Assignment on Financial Institutions and Markets (BBA Course) of Banking Industry in Bangladesh

1. INSTITUTE OF BUSINESS ADMINISTRATION
JAHANGIRNAGAR UNIVERSITY
ASSIGNMENT ON
Banking Industry in Bangladesh
Submitted To:
Palash Saha
Associate Professor
Course Instructor
Financial Instruments and Markets- [FIN 402]
Submitted By:
Fara Ul Fath
Class ID: 2215
Batch: 26
Reg. No:45971
Date of Submission
23 June, 2019

2. Banking Industry in Bangladesh,2019
The Bangladesh banking part with respect to the size of its economy is relatively bigger than
numerous economies of comparable dimension of improvement and per capita salary. The
absolute size of the area at 26.54% of Gross domestic product overwhelms the money related
framework.
The part includes various banks in different classes. Considering ownership, the sector can be
classified in to the following categories -
A. State Owned Commercial Banks (SOCBs),
B. State Owned Development Financial Institutions (DFIs),
C. Private Commercial Banks (PCBs) and
D. Foreign Commercial Banks (FCBs)
The Nobel Prize for Grameen Bank is a specialized micro-finance institution, the concept of
microcredit revolution and a major contribution to poverty alleviation and empowerment of
women in Bangladesh. Information on the banking structure by types of banks is shown in the
following table –
Banking System Structure
(billion Taka)
Bank Types Number of
Banks
Number of
Branches
Total
Assets
% of
Industry
Assets
Deposits % of
Deposits
State Owned
Commercial
Banks
06 3700 3219.1 26.1 2447.4 29.0
State Owned
Development
Financial
Institutions
02 1407 302.2 2.5 247.4 2.9

3. 3
Private
Commercial
Banks
39 4271 8254.6 67.0 5382.3 63.8
Foreign
Commercial
Banks
09 75 550.6 4.5 358.9 4.3
Total 56 9453 12326.4 100.0 8436.0 100.0
Source: Bangladesh Bank, June 2016
Former conditionof Banking in Bangladesh
The principal present day bank headquartered in Dhaka was Dacca Bank, built up in 1846. It
completed an exceptionally restricted business and did not issue banknotes. It was acquired by
Bank of Bengal in 1862. Bank of Bengal opened branches in Sirajganj and Chittagong in 1873,
and in Chandpur in 1900. In 1947, upon the Segment of Bengal, it had six branches in East
Bengal, in Dhaka, Chittagong, Chandpur, Mymensingh, Rangpur, and Narayanganj.
In the start of 1971, there were 1130 parts of 12 banks in task in East Pakistan. The establishment
of autonomous financial framework in Bangladesh was laid through the foundation of the
Bangladesh Bank in 1972 by the Presidential Request No. 127 of 1972 (which produced results
on sixteenth December,1971)..
After the freedom of Bangladesh, the twelve Financial organizations who were working together
in Bangladesh, were nationalized by the Administration of the General population's Republic of
Bangladesh under president's structure No.26 of 1972 entitled "The Bangladesh Bank
(Nationalizations) Request, 1972" on Walk 26, 1972.These are –
Existing Bank
New Bank after
Independence
Authorized
Capital (Lac Tk.)
Paid-up
Capital (Lac
Tk.)
The National Bank of Pakistan,
The Bank of Behawalpur Ltd.
Sonali Bank 500 200

4. 4
The Premier Bank Ltd., The
Habib Bank Ltd., The
Commerce Bank Ltd.
Agrani Bank 500 100
The United Bank Ltd., The
Union Bank Ltd.
Janata Bank 500 100
The Muslim Commercial Bank
Ltd., The Standard Bank Ltd.
Rupali Bank 500 100
The Austrasia Bank Ltd., The
Eastern Mercantile Bank Ltd.
Pubali Bank 500 100
The Eastern Banking
Corporation Ltd.
Uttara Bank 500 100
There were no domestic private commercial banks in Bangladesh until 1982; When the Arab-
Bangladesh Bank Ltd. commenced private commercial banking in the country.
Types of Banks in Bangladesh
Banking sector of Bangladesh is primarily of two types –
i. Scheduled Bank
ii. Non-scheduled Bank
Scheduled Banks: The banks which get license to operate under Bank Company Act, 1991
(Amended up to 2013) are termed as Scheduled Banks. State-owned commercial banks, private
commercial banks, Islamic commercial banks, foreign commercial banks and some specialized
banks are Scheduled Bank.
Non-Scheduled Banks: The banks which are built up for extraordinary and clear target and
work under the demonstrations that are instituted for gathering up those goals, are named as
Non-Booked Banks. These banks can't play out all elements of booked banks.

