This document discusses guidelines for establishing a banking company in Bangladesh. It outlines 10 steps that must be followed, including: (1) forming a public limited company incorporated in Bangladesh with a minimum paid-up capital of 500 crore taka, (2) contributions coming from sponsors in liquid, unencumbered form and held under Bangladesh Bank lien, (3) sponsors passing a "fit and proper test", (4) obtaining necessary approvals and licenses from Bangladesh Bank and BEPZA, and (5) starting business operations once requirements are met. The roles of relevant laws, regulations and Bangladesh Bank in controlling the country's monetary and financial system are also summarized.

1. Presented by
Accounts & Finance Department of BEPZA.

2. What is commercial Bank. Functions and Activities.

3. Banking Sector of Bangladesh:
State owned banks
•Sonali Bank Limited
•Janata Bank Limited
•Agrani Bank Limited
•Rupali Bank Limited
•BASIC Bank Limited
•Bangladesh Development Bank
01 Specialized banks
•Bangladesh Krishi Bank
•Rajshahi Krishi Unnayan Bank
•Probashi Kollyan Bank
02 Private commercial banks
 There is a total of 43 PCBs in
Bangladesh are in operation right
now. They are majorly owned by
private entities and classified into
two types.
 Conventional PCBs. 33 Nos
 Islami Shariah Based PCBs. 10
Nos
03
Foreign commercial banks
•Bank Al-Falah Limited (United Arab Emirates)
•Citibank N.A (United States of America)
•Commercial Bank of Ceylon PLC (Sri Lanka)
•Habib Bank Limited (Pakistan)
•HSBC (Hong Kong)
•National Bank of Pakistan (Pakistan)
•Standard Chartered Bank (United Kingdom)
•State Bank of India (India)
•Woori Bank (South Korea)
04 Non-scheduled banks
•Ansar VDP Unnayan Bank
•Karmashangosthan Bank
•Grameen Bank
•Jubilee Bank
•Palli Sanchay Bank
05
Central Bank of Bangladesh
•BANGLADESH BANK
•Among the rules and regulations of
Bangladesh Bank are regulatory capital
control, fit and proper test (recruitment), audit
etc. These are good enough arrangements, of
international standard. Besides, Bangladesh
Bank is implementing Basel-1 and Basel-2 in
line with international standards. This is also a
good aspect.
06
http://bankinfobd.com/banks/list_of_banks/Private

4. Overview of Bangladesh Banking Sector
2021
2020
2016-2017
.
Source Bangladesh Bank
All the financial sub-sectors recorded decline
in their growth rates in the immediate past
fiscal year (FY 2019-20). The sub-sector
(monetary intermediation) had the worst time
in many years.

5. Potential of Bangladeshi Bank
R
In the last two years, Bangladesh's economic expansion has been quite
impressive from the perspective of GDP growth rate, which was seven-plus
percent both years, according to figures from government and other sources.
Growth of Country Economy
Establishment of about 100 economic zones and 3
more EPZs
170 million people and 50% people out of banking
service at precent
Meanwhile, due to the record amount of remittances sent by expatriates in
the fiscal year 2020-21, the foreign exchange reserves of Bangladesh Bank
have also risen to new heights throughout the financial year. Foreign
exchange reserves stood 50 billion on Monday (July 5th) due to export
earnings and remittances.
Remittance
Once the outbreak is contained and the economy resumes its normal
activity there will be more demand for money, both from the private
and public sector. Private sector will be needing money for business
structuring and the government will need to spend a substantial
amount of money on development projects to boost up economic
activities and to create aggregate demand.
Build Mega Project In The Country.
Bangladesh is a land of 170 million people and half of its population still does not have a
bank account. This contradicts with the national financial inclusion strategy (NFIS).
Currently, there are fewer than 10,000 bank branches in the country. The number of bank
branches needs to be increased to bring people into the financial system.

6. Factors that affect banking industry in Bangladesh
GDP Growth
Bank Size Capital
Liquidity is a measure of the cash
and other assets banks have
available to quickly pay bills and
meet short-term business and
financial obligations. Capital is a
measure of the resource’s banks
have to absorb losses.
Liquidity
Classified Loan
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Non-performing Loan Ratio
Capital Adequacy Ratio (CAR) is
the ratio of a bank's capital in
relation to its risk weighted
assets and current liabilities. ...
The risk weighted assets take
into account credit risk, market
risk and operational risk.
Capital Adequacy

7. Challenges in Banking sector
According to research on cyber security by the
Bangladesh Institute of Bank Management
(BIBM), 52% of the banks are at a high risk of
cyber attacks. It is imperative that we develop
a system for stopping any cyber attacks.

8. Challenges in Banking sector Contd:
Like most other sectors, banking
sector lacks properly skilled
workforce. For effective and smooth
operation and management of bank,
trained and skilled employees need to
be developed.
Lacks properly skilled workforce.
Good governance is a key issue
that is lacking in the banking
sector.
Good Governance:
At the moment, the biggest challenge for the
country's banking sector is defaulted loans. The
amount of defaulted loans is more in
government banks than in private banks. But
the concern is that the amount of defaulted
loans in private banks is also increasing.
Defaulted loans:

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Comparison of capital adequacy indicators of neighboring countries:

10. GUIDELINES TO ESTABLISH A BANKING
COMPANY IN BANGLADESH
.
GUIDELINES TO ESTABLISH
A BANKING COMPANY IN BANGLADESH
According to Section 31 of the Banking
Companies Act, 1991/ Bank Company (amendment)
Act, 2013, 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:
1. Status of the new commercial bank.
1.1.Must be a public limited company incorporated in
Bangladesh

11. GUIDELINES TO ESTABLISH A BANKING COMPANY IN BANGLADESH
2. Paid up capital requirement for a bank to be established:
The paid up capital of new commercial bank shall not be less than
Taka 500.00 Crore as required under Bank Company Act.
1991/ Bank Company (amendment) Act, 2013. The share
capital will be formed with ordinary shares only.
3. Mode of payment:
For a banking company incorporated in Bangladesh, the cap
ital 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 th
at has been verified by Bangladesh Bank, and under a
Bangladesh Bank lien.

12. GUIDELINES TO ESTABLISH A BANKING COMPANY IN BANGLADESH
4. Sponsors and share capital contribution:
Initial minimum capital Taka 500.00 crore shall be provided
by sponsors of the proposed bank. (Bank Company
(amendment) Act, 2013)
5. Fit and Proper Test for Sponsors/Directors
6. Management of the proposed bank
7. Operation of the proposed bank.
8. Required documents/ information/ analysis to be
submitted to Bangladesh Bank.
9. Need prior approval from BEPZA Governor board.

13. Its role as a central bank particularly, to control and regulate country’s monetary and financial system. Among
others, important laws and acts include:
1. Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972)
2. Bank Company Act, 1991
3. Bank Company (amendment) Act, 2013
4. The Negotiable Instruments Act, 1881
5. The Bankers’ Book Evidence Act, 1891
6. Foreign Exchange Regulations (Amendment) Act, 2015
7. Foreign Exchange Regulations Act, 1947
8. Financial Institutions Act, 1993
9. Financial Reporting Act, 2015
10. Bank Deposit Insurance Act, 2000
11. Money Loan Court Act, 2003
12. Micro Credit Regulatory Authority Act, 2006
13. Money Laundering Prevention (Amendment) Act, 2015
14. Money Laundering Prevention Act,2012 [Bangla] [English]
15. Anti Terrorism (Amendment) Act, 2013
16. Anti-terrorism Act, 2009 and
On the other hand, regulations and guidelines broadly include Bangladesh Bank Regulations and Foreign
Exchange Regulations.
Laws and structures for the establishment of Banks

14. What does
BEPZA have to do
to establish a
bank?
HOW TO START A BANK
Start a bank by following these :
steps:
STEP 1: Plan your business
STEP 2: Form a legal entity
STEP 3: Obtain necessary permits and licenses
STEP 4: Capital Investment
STEP 5: Setup Office and Branch.

15. What does
BEPZA have to do
to establish a
bank?
HOW TO START A BANK
Start a bank by following these :
steps:
STEP 6: Recruitment
STEP 7: Advertisement & Publicity
STEP 8: Print the required publications
STEP 9: Business inauguration
STEP 10: Start the business….

16. We need to be surveyed by
professional bodies/personnel on
the Issues.
Do not issue license to new banks. The
culture of giving licenses to new banks on
political grounds should be stopped. Given
the size of the economy, there is no need for
new banks. The market is already saturated
and new banks have been performing poorly
by extracting public money.
Recommendation: Given by cpd
https://cpd.org.bd

17. THANK YOU
Accounts & Finance Department of BEPZA