Lecture- 01
Financial System & Competing
Financial Service Institutions of a
Country Focusing on Bangladesh
GROUP: 01
Name ID
Md. Towfiqul Islam Mozumder 2225491660
Md. Mohtasim Neaz 2016639660
Abdul Ahad Ohi 2135248660
Lubna Jahan 1825367060
Factors of Production
Land Labor Capital ORG
Natural resources like Labor refers to the human Financial and physical Management and
water, minerals, and effort and skills assets, such as machinery coordination of resources
forests used in production. contributed to the and funds, required for for efficient production.
production process. production.
a) Debt Capital:
Bank, Financial Institution,
NGO, Family & Friends,
Multilateral Development
Banks.
b) Equity Capital
Regulators of Financial System in Bangladesh
Bangladesh Bank Bangladesh Securities And Insurance Development Microcredit Regulatory
(BB) Exchange Commission And Regulatory Authority Authority
Established Year: 1971 Established Year: 2006
Established Year: 1993 Established Year: 2011
Head Office Location: Head Office Location: 2nd
Head Office Location: Head Office Location: BSEC
Motijheel, Dhaka, Floor, BCIC Bhaban, 30-31,
Agargaon, Sher-e-Bangla Bhaban, 102 Kazi Nazrul
Bangladesh Dilkusha Commercial Area,
Nagar, Dhaka, Bangladesh Islam Avenue, Dhaka,
Dhaka, Bangladesh
Bangladesh
State Owned Commercial Banks
Source: Bangladesh Bank (BB)
Private Commercial Banks
There is a total of 43 PCBs in operation right now. They are majorly
owned by private entities and classified into two types.
Conventional PCBs (total 33 conventional PCBs):
AB Bank Limited, Bangladesh Commerce Bank Limited, Bank Asia Limited, Bengal
Commercial Bank Limited, BRAC Bank Limited, City Bank Limited, Community
Bank Bangladesh Limited, Dhaka Bank Limited, Dhaka Mercantile Co-Operative
Bank Limited, Dutch-Bangla Bank Limited, Eastern Bank Limited, IFIC Bank PLC,
Jamuna Bank Limited, Meghna Bank Limited, Mercantile Bank Limited, Midland
Bank Limited, Modhumoti Bank Limited, Mutual Trust Bank Limited, National Bank
Limited, National Credit & Commerce Bank Limited, NRB Bank Limited, NRB
Commercial Bank Limited, One Bank Limited, Padma Bank Limited, Premier Bank
Limited, Prime Bank Limited, Pubali Bank Limited, Shimanto Bank Limited,
Southeast Bank Limited, South Bangla Agriculture and Commerce Bank Limited,
Trust Bank Limited, United Commercial Bank PLC, Uttara Bank Limited.
Islami Shariah Based PCBs (10 Islami Shariah-based PCBs)
Al-Arafah Islami Bank Limited, EXIM Bank Limited, First Security Islami Bank
Limited, Global Islami Bank PLC, ICB Islamic Bank Limited, Islami Bank
Bangladesh Limited, Shahjalal Islami Bank Limited, Social Islami Bank Limited,
Standard Bank Limited, Union Bank Limited
Four Generations in the Private Commercial Bank
First Generation (1971-1990) :
1st
Pubali Bank, Uttara Bank, AB Bank, NCC Bank, IFIC Bank
etc.
Second Generation (1991-2000):
Prime Bank Limited , Dhaka Bank Limited , Eastern Bank
2nd Limited, Southeast Bank Limited ,Mercantile Bank Limited
etc.
Third Generation (2001-2012):
BRAC Bank Limited, Dutch-Bangla Bank Limited, Jamuna
3rd Bank Limited, First Security Islami Bank Limited etc.
Fourth Generation (2013-Present):
Community Bank Bangladesh Limited, Padma Bank
4th Limited, Meghna Bank Limited, Madhumati Bank Limited
etc.
In Terms of Financial Inclusion People of
Bangladesh Classified Into Three Groups:
1. Bankable: People use many banking services
frequently like banks, credit cards, and loans
2. Under banked: People rarely use a few banking
services, maybe 2/3 times.
3. Unbanked: People don't use any banking services at
all.
Specialized Banks
3 specialized banks are now operating which were established for specific objectives like
agricultural or industrial development. These banks are also fully or majorly owned by the
Government of Bangladesh
Foreign Commercial Bank
In total 9 FCBs are operating in Bangladesh as the branches of the banks
which are incorporated in abroad.
Bank Al-Falah Limited (Pakistan)
Citibank N.A (United States of America)
Commercial Bank of Ceylon PLC (Sri Lanka)
Habib Bank Limited (Pakistan)
HSBC (United Kingdom)
National Bank of Pakistan (Pakistan)
Standard Chartered Bank (United Kingdom)
State Bank of India (India)
Woori Bank (South Korea)
Non Bank Financial Institutions (NBFI)
The first NBFI was established in 1981 (IPDC). Currently there are 35
NBFI operating in Bangladesh. Out of 35, 2 is fully govt. owned, 1 is a
subsidiary of SOCB, 19 is owned by private companies, and 13 are under
joint venture.
IDLC, IPDC, Lanka Bangla Finance Ltd, Bangladesh Finance and Investment Co., Ltd,
Bangladesh Industrial Finance Co., Ltd etc. are some of the well known NBFIs in
Bangladesh.
NBFI in Bangladesh provides services like leasing, term lending, housing finance, merchant
banking, equity financing and venture capital financing.
Difference between Banks and NBFI
1. NBFIs cannot issue checks, pay-orders or demand drafts like Banks.
2. NBFIs cannot receive all sorts of deposits except fixed deposit, but Banks can receive all.
3. Unlike Banks NBFI cannot offer foreign exchange financing.
4. Banks are strongly regulated by Bangladesh Bank under Bank Act 1991 , but NBFIs are moderately
regulated by Bangladesh Bank under financial Act 1993.
5. Banks are established initially to provide short term loan, but NBFIs could only offer long term loans
initially. Though currently, NBFI can issue short term loans as well.
Bangladesh Securities and exchange
Commission
Bangladesh securities and exchange Commission (BSEC) was founded on June 8,
1993 headquartered in Sher-e-Bangla, Dhaka. The commission is a statutory body
and attached to the ministry of finance. It regulates,
1. Central depository Bangladesh Ltd. [Manages Beneficiary owners accounts]
2. Brokerage Houses, [Connects buyers and sellers to complete financial transactions]
3. DSE/CSE
4. Listed companies [1500 public ltd companies, 400 companies are trades in
secondary market]
Money Market Vs Capital Market
Money Market Capital Market
Capital Market deals with the Financial
Money Market deals with the financial Instruments
instruments which have duration more than one
which have duration less than one year.
year.
Example: Commercial Paper, T-bill etc. Example: Share, Bond and Debenture.
The money market secures short term liquidity for The capital market secures long term financing and
both investors and sellers. investment opportunities.
Capital markets are potentially high risk depending
Money markets are considered low risk.
on the asset.
Importance of share market in Bangladesh-
Bangladesh have a huge population of 170 million. Even if every person invests 1 BDT to a
listed company then it can raise huge capital of 17 crore which will help the company to grow.
As a result, more companies will be encouraged to get listed which will reduce unemployment,
and develop the economic condition of Bangladesh.
Types of Investments-
1. Foreign Direct Investment (FDI)- Mode of Factory or setting up factories.
2. Foreign portfolio investment (FPI)- Mode of getting ownership by purchasing share of
companies.
Insurance Development and Regulatory
Authority (IDRA)
Established by IDRA Act 2010 and Became operational in 26
January 2011
To regulating and supervising the insurance company
Protect the interest of the policy holders and other
stakeholders
62 companies are operating under Insurance Act 2010. 18 Life
Insurance companies including 1 Foreign Company and 1
State Owned Company 44 General Insurance companies
including 1 State Owned Company
Insurance Development and Regulatory Authority
(IDRA)
Insurance
Life Insurance General Insurance
For specific period of time For Specific events or
or entire life of the insured risks
Called Assurance Called Insurance
MICRO-CREDIT REGULATORY
AUTHORITY
MRA is responsible for monitoring and supervision of
microfinance operations in Bangladesh.
Created by the Bangladesh Government under the
Microcredit Regulatory Authority Act 32 of 2006.
Regulates non-governmental organizations like NGO-
MFIs.
Regulates only those NGO’s who are associated with
financing activities.
746 licensed MFI’s.
Grameen Bank, BRAC, ASA, Proshika are top four MFI’s
in Bangladesh.
MICRO-CREDIT REGULATORY
AUTHORITY
NGO-MFIs 38%
Mobilized about
13.85 million poor
people
11.85 million are
female
2 million are male
90% of the
borrowers are from
rural area
10% are from
urban area
Fig-Institution wise cumulative
loan disbursement
IMPACT OF MICRO-FINANCE SERVICES
IN OUR ECONOMY
Dependency of poor people on the moneylender has
been reduced
Employment opportunities has been increased
labor force participation rate (LFPR) has been
increased
Main targeted people of micro-finance is women.
They get credit and do their own business. It creates a
positive impact on our national GDP growth.
THANK YOU
Any Question