5. 5
Grameen Bank, Probashi Kallyan Bank, Karmasangsthan Bank, Progoti Co-operative Land
Development Bank Limited (Progoti Bank) and Answer VDP Unnayan Bank are Non-Scheduled
Bank.
There are now 6 non-scheduled banks in Bangladesh which are:
1. Ansar VDP Unnayan Bank,
2. Karmashangosthan Bank,
3. Grameen Bank,
4. Jubilee Bank,
5. Probashi Kollyan Bank,
6. Palli Sanchay Bank
List of Banks in Bangladesh
The following table contents the list of existing and running banks in Bangladesh –
Scheduled Banks
A. Central Bank
Bangladesh Bank Commenced on 1972
B. State Owned Commercial Banks
Banks Established
1. Agrani Bank Limited 26 March 1972
2. Janata Bank Limited By Bank Nationalisation Ordinance of 1972
3. Rupali Bank Limited By Bank Nationalisation Ordinance of 1972
4. Sonali Bank Limited By Bank Nationalisation Ordinance of 1972
5. Bangladesh Development Bank
Limited
On 16 November, 2009 by amalgamation
of Bangladesh Shilpa Bank (BSB) and

6. 6
Bangladesh Shilpa Rin Sangstha (BSRS)
6. BASIC Bank Limited 21 January, 1989
C. State Owned Specialized Banks
1. Bangladesh Krishi Bank 1973
2. Rajshahi Krishi Unnayan Bank
(RAKUB)
15 March 1987 (President's Ordinance No. 58
of 1986)
D. Private Commercial Banks (PCBs):
I. Conventional PCBs
1. AB Bank Limited 12 April, 1982
2. Bangladesh Commerce Bank Limited 16 Sep, 1999
3. Bank Asia Limited 27 November, 1999
4. BRAC Bank Limited 4 July, 2001
5. City Bank Limited 27 March, 1983
6. Dhaka Bank Limited 5 July, 1995
7. Dutch-Bangla Bank Limited 3 June, 1996
8. Eastern Bank Limited 1992
9. IFIC Bank Limited 1976
10. Jamuna Bank Limited 3 June, 2001
11. Meghna Bank Limited 21 April, 2013
12. Mercantile Bank Limited 2 June 1999
13. Midland Bank 9 April, 2013
14. Modhumoti Bank Limited 19 September, 2013
15. Mutual Trust Bank Limited 24 October, 1999

7. 7
16. National Bank Limited 28 March, 1983
17. National Credit & Commerce Bank Limited In 1993 as commercial bank
18. NRB Bank Limited 2013
19. NRB Commercial Bank Limited 2013
20. NRB Global Bank Limited 2013
21. One Bank Limited May, 1999
22. Premier Bank Limited 10 June, 1999
23. Prime Bank Limited 17 April, 1995
24. Pubali Bank Limited
By Bank Nationalisation Ordinance of
1972; denationalized in the year 1983
25. South Bangla Agriculture & Commerce Bank
Limited
25 March, 2013
26. Southeast Bank Limited March, 1995
27. Standard Bank Limited 3 June, 1999
28. The Farmers Bank Limited 11 September, 2012
29. Trust Bank Limited 1999
30. United Commercial Bank Limited 1983
31. Uttara Bank Limited By Bank Nationalisation Ordinance of
1972; denationalized in the year 1983
32. Shimanto Bank Ltd 21 July, 2016
II. Islami Shariah based PCBs
1. Al-Arafah Islami Bank Limited 27 September, 1995
2. EXIM Bank Limited 3 August, 1999
3. First Security Islami Bank Limited August 29, 1999

