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Financial system of bangladesh July 2019
1.
2.
3.
4.
5. BB's repo & reverse
repo auctions
BB bills auctions
Treasury bills auctions
Active secondary
trade in treasury bills
Comprises of banks and
financial institutions as
intermediaries
20 of them are primary
dealers in treasury
securities
13. Central Depository Bangladesh Ltd. (CDBL): established in 2000, the only
depository system for the transaction and settlement of financial securities.
Stock dealers or brokers: bound to be a member of any of the two stock
exchanges. At present, DSE and CSE have 238 and 136 members
respectively.
Merchant Banker & Portfolio Manager: 62 companies are licensed by BSEC.
14. Asset Management Companies (AMCs): AMCs are authorized to act as issue and
portfolio manager of the mutual funds. There are 43 AMCs in Bangladesh at
present.
Credit Rating Companies (CRCs): 5 CRCs have been accredited by SEC.
Investment Corporation of Bangladesh (ICB): ICB is a specialized capital
market intermediarywhich was established in 1976. ICB has three
subsidiaries:
ICB Capital Management Ltd.,
ICB Asset Management Company Ltd.,
ICB Securities Trading Company Ltd.
15. Banks:
There are currently 59 scheduled banks in Bangladesh classified in to the
following types:
State Owned Commercial Banks (SOCBs)
Specialized Banks (SDBs)
Private Commercial Banks (PCBs)
Conventional PCBs
Islami Shariah based PCBs
Foreign Commercial Banks (FCBs)
16. There are now 5 non-scheduled banks in Bangladesh which are:
Ansar VDP Unnayan Bank,
Karmashangosthan Bank,
Grameen Bank,
Jubilee Bank,
Palli Sanchay Bank
17. Non-Banking Financial Institutions (NBFIs)
34 NBFIs are operating in Bangladesh while the maiden one was established in
1981.
Out of the total, 2 is fully government owned, 1 is the subsidiary of a SOCB, 15 were
initiated by private domestic initiative and 15 were initiated by joint venture
initiative.
Major sources of funds of FIs are Term Deposit (at least three months tenure),
Credit Facility from Banks and other FIs, Call Money as well as Bond and
Securitization.
18. Insurance Companies: 76 companies are operating in Bangladesh.
They provide following services:
Life insurance
General Insurance
Reinsurance
Micro-insurance
Takaful or Islami insurance
19. Microfinance Institutions (MFIs): constitute a rapidly growing segment of the Rural
Financial Market (RFM) in Bangladesh.
Microcredit programs (MCP) in Bangladesh are implemented by various
commercial banks and specialized banks, specialized government organizations and
Non-Government Organizations (NGOs).
Around 30 million people are directly benefited from microcredit programs.
Currently, 599 institutions have been licensed by MRA to operate Micro
Credit Programs.
21. Semi-formal
Sector
1. House Building Finance Corporation (HBFC)
2. Palli Karma Sahayak Foundation (PKSF)
3. Grameen Bank
4. Jubilee Bank
5. Ansar VDP Unnayan Bank
6. Karmasangsthan Bank
7. Probashi Kallyan Bank
8. Palli Sanchay Bank
Ministries of the
Government
Informal Sector Shadow Banking Not Regulated
SECTORS INSTITUTIONS REGULATORS
22.
23. Financial instruments are monetary contract that can be traded
between parties.
ā¢ Financial instrument generates financial asset to one parties
involved
And equity instrument or financial liability to other entity.
24. ā¢ Stock
ā¢ Bonds
ā¢ Bank and
consumer loans
ā¢ T-bills: 736,000 million BDT (Short term)
(Bangladesh Bank, 2019)
ā¢ Repurchase agreements (inter-bank repo
rate 4-6%)
ā¢ Commercial paper (7 days to 1 year)
ā¢ Negotiable certificate of deposit
ā¢ Banker's acceptance (30 to 180 days)
Financial instruments can be classified as (Saunders & Cornett, 2012):
25. Financial assets can be classified as (Rose, 1997):
Bangladesh Bank. (2019). Primary Issuance of Government Treasury Bills and Bonds . Retrieved from Bangladesh
Bank : https://www.bb.org.bd/monetaryactivity/tbillnbond/pri_gov_tbillnbond.php
Share of a firm
(common and
preferred).
Claim against firm's
profits and against
proceeds from the sale
of its assets.
Bonds, notes,
accounts payable,
savings deposits.
Fixed (time and
amount) claim
backed by collateral.
Currency, coin, checking
accounts.
Most liquid form of
asset.
Notes in circulation 1.6
thousand billion BDT
(Bangladesh Bank, 2019)
26. Stock
ā¢ Positive correlation of GDP and market cap of main stock
exchange of a country.
ā¢ Bangladesh has 41st
largest GDP, market cap of Dhaka
Stock Exchange $47.34 billion
ā¢ Chile (43), market cap of Santiago Stock Exchange $269
Billion
ā¢ (to make us feel even worse) Pakistan (206), $54 billion.
(Desjardins, 2016)
J. (Desjardins 2016). All of the Worldās Stock Exchanges by Size. The Money Project.
27. Bonds
ā¢ The global bond market has more than tripled in the past
15 years and exceeds $100 trillion.
ā¢ That is 40 percent larger than the total value of global
stock markets.
ā¢ In Bangladesh, debt instruments are mostly public.
ā¢ The size of the corporate bond market is very scanty --
only 0.2 percent of GDP
(Banerjee, 2018)
Banerjee, P. K. (2018). Vibrant corporate bond market key to higher economic growth. Dhaka: The Daily Star.
28. ā¢ Poor stock market
cap compared to
GDP
ā¢ Lack of fund in
private projects
ā¢ Lack of financial
literacy of public
ā¢ Progress towards
cashless economy -
banking in remote areas
with intermediaries like
bKash
ā¢ Some major private
corporations are coming
to bond market
ā¢ Unhealthy competition
and lack of corporate
governance - high
percentage of bad
debt ābanks are
struggling.
ā¢ Bond market is
dominated by Govt.
bonds