LECTURE- 01
Financial System of
Bangladesh
GROUP: 01
“The Team”
Protima Basheratul Zannat S.M. Aminul Forquan Ahmed Nafis Ahmed Raiyan
Chakraborty ID: 2235426060 Haque ID: 2315133060 ID: 2315252660
ID: 2125160660 ID:2235096660
Three pillars of Bangladesh
Agriculture Remittanc Garments
e
2022 2023 2022 2023 2022 2023
$3.39130 b $3.4797 b $22 b $24 b $42.17 b $47 b
Factors of Production
Land Labor Capital Entrepreneurship
Natural resources like Labor refers to the Financial and physical Entrepreneurs use
land, labor, and
water, minerals, and human effort and skills assets, such as machinery
capital in order to
forests used in contributed to the and funds, required for produce a good or
production. production process. production. service for
a) Debt Capital consumers.
Bank, NBFI, Bond and
Debenture etc
b) Equity Capital
Common share, Prefer
share etc
Different financing system
Direct financing
Deficit unit (Issuing bond,
Surplus unit
debenture or share)
Indirect financing
Financial intermediary (Bank or
Surplus unit Deficit unit
Non-bank institution)
Different types of Capital
Debt capital Bank
NBFI
Bond
Debenture
Equity capital Common stock
Preferred
stock
Regulators of Financial System in
Bangladesh
Bangladesh Bangladesh Securities Insurance Microcredit
Bank And Exchange Development And Regulatory Authority
(BB) Commission Regulatory Authority
Established Year: Established Year: 2006
Established Year: Established Year:
1971 Head Office Location:
1993 2011
Head Office 2nd Floor, BCIC Bhaban,
Head Office Head Office Location:
Location: Motijheel, 30-31, Dilkusha
Location: Agargaon, BSEC Bhaban, 102
Dhaka, Bangladesh Commercial Area,
Sher-e-Bangla Kazi Nazrul Islam
Dhaka, Bangladesh
Nagar, Dhaka, Avenue, Dhaka,
Bangladesh Bangladesh
Difference between Banks and NBFI
1.NBFIs cannot issue cheques, 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 while banks can provide long-term loans.
State Owned Commercial Banks
Source: Bangladesh Bank (BB)
Specialized Banks
I. Bangladesh Krishi Bank
II. Probashi Kallyan Bank
III. Rajshahi krishi Unnayan Bank
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
Digital Commercial Bank
1. Nagad Digital Bank Plc..
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)
Five 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):
2nd Prime Bank Limited , Dhaka Bank Limited , Eastern Bank
Limited, Southeast Bank Limited ,Mercantile Bank Limited etc.
Third Generation (2001-2012):
3rd
BRAC Bank Limited, Dutch-Bangla Bank Limited,
Jamuna Bank Limited, First Security Islami Bank
Limited etc.
Fourth Generation (2013-2019):
4th Community Bank Bangladesh Limited, Padma Bank Limited,
Meghna Bank Limited, Madhumati Bank Limited etc.
Fifth Generation (2020-
5t onwards):
Bengal Commercial Bank PLC.
h
Steps of financial inclusion
Easy access
Available and suitable products
Utilization of the product
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.
Mostly they deposit and take loan.
3. Unbanked: People don't use any banking
services at all.
Non Bank Financial Institutions
(NBFI)
The first NBFI was established in 1981 (IPDC). Currently there are
34 NBFI operating in Bangladesh.. 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.