8. 8
4. ICB Islamic Bank Limited April, 1987
5. Islami Bank Bangladesh Limited 13 March, 1983
6. Shahjalal Islami Bank Limited 10 May, 2001
7. Social Islami Bank Limited 22 November, 1995
8. Union Bank Limited 2013
E. Foreign Commercial Banks
Banks Started Operations in Bangladesh
1. Bank Al-Falah Limited 2005
2. Citibank N.A 1995
3. Commercial Bank of Ceylon PLC 2003
4. Habib Bank Limited 1976
5. National Bank of Pakistan August, 1994
6. Standard Chartered Bank 1905 (including ANZ Grindlays experience;
SCB originally established its first branch in
Chittagong in 1948)
7. State Bank of India
8. Woori Bank September 1996
9. HSBC Bank 1996
Non-scheduled Banks
1. Ansar VDP Unnayan Bank
2. Karmashangosthan Bank
3. Grameen Bank
4. Jubilee Bank
5. Probashi Kollyan Bank
6. Palli Sanchay Bank
NBFI : Non-BankFinancial Institutions

9. 9
The banks which are set up for uncommon and clear target and work under the demonstrations
that are established for gathering up those goals, are named as Non-Planned Banks. These banks
can't play out all elements of planned banks.
Investment Corporation of Bangladesh International Leasing and Financial Services
Limited
Agrani SME Financing Company Limited Islamic Finance and Investment Limited
Bangladesh Finance and Investment Company
Limited
LankaBangla Finance Limited
Bangladesh Industrial Finance Company
Limited
Meridian Finance and Investment Limited
Bangladesh Infrastructure Finance Fund
Limited
MIDAS Financing Limited
Bay Leasing and Investment Limited National Finance Limited
CAPM Venture Capital and Finance Limited National Housing Finance and Investments
Limited
Delta Brac Housing Finance Corporation
Limited
People's Leasing and Financial Services
Limited
Far-east Finance & Investment Limited Phoenix Finance and Investments Limited
FAS Finance & Investment Limited Premier Leasing & Finance Limited
First Finance Limited Prime Finance & Investment Limited
GSP Finance Company (Bangladesh) Limited Reliance Finance Limited
Hajj Finance Company Limited Saudi-Bangladesh Industrial & Agricultural
Investment Company Limited
IDLC Finance Limited Uttara Finance and Investments Limited
Industrial and Infrastructure Development
Finance Company Limited
The UAE-Bangladesh Investment Company
Limited
Industrial Promotion and Development
Company of Bangladesh Limited
Union Capital Limited
Infrastructure Development Company Limited United Finance Limited

10. 10
Functions of Central Bank
Functions of Commercial Bank

11. 11
Islamic Banking
Nearby the customary enthusiasm bearing financial framework, Bangladesh went into an Islamic
banking framework (benefit misfortune sharing) in 1983. At present, out of all the business
banks in Bangladesh, 8 business banks are working as undeniable Islamic banks.
Presently, an aggregate of 23 open and private business banks are working undeniable or
incompletely Islamic financial activities in Bangladesh. Among them, 8 undeniable Islamic
banks are working with 843 branches, 8 ordinary business keeps money with 19 Islamic financial
branches and 7 business saves money with 25 Islamic financial windows in the nation. An
aggregate of 26,135 representatives are working in 887 Islamic financial branches and windows.
The normal development of store in the financial part in most recent five years (2009-2013) was
19% which was 20% for Islamic banks. For a similar period, the all out resources in banking
division expanded by 19%. Interestingly, Islamic banks have accomplished 21% development.
Mobile Banking in Bangladesh
There are around 151.82 million individuals in Bangladesh (2012) of which just 13 percent have
financial balances though in excess of 95 percent are cell phone clients. Banks would now be
able to offer the financial administrations to both the rustic network and the populace
An ongoing report distributed by the USAID stated, portable cash move is on the ascent in the
nation. Since its dispatch in 2011, portable financial area has been encountering exponential
development.
According to the report, the following table shows the growth of mobile banking in Bangladesh
between January 2013 and February 2014 –
Number of
Agents
Number of
Registered Clients (in
million)
Number of
Transactions
(in million)
Transaction
Value (in million
dollars)
Jan 2013 60,000 5 10 301
Dec 2013 189,000 13.18 31.36 862

