 3olicies of the Go"ernment and controls all commercial 7anks. (Banking ystem of Bangladesh0 ?,')
The Banking Structure of Bangladesh BA+"AD-S. BA+/ (he !entral bank is at the top of the Banking structure in Bangladesh"
Scheduled Banks (#$ Scheduled Bangladesh"
State 3ned ommercial Banks 'S3B(
Specialied Banks 'SDB(
Banks
+on Scheduled Banks in
Pri&ate ommercial Banks 'PB(
(% on schedule banks are there in Bangladesh"
0oreign ommercial Banks '0B(
on&entional PB Shariah Based PB
The Central bank: Bangladesh Bank: The Bangladesh Bank 3erforms all the functions that a central 7ank in any country is e83ected to 3erform. uch functions include maintaining 3rice sta7ility through economic and monetary 3olicy measures0 managing the country6s foreign e8change and gold reser"e0 and regulating the 7anking sector of the country. Eike all other central 7anks0 Bangladesh Bank is 7oth the go"ernment6s 7anker and the 7anker6s 7ank0 a Flender of last resort. Bangladesh Bank0 like most other central 7anks0 e8ercises a mono3oly o"er the issue of currency and 7anknotes. 8ce3t for the one& and t4o&taka notes0 it issues all other denominations of Bangladeshi taka. (Bangladesh Bank0 ?,') The maor functional areas include< •
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ormulation and im3lementation of monetary and credit 3olicies. %egulation and su3er"ision of 7anks and non&7ank financial institutions0 3romotion and de"elo3ment of domestic financial markets.
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Management of the countryHs international reser"es.
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Issuance of currency notes.
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%egulation and su3er"ision of the 3ayment system.
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Acting as 7anker to the go"ernment.
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Money laundering 3re"ention.
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Collection and furnishing of credit information.
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Im3lementation of the oreign 8change %egulation Act.
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Managing a de3osit insurance scheme.
The subordinate Banks of Bangladesh Bank After the inde3endence0 7anking industry in Bangladesh started its ourney 4ith ' #ationali>ed commerciali>ed 7anks0 ? tate o4ned 3eciali>ed 7anks and @ oreign Banks. In the ,/*Hs 7anking industry achie"ed significant e83ansion 4ith the entrance of 3ri"ate 7anks. #o40 7anks in Bangladesh are 3rimarily of t4o ty3es<
15 Scheduled Banks: The 7anks 4hich get license to o3erate under Bank Com3any Act0 ,//, (Amended u3 to ?,@) are termed as cheduled Banks. There are 67 scheduled banks in Bangladesh 4ho o3erate under full control and su3er"ision of Bangladesh Bank 4hich is em3o4ered to do so through Bangladesh Bank =rder0 ,/? and Bank Com3any Act0 ,//,. cheduled Banks are classified into follo4ing ty3es< •
State Owned Commercial Banks (SOCBs): There are ! S3Bs 4hich are fully or maorly o4ned 7y the Go"ernment of Bangladesh.
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Seciali!ed Banks (S"Bs): 2 specialied banks are no4 o3erating 4hich 4ere esta7lished for s3ecific o7ecti"es like agricultural or industrial de"elo3ment. These 7anks are also fully or maorly o4ned 7y the Go"ernment of Bangladesh.
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#ri$ate Commercial Banks (#CBs): There are 89 pri&ate commercial banks 4hich are maorly o4ned 7y the 3ri"ate entities. +CBs can 7e categori>ed into t4o grou3s<
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Con$entional #CBs: 81 con&entional PBs are no4 o3erating in the industry. They 3erform the 7anking functions in con"entional fashion i.e. interest 7ased o3erations.
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Islamic Shariah based #CBs< There are %slamic Shariah based PBs in Bangladesh and they e8ecute 7anking acti"ities according to Islamic hariah 7ased 3rinci3les i.e. +rofit&Eoss haring (+E) mode.
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Foreign Commercial Banks (FCBs): / 0Bs are o3erating in Bangladesh as the 7ranches of the 7anks 4hich are incor3orated in a7road. (inancial ector of Bangladesh0 ?,')
25 %on&Scheduled Banks: The 7anks 4hich are esta7lished for s3ecial and definite o7ecti"e and o3erate under the acts that are enacted for meeting u3 those o7ecti"es0 are termed as #on&cheduled Banks. These 7anks cannot 3erform all functions of scheduled 7anks. (inancial ector of Bangladesh0 ?,')
There are no4 4 non*scheduled banks in Bangladesh 4hich are< •
Ansar VD+ !nnayan Bank0
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armashangosthan Bank0
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+ro7ashi ollyan Bank0
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-u7ilee Bank
Bibliograh' Bangladesh Bank . (?,'0 August ?). %etrie"ed from htt3s
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Financial Sector of Bangladesh. htt3s
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