Financial System and Banking Sector of Bangladesh

Financial System and Banking Sector
Of
Bangladesh
A REPORT
ON

[Principles And Practices of Banking] A Report On [Financial System & Banking Sector of Bangladesh]
Page1
Submitted To:
Ms. Benazir Imam Majumder
Lecturer, Department of Banking and Insurance
University of Dhaka
Submitted By:
Group #4
Group Members
Name Id Signature
Md. Rabiul Islam [L] 23-024
Israt Jahan Sinthy 23-022
Md. Imran Khan 23-028
Mou Ghosh 23-010
Nasir Uddin 23-032
Date of Submission: 4th
May, 2017
Report on
Financial System and Banking Sector of Bangladesh

Page2
Letter of Transmittal
4th
May, 2017
The Course Teacher
Ms. Benazir Imam Majumder
Department of Banking and Insurance
University of Dhaka
Subject: Application for the acceptance of the term paper.
Madam,
Here is the report you have assigned as a part of the course requirement. We have taken this report as an
opportunity to know more about “Financial System and Banking Structure” of our country. Although
we have tried our level best to make the report effective, we realize our report may not be faultless.
We hope that you will be kind enough to remark on its strengths and weaknesses, so that we can
prepare factual reports on such subjects in the future.
Yours sincerely
zi
Md. Rabiul Islam
On behalf of Group 04

Page3
Acknowledgement
We would like to thank The Almighty for His blessings that we were able to finish this report in time.
The completion of the report was much owing to our course teacher Ms. Benazir Imam Majumder
(Lecturer, Dept. of Banking and Insurance, University of Dhaka).We would also like to thank all the
group members who worked hard to finish the report with such devotion, enthusiasm and energy. Their
generosity and assistance are greatly appreciated.
However, this report was a united effort. Therefore, all the credit of our accomplishment spreads to all
the helping hands.

Page4
Table of Contents
Page
Executive Summary 08
Overview 09
Chapter 1 Financial System of Bangladesh 10
1.1 Financial Sectors 10
1.2 Formal Sector 11
1.3 Semi-formal Sector 11
1.4 Informal Sector 11
Chapter 2 Banking Sector of Bangladesh 12
2.1 Historical Background 12
2.2 Scheduled Bank 13
2.3 State owned Commercial banks 13
2.4 Private Commercial Banks 13
2.5 Islamic Commercial Banks 13
2.6 Foreign Commercial Banks 14
2.7 Specialized Banks 14
2.8 Non-Scheduled Banks 14
2.9 Problems in Banking Sector in Bangladesh 15
2.10 Possibilities in Banking Sector in Bangladesh 15
2.11 Guidelines and Regulations 15
Chapter 3 Bangladesh Bank 17
3.1 Departments 17
3.2 Organizational Structure 19
3.3 Governor 20
Chapter 4 Banking Companies Act 23
4.1 Requirements to Established A Bank in
Bangladesh
23
4.2 Opening a Bank account 24

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Chapter 5 Banking Statistics 25
5.1 Top Profit Earning Banks 25
5.2 Top NPL Holder Banks 26
List of Reference 27

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List of Charts
Page
Chapter 1 1.1 Financial Sectors of Bangladesh 10
Chapter 2 2.1 Organizational Structure of Bangladesh 19
Chapter 5 5.1 Profits of Banks of Bangladesh 25

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List of Tables
Page
Chapter 1 1.1 Amount of Banks in Bangladesh 12
Chapter 2 2.1 Departments of Bangladesh Bank 16
2.2 Governors of Bangladesh Bank 20
Chapter 5 5.1 Top Five Banks in Bangladesh 25
5.2 Amount of NPL in Different Banks in Bangladesh 26

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Executive Summary
This report is about financial system and baking sector of our country. It contains
short brief of 3 financial sector of the financial system. In this report, the banking
sector has given extra priority. It also contains the short introduction of different
kinds of banking systems and existing problems and possibilities of the banking
sector. We also give a short description of Bangladesh Bank. At the end, we show
2 statistics about top 5 banks and NPL.

Page9
Overview
Financial system of Bangladesh is getting emerged with the support of Bangladesh Bank, motorized by
Bangladesh Bank Order 1972, which is now substitute as regulatory body of financial institutes. Under
the supervision of Bangladesh Bank, 57 scheduled banks and 31 non-bank financial institutes are
running actively in the country. For shielding the interest of general depositors, it is essential to control
the financial institutes expansively so that payment of depositors may be made on demand. We have to
keep in wits one thing that contagious aspect may be worked in the financial system of Bangladesh in
the case of arising bank run to a particular bank. In that case, the economy of the county may be easily
broken. As a result we will experience the negative growth of the economy in our country. So a brutal
dare we might face if we cannot ensure a substantial financial system in the country

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Financial System of Bangladesh
A financial system is a system that to channels finances from lenders to borrowers, to make liquidity
and money, to supply an outgoing system, to provide financial services such as insurance and pensions
and to offers portfolio adjustment facilities. A developed financial system is one that has a protected
and well-organized payment system, security market and financial intermediaries that plan financing
and derivative markets and financial institutions that provide right to use to risk management
instruments.
The current structure of the financial system in Bangladesh comprises of different types of banks,
insurance companies, and non-bank financial institutions. Bangladesh Bank is at the top of the banking
system and is responsible for assuring prudential administration and central banking actions for all
types of banks working within the banking industry. In contrast, the Securities and Exchange
Commission (SEC) of Bangladesh is the regulatory body for stock-market correlated activities.
1.1 Financial Sectors
The financial system of Bangladesh is comprised of three wide disjointed sectors-
1. Formal Sector
2. Semi-Formal Sector
3. Informal Sector
*Chart: 1.1 : Financial Sectors of Bangladesh
*Source: Bangladesh Bank
Chapter : 1 Mou Ghosh
ID : 23 - 010

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1.2 Formal Sector
The sectors have been categorized in accordance with their quantity of guideline.
The formal sector includes all regulated institutions like Banks, Non-Bank Financial
Institutions, Insurance Companies, Capital Market Intermediaries like Brokerage Houses, Merchant
Banks, and Micro Finance Institutions and so on.
1.3 Semi-formal Sector
The semi formal sector includes those institutions which are synchronized or else but do not drop under
the authority of Central Bank, Insurance Authority, Securities and Exchange Commission or any other
enacted financial supervisor. This sector is mainly represented by Specialized Financial Institutions like
House Building Finance Corporation (HBFC), Palli Karma Sahayak Foundation (PKSF), and Samabay
Bank, Grameen Bank, Non Governmental Organizations and distinct government programs.
1.4 Informal Sector
The informal sector includes private intermediaries which are fully unregulated.

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Banking Sector of Bangladesh
Banking sector is one of the major sectors of Bangladesh and contributes greatly to the economy of the
country. There are a number of banks under various categories in Bangladesh.
Banks can be classified in four major categories in respect of ownership such as:
1.nationalized commercial bank (NCBs)
2.specialized banks(SPBs)
3.private commercial banks(PCBs)
4.trans-national banks (TNBs)
There is a great impact of the commercial banking system on the financial sector of Bangladesh.
Bangladesh bank is the central bank of Bangladesh and it controls the whole banking sector. It takes all
the major decisions about the banking sector. Here are total 57 states owned, private, foreign and
specialized banks in Bangladesh. More specifically there are 6 state-owned commercial banks, 31
private commercial banks, and 10 foreign banks.
Nobel Prize winning the Grameen bank is a specialized micro-finance institution. The Grameen bank
and its micro-credit system have brought a great revolution to the nation’s economy and has contributed
to poverty reduction. The Grameen bank has also focused on women empowerment which has helped
the economy of Bangladesh in great extent.
Banking structure in Bangladesh respect of bank is shown in the chart below:
Table: 1.1 Amounts of Banks in Bangladesh
Bank types Number of banks
National commercial banks 4
Specialized Banks 4
Private commercial banks 32
Foreign commercial bank 9
Islamic Banks 8
Total 57
2.1 Historical Background
Bangladesh became independent in 1971. after its independence it started its journey in the banking
sector. At first there were 6 nationalized banks, 2 state owned specialized banks, 3 foreign banks, the
banking sector flourished much in the 1980s when private banks came into operation.
Chapter : 2 Md. Rabiul Islam
ID : 23 - 024

Page13
At present there are two types of banking sector in Bangladesh they are:
 schedule bank
 Non-schedule bank
2.2 Scheduled Banks
The banks which get license to operate under Bank Company Act, 1991 (Amended in 2003) are termed as
Scheduled Bank State owned commercial banks, private commercial banks, Islamic commercial banks,
foreign commercial banks and some specialized banks are Scheduled Bank
2.3 State Owned Commercial Banks
Staten owned commercial bank is a financial institution that has been chartered by a state to
provide commercial banking. A state bank is not the same as a central or reserve bank because
those banks are primarily concerned with influencing a government's monetary policy. Here are the
state owned commercial banks of Bangladesh-
1. Agrani Bank Limited
2. Janata Bank Limited
3. Rupali Bank Limited
4. Sonali Bank Limited
2.4 Private Commercial Banks
A commercial bank is a type of financial institution that provides services such as accepting
deposits, making business loans, and offering basic investment products. Here are some of the
private banks of Bangladesh-
1. AB Bank Limited
2. Bangladesh Commerce Bank Limited
3. Bank Asia Limited
4. BRAC Bank Limited
5. City Bank Limited
6. Dhaka Bank Limited
7. Dutch-Bangla Bank Limited
8. Eastern Bank Limited
9. IFIC Bank Limited
10. Jamuna Bank Limited
Etc.
2.5 Islamic Commercial Banks
Islamic banking is a banking system that is based on the principles of Islamic law, also referred to
as Shariah law, and guided by Islamic economics. Two basic principles behind Islamic banking are
the sharing of profit and loss and, significantly, the prohibition of the collection and payment of
interest by lenders and investors. Collecting interest or "riga" is not permitted under Islamic law.
Here are the Islamic banks of Bangladesh-
1. Al-Arafah Islami Bank Limited

Page14
2. EXIM Bank Limited
3. First Security Islami Bank Limited
4. ICB Islamic Bank Limited
5. Islami Bank Bangladesh Limited
6. Shahjalal Islami Bank Limited
7. Social Islami Bank Limited
8. Union Bank Limited
2.6 Foreign Commercial Banks
A foreign branch bank is a type of foreign bank that is obligated to follow the regulations of both
the home and host countries. Because the foreign branch banks' loan limits are based on the
parent banks capital, foreign banks can provide more loans than subsidiary banks. Here are the
foreign banks of Bangladesh-
1. Bank Al-Falah Limited
2. Citibank N.A
3. Commercial Bank of Ceylon PLC
4. Habib Bank Limited
5. National Bank of Pakistan
6. Standard Chartered Bank
7. State Bank of India
8. Hong Kong and Shanghai Banking Corporation Limited
9. Woori Ban
2.7 Specialized Banks
Specialized Banks are banks which concentrate mainly on financing specialized economic and social
activities. Specialized activities may be small and cottage industries financing. Financing the rural asset
less and landless people etc. Here are the specialized banks of Bangladesh-
1. Bangladesh Krishi Bank
2. Bangladesh Development Bank
3. BASIC Bank LimitedRajshahi Krishi Unnayan Bank (RAKUB)
2.8 Non-Scheduled Banks
The banks which are established for special and definite objective and operate under the acts that are
enacted for meeting up those objectives are termed as Non-Scheduled Bank. These banks cannot perform
all functions as like as scheduled banks. Grameen Bank, Probashi --Kallyan Bank, Karmasangsthan Bank,
Progoti Co-operative Land Development Bank Limited (progoti Bank) and Answer VDP Unnayan
Bankare Non-Scheduled Bank