12. 12
Jun 2014 414,000 16.7 44.01 1,110
Dec 2014 541,000 25.2 74.47 1,361
Feb 2014 543,000 25.87 76.99 1,423
1. Dutch-Bangla Bank Limited (DBBL) has for the first time introduced its mobile
banking service expanding the banking service from cities to remote areas. Bangladesh
Bank Governor Atiur Rahman inaugurated the service by depositing Tk 2,000 and
withdrawing Tk 1,500 through Banglalink and Citycell mobile networks in Motijheel
area. Bangladesh Bank has already allowed 10 banks to initiate mobile banking. Of them
DBBL kicked off first.
2. BKash, a joint venture between BRAC Bank and US-based Money in Motion, will
provide mobile banking with a fully encrypted VISA technology platform for
transactions through mobile phones. Any mobile user can register and open up a bKash
account and then do transactions through their mobile phones in easy, convenient and
reliable way.
Problems of Banking Sector of Bangladesh
The banking sector in Bangladesh has been performing well in terms of employment generation,
profitability and operations during the past few decades. The value of bank shares in the stock
market is reasonably high. But this sector's performance has noticeably declined in the recent
years. Its investment in private sector industries has down-turned due to anti-investment
environment prevailing in the country. The banking industry has been facing the challenges
arising from political instability and uncertainties, in addition to inept management, frauds,
corruption, inadequate capital base, unprofessional personnel in the management, political
interference in decision making and so on.
Increasing availability of foreign currency loans, depressed commodity prices in international
markets and infrastructural constraints have subdued credit demand from the private sector.
Advance-deposit ratio has fallen to around 70% from 80% (and higher) in previous years.
Banks usually invest excess liquidity in treasury securities. But rise in sale of National savings
schemes (NSS) prompted government to reduce sale of treasury bills and bonds, squeezing
investment options for banks.

13. 13
Problem of banking sector is widespread and is not related to banking system only. The
regulatory entity should be independent but accountable. Prudential regulation should be limited
to deposit-taking institutions and should be clearly separated from non-prudential regulation. The
problem of lower profitability of bank is that it might reduce the tax and thus make a trace on
fiscal system where bank is the number one source of tax under large tax unit of NBR.
Not only are the institutions competing, the regulators and customers are also pitting one
against the other, making the situation extremely difficult giving you the feeling of being stuck
between a rock and a hard wall. A customer will often try to make the best out of the situation by
not complying with the regulatory requirement, referring to the service provided by another bank
or banks.
Other challenges faced by the banking industry in Bangladesh are lack of effective and efficient
corporate governance. Best practice of corporate governance can speed up the operations, cut
corruption, increase profitability and the performance of banks. The performance of private
banks and public banks (state-owned banks) in the country justifies the views of this scribe.
Imbibing best practice of corporate governance in the banking industry is the crying need of the
time.
Experts opine that wrong policies of the policy-makers of banks and the controlling authorities
have made the banking industry week and vulnerable in terms of profitability, operations and
growth.
Finding and Conclusion
The business banks are presently viewed as the nerve arrangement of all monetary advancement in
the Bangladesh. Business banks are presently utilizing most recent data innovation, contending in
the open market with high innovation framework, changing from local banking to speculation
banking. Bangladesh is a rising monetary nation. In Bangladesh we have all out 57 banks to give
their benefits across the nation. In any case, all banks don't give web based financial
administrations. Some bank administrations are exceptionally restricted, (for example, just broad
banking). State possessed business bank and concentrated improvement bank isn't effective for
remote individuals, as a result of their generally lower quality administration.

14. 14
Coming years will observer banks endeavoring to make sound interior control or hazard the
executives forms. With the attention on guideline and hazard the board in the Basel II structure
picking up unmistakable quality, the post-Basel II period will have a place with the banks that deal
with their dangers viably. The keeps money with legitimate hazard the board frameworks would not
just increase upper hand by method for lower administrative capital charge, however would
likewise enhance the investors and different partners by appropriately estimating their
administrations, satisfactory provisioning and keeping up a powerful budgetary structure.
"The future has a place with greater banks alone, just as to those which have limited their
dangers significantly."
References
 A Report on Banking Sector of Bangladesh by Mansur Ahamed (Ph. D),Research
Department, JBBC Corporation
 Banks & FIs (https://www.bb.org.bd/fnansys/bankfi.php)
 Lists of Banks in Bangladesh (http://bankinfobd.com/banks)
 All Bank Listings in BD (http://www.banksbd.org/banks/)
 State Bank of India, Bangladesh (https://sbibd.com/)
 List of International Foreign Banks Bangladesh (http://www.bangladeshtrades.com/banks-in
bangladesh/foreign-banks-in-bangladesh.html)
 Bangladesh Bank (http://en.banglapedia.org/index.php?title=Bangladesh_Bank)