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Role of Banking Sector in The Economic Development of Bangladesh

The banking sector is vital for the economic development of Bangladesh by mobilizing savings, facilitating trade, and generating employment. It attracts foreign capital, promotes sustainable practices, and provides credit to various industries, thereby supporting infrastructure development and financial inclusion. Additionally, a healthy banking system contributes to economic stabilization and growth through effective resource allocation and liquidity preservation.

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Imtiaz Zaman
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60 views2 pages

Role of Banking Sector in The Economic Development of Bangladesh

The banking sector is vital for the economic development of Bangladesh by mobilizing savings, facilitating trade, and generating employment. It attracts foreign capital, promotes sustainable practices, and provides credit to various industries, thereby supporting infrastructure development and financial inclusion. Additionally, a healthy banking system contributes to economic stabilization and growth through effective resource allocation and liquidity preservation.

Uploaded by

Imtiaz Zaman
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Role of Banking sector in the economic development of Bangladesh

The banking sector plays a fundamental role in the economic development of Bangladesh by
facilitating financial sector of Bangladesh, supporting investment, and promoting growth across
every industries.

Savings Mobilization:
Bangladesh's public and commercial banking institutions mobilize idling savings by offering fixed
deposits, savings accounts, and other financial products, enabling investments in profitable
industries.

Facilitating Trade and Commerce


The banking industry, through trade finance like LCs, remittances, and foreign currency services,
supports domestic and international trade, enhancing Bangladesh's trade balance through imports
and exports.

Generating Employment
Thousands of employment are created by banks, making them significant employers. Additionally,
they indirectly support the creation of jobs in a variety of economic sectors, including services,
industry, and agriculture, by providing funds to different enterprises.

Bringing in Foreign Capital


The banking industry draws foreign direct investment (FDI) and facilitates the influx of
remittances from Bangladeshis employed outside by upholding a stable and well-regulated
financial system. These remittances increase domestic investment and consumption while making
a major contribution to the nation's foreign exchange reserves.
Sustainability and Green Banking
Bangladeshi banks are promoting sustainable banking practices by financing renewable energy
projects, balancing environmental preservation with expansion for sustainable economic growth.

Provision of Credit
Banks assist investment in a variety of industries, including manufacturing, services, agriculture,
and industry, by providing credit and loans to individuals, firms, and entrepreneurs. This financing
arrangement promotes infrastructure development and corporate expansion, both of which
accelerate economic growth. Small and medium-sized businesses (SMEs), which are essential for
the nation's innovation and job creation, are financed in part by banks.

financial accessibility
Financial inclusion in Bangladesh depends on the banking industry. To serve rural and unbanked
communities, banks are expanding their product offerings and microfinance services. More people
are able to engage in the formal economy thanks to the growth of mobile banking (e.g., bKash,
Nagad), which makes banking services more accessible to the underprivileged.

Stabilizing Economy
Effective resource allocation and preservation of financial market liquidity are two ways that a
healthy banking system can support economic stabilization. A major factor in controlling inflation,
interest rates, and monetary policy as a whole, which affects economic growth and stability, is the
role played by central banks, especially the Bangladesh Bank.

Development of infrastructure
Large-scale infrastructure projects, like telephones, power plants, bridges, and highways, are
frequently financed by banks and are crucial to economic growth. The banking industry supports
the development of initiatives that raise the productivity and connectedness of the country by
offering long-term financing.

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