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2.9 Problems of Banking Sector in Bangladesh
The banking sector in Bangladesh has been performing well in terms of employment generation,
profitability and operations during the rest few decades. But the banking industry has been facing the
challenges arising from political instability and uncertainties in addition to inept management in
decision making and so on. Other challenges faced by the banking sector in Bangladesh are lack of
effective and efficient corporate governance. Best practice of corporate governance can speed up the
operation, cut corruption, increase profitability and the performance of the banks. Imbibing best
practice of corporate governance ion the banking industry is the crying need of the time. Highly
inconsistent interest rates of deposits and landings of banks in the country stand as a stumbling block to
banks investment. Because of high interest rates on lending from the local banks, some off-shore banks
have started lending in the country at lower rates then the local banks. They are not investing in stocks
of shares. If the process continues, the local banks will face more problems in investment. Improved IT
sector can play a major role in the banking industry of the country by enabling banks to connect more
customers and speed up banking operations. Now-a-days people can do banking transactions sitting at
offices or at home without visiting banks physically. Although this system of banking has started in
Bangladesh, it is still very inadequate compare to needs.
2.10 Possibilities of Banking Sector in Bangladesh
Banking sector is an integral part of the economy of a country. In Bangladesh also the banking sector
has huge possibilities.
 Banking sector has a great opportunity to become a major sector of the national economy.
 Bangladesh has huge number of population. This huge population can be used to accelerate the
banking sector by taking proper initiatives.
 Banking sector can be the main source of loan and information for the business entities and
largely contribute to the national economy.
 As Bangladesh is an agricultural country the sector has huge possibility to flourish. If banking
sector gives proper help and facilities in the form of loan and instruction it can be a huge
contribution to the economy.
 There are many foreign banks in Bangladesh yet many more foreign banks can be opened to
broad the banking sector in international level.
 General people in Bangladesh face many problems in opening and performing banking
activities. If proper facilities and help are provided to the people banking sector can be more
popular among the general people also.
2.11 Guidelines and Regulations
Bangladesh Bank regulations:
 Bank procurement regulations, 2004
 The Bangladesh Bank Procurement Processing and Approval Procedures (BBPPAP)
 Bangladesh Bank (Bangladesh Bank expenditure regulations, 1977
 Bangladesh Bank leave rules, 2003
 Bangladesh Bank accommodation allotment rules, 2003
 The Bangladesh Note Refund) Regulations-2012

Page16
Scheduled Bank:
 Guidelines to establish a banking company in Bangladesh
 Guidelines for Islamic Banking
 Prudential Regulations for Banks
 Guidelines for establishment of NRB bank
 Guidelines on Commercial Paper for Banks
 Policy Guidelines for Green Banking
 Guidelines on subordinated debt
Financial Institution:
 Guidelines on the Base Rate System for Non-Bank Financial Institutions
 Financial institute regulation, 1994
 Financial institute act, 1993
 Prudential regulation for financial institutions
 Guidelines on Products & Services of Financial Institutions in Bangladesh
 Integrated Risk Management Guidelines for Financial Institutions
Banks and Financial Institutions:
 Indicative guidelines for CSR expenditure allocation and end use oversight
 Mainstreaming Corporate Social Responsibility (CSR) in banks and financial institutions in
Bangladesh
 Merger/Amalgamation of banks/FIs
Anti-Money Laundering:
 Guidelines on Money Laundering & Terrorist Financing Risk Management Guidelines for Banks
 Financial Sanctions, Travel Ban, And Arms Embargo
 Money Laundering and Terrorist Financing Risk Assessment Guidelines
 Guidance notes on AML&CFT
Foreign exchange:
 Foreign exchange guideline vol 1
 Foreign exchange guideline vol 2
 FAQ in foreign exchange transactions
 Forex Transactions for Individuals
 Guidelines to FX Audit Team
 Forex Transactions for Inbound and Outbound Travelers
Payment & Settlement:
 Bangladesh Real Time Gross Settlement(BD-RTGS) System Rules
 Regulations on Electronic Fund Transfer 2014
 Payment & settlement systems regulations 2009
 Bangladesh Electronic Fund Transfer Network (BEFTN) operating rules

Page17
Bangladesh Bank
After the Liberation War and the independence of Bangladesh, the Government of Bangladesh
reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of the country, naming
it Bangladesh Bank.
Bangladesh Bank and peak regulatory body for the country's monetary and financial system, was
established in Dhaka as a body corporate vide the Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972)
with effect from 16th December, 1971. At present it has ten offices located at Motijheel, Sadarghat,
Chittagong, Khulna, Bogra, Rajshahi, Sylhet, Barisal, Rangpur and Mymensingh in Bangladesh; overall
manpower stood at 5807 (officials 3981, subordinate staff 1826) as on March 31, 2015.
The paid up capital of Bangladesh Bank is Tk. 30 million divided into 300,000 shares of Tk. 100 each
that are fully paid up by the government. A board of directors comprising the Governor as the
Chairman, one deputy governor and seven other members oversees the affairs of the bank. The
Governor and the deputy governors of the Bank are appointed by the government for a period not
exceeding five years and are eligible for reappointment.
3.1 Departments
In Bangladesh Bank, there are 53 departments for different purposes.
*Table: 2.1: Departments Of Bangladesh Bank
1. Accounting and Budgeting Department
2. Bangladesh Bank Library 3. Bangladesh Bank Training Academy
4. Bangladesh Financial Intelligence Unit 5. Bankers' Selection Committee Secretariat
6. Banking Regulation and Policy Department 7. Chief Economist's Unit
8. Common Services Department-1 9. Common Services Department-2
Chapter : 3 Md. Imran Khan
ID : 23 - 028

Page18
10. Credit Information Bureau 11. Debt Management Department
12. Department of Banking Inspection 1 13. Department of Banking Inspection 2
14. Department of Banking Inspection 3 15. Department of Banking Inspection 4
16. Department of Communications and Publications 17. Department of Currency Management
18. Department of Financial Institutions and Markets 19. Department of Foreign Exchange Inspection
20. Department of Off-Site Supervision 21. Deposit Insurance Department
22. Equity and Entrepreneurship Fund Unit 23. Expenditure Management Department-1
24. Expenditure Management Department-2 25. Financial Inclusion Department
26. Financial Institutions Inspection Department 27. Financial Integrity and Customer Services
Department
28. Financial Sector Support and Strategic Planning
Department
29. Financial Stability Department
30. Foreign Exchange Investment Department 31. Foreign Exchange Operation Department
32. Foreign Exchange Policy Department 33. Forex Reserve & Treasury Management
Department
34. Governor's Secretariat 35. Grihayan Tahbil & Fund Management Unit
36. Human Resources Department 1 37. Human Resources Department 2
38. Information Systems Development Department 39. Integrated Supervision Management
Department
40. Internal Audit Department 41. Investment Promotion & Financing Facility
Project Cell
42. IT Operation & Communication Department 43. Law Department
44. Monetary Policy Department 45. Payment Systems Department

Page19
2.2 Organizational Structure
The bank's highest official is the governor (currently FazleKabir). His seat is in Motijheel, Dhaka. The
governor chairs the board of directors. The executive staffs, also headed by the governor, are
responsible for the bank's day-to-day affairs.
Bangladesh Bank also has a number of departments under it, namely Debt Management, Law, and so
on, each headed by one or more general managers. The Bank has 10 physical branches: Bangladesh,
Mymensingh, Motijheel, Sadarghat, Barisal, Khulna, Sylhet, Bogra, Rajshahi, and Chittagong; each is
headed by a general manager. Headquarters are located in the Bangladesh Bank Building in Motijheel,
which has two general managers.
*Chart: 2.1: Organizational Structure Of Bangladesh Bank
*Source: Slideshare.net
46. Research Department 47. Secretary's Department
48. Security Management Department 49. SME & Special Programmes Department
50. Special Studies Cell 51. Statistics Department
52. Sustainable Finance Department 53. Agriculture Credit Department

Page20
2.3 Governor
Mr. Fazle Kabir, former Senior Secretary to the Government of Bangladesh, joined as the 11th
Governor of Bangladesh Bank on March 20, 2016. Fazle Kabir started his professional career in 1980 in
the Railway Transpotation and Commercial cadre of Bangladesh Civil Service. In 1983, he joined the
BCS Administration cadre. During his 34 years of civil service, Kabir held different key positions in
different ministries and also in the field administration. He served as the Deputy Commissioner and
District Magistrate of Kishoreganj district, Joint Secretary in the Ministry of Education, Director
General of the National Academy for Planning and Development, Director General of the BCS
Administration Academy, Secretary Ministry of Railways and Secretary Finance Division of the
Ministry of Finance.
He served as a Director in the Board of Directors of Janata Bank Limited between 2008 and 2010 and
Bangladesh Bank from 2012 to 2014. Prior to joining Bangladesh Bank, Fazle Kabir was holding the
position of Chairman of the Board of Directors of Sonali Bank Limited. Born in 1955, Fazle Kabir
studied at Faujdarhat Cadet College for his secondary and higher secondary education, followed by his
undergraduate and graduate studies at the Department of Economics of the University of Chittagong
where he obtained his B.A.(Honours) and M.A. degree. In his professional career, he was a resource
person in the subjects of Public Finance Management, Public Expenditure Management, Debt
Management and other issues at many training institutions including National Defence College,
BPATC, National Academy for Planning and Development, BCS Administration Academy, Police
Staff College and National Institute of Mass Communication. Fazle Kabir is married to Mahmuda
Sharmin Benu who is at present working as Additional Secretary in the Ministry of Women and
Children Affairs.
Here are the Former governors’ names -
*Table: 2.2: Governors Of Bangladesh Bank
Name Duration Picture
1. A. N. M.
Hamidullah
18 January 1972 – 18 November
1974

Page21
2. A. K. N. Ahmed
19 November 1974 – 13 July
1976
3. M. Nurul Islam 13 July 1976 – 12 April 1987
4. Shegufta Bakht
Chaudhuri
April 12, 1987 to December 19,
1992
5. Khorshed Alam
20 December 1992 – 21
November 1996
6. Lutfar Rahman
Sarkar
21 November 1996 – 21
November 1998
7. Mohammed
Farashuddin
24 November 1998 – 22
November 2001

Page22
8. Fakhruddin Ahmed
29 November 2001 – 30 April
2005
9. Salehuddin Ahmed 1 May 2005 – 30 April 2009
10. Atiur Rahman 1 May 2009 – 15 March 2016
11. Fazle Kabir 20 March 2016 – present

Page23
Banking Companies Act
Banking Companies Act is 1991 for Bangladesh. it is necessary to establish a central bank in
Bangladesh to manage the monetary and credit system of Bangladesh with a view to stabilising
domestic monetary value and maintaining a competitive external par value of the Bangladesh Taka
towards fostering growth and development of country’s productive resources in the best national
interest.
4.1 Requirements to Establish a Bank
According to Section 31 of the Banking Companies Act, 1991, no company shall carry out banking
business in Bangladesh without obtaining a license from Bangladesh Bank. Bangladesh Bank will
decide to grant licenses after considering the need and overall strategy congenial to effective monetary
and financial sector policy for the country. Bangladesh Bank must be satisfied that the following terms
and conditions for the establishment of a new banking company in Bangladesh have been met. The
application for approval to establish a new banking company shall be submitted to Bangladesh Bank
with all the accompanying documents and information required.
1. Must be a public limited company incorporated in Bangladesh.
2. The paid up capital of new commercial bank shall not be less than Taka 400.00 Crores as
required under Bank Company Act 1991. The share capital will be formed with ordinary shares
only.
3. For a banking company incorporated in Bangladesh, the capital contribution made by the
sponsors and subscribers of the proposed bank shall be in a liquid, unencumbered form (such as
cash or approved securities), held in a bank account that has been verified by Bangladesh
4. Bank, and under a Bangladesh Bank lien.
5. A Director or Advisor to any banking company other than the proposed bank shall not be a
Director of the proposed bank.
6. The Member of Board of Directors shall be restricted to 13 (Thirteen).
7. Maximum number of directors from a family shall be restricted to two incase of the total
shareholding of that family exceeds 5% and one director if the total shareholding is up to 5%.
8. The Chief Executive Officer (CEO) of the proposed bank shall have at least 15 (fifteen) years
of experience in the banking profession.
9. The ratio of urban and rural bank branch has to be 1:1 or as per instruction issued by
Bangladesh Bank from time to time.
10. New Bank has to ensure finance at least 5% of its total lending into agricultural sector or as per
instruction issued by Bangladesh Bank from time to time.
11. Proposed bank should take part in Corporate Social Responsibility (CSR) activity. The new
bank should spent 10% or more of its previous year's net income to CSR.
12. A bank draft in the amount of Taka 10 (Ten) lakh in favor of Bangladesh Bank, attached to the
Letter of Application, that serves as a non refundable application processing fee
13. Name and address of the Applicant, Name, address, telephone number of the contact person.
14. Feasibility Report on the proposed banking company including an analysis of Bangladesh's
macroeconomic environment, financial system, as well as a business plan for the proposed
bank, financial projections and sensitivity analyses;
15. Biographical Reports (see Annexes III and IV) and proof of citizenship for each
promoter/director, CEO/MD and Heads of Operation, Credit, Finance, Risk Management
,Internal Control and IT of the proposed bank.
16. Proposed compensation package and other terms of contract of the CEO;
17. Minutes of the shareholders (sponsors) meeting;
Chapter : 4 Nasir Uddin
ID : 23 - 032

Page24
18. Written agreement by the shareholders to organize the banking company;
19. Risk factors relating to assets of proposed bank.
20. Strategy for reaching unbanked area specially disadvantaged locality/ group.
21. A strategy to provide financial services to enhance Bangladesh's competitiveness by reducing
trade related banking fees/charges.
22. A strategy to provide banking services which could promote export diversification as well as to
provide financial services for non‐traditional export sectors and small & medium entrepreneurs
23. New bank should bring new/modern technology (e.g. mobile banking, internet banking) for
providing better service to customers.
24. Draft Memorandum and Articles of Association;
25. For a corporate promoter; Board Resolution, Articles of Incorporation and By‐laws, list of
directors and officers, list of shareholdings, audited financial statements for the latest two years,
certified copies of the Memorandum and Articles of Association;
26. Joint Venture agreement, in case of foreign equity participation.
4.2 Opening a Bank Account
Commercial banks in Bangladesh provide general people with the facility to save their money in bank.
General people can open bank account in the commercial banks according to need. By fulfilling some
requirements general people can open bank account. Moreover people have to submit some documents
and a fixed amount of money which vary from bank to bank.
Required eligibility for opening a bank account:
 Non Resident Bangladeshis (NRB)
 Foreign Nationals having Bangladeshi origin
Documents required for opening current/saving account
 Filled up Application Form
 Employer’s certificate / Contract Agreement
 Work permit
 Photo ID
 Resident Address Verification Document (i.e. utility bill, bank statement)
 Source of fund documents
 Pay slip
 2 photographs of customer
 2 photograph of nominee
Besides submitting some documents people need to submit a specific amount of
money. Generally the amount of money varies from bank to bank. But generally
the amount for current is taka 3000-5000 and the amount for saving account
varies from taka 500-1000.

Page25
Banking Statistics
In this Chapter, we will show two statistics which are related to Banking Sector of our country. We will
see top 5 banks based on profitability and NPL holder.
5.1 Top Profit Earning Banks
From the chart 5.1, we can easily understand that Islami, National, UCB, Southeast and Pubali are the
top 5 bank according to profitability. From the table 5.1, we can the amount of the profit of the 5 top
banks in cores of TK. Islamic Bank Limited has hold its position at the top of the table as every year.
*Source: The Daily Stars
*Chart: 5.1 : Profits of Banks Bangladesh*Table: 5.1 : Top Five Banks of Bangladesh
Chapter : 5 Israt Jahan Sinthy
ID : 23 - 022

Page26
5.2 Top NPL Holder Banks
A nonperforming loan (NPL) is the sum of borrowed money upon which the debtor has not made his
scheduled payments for at least 90 days. A nonperforming loan is either in default or close to being in
default. Once a loan is nonperforming, the odds that it will be repaid in full are considered to be
substantially lower.
From the table 5.2, we can easily find out the top 5 bank which are holding the most amount of NPL for
the year 2014-15. However, the top 5 NPL holding Banks are Sonali, Agrani, Rupali, BASIC, and
BDBL.
*Source: The Daily Sun
*Table: 5.2 : Amount of NPL in Different Banks in Bangladesh

Page27
List of References
1. Bangladesh Bank www.bb.org.bd
2. The Daily Star www.thedailystar.com
3. The Daily Sun www.thedaily-sun.com
4. SlideShare.Net www.slideshare.net

Financial System and Banking Sector of Bangladesh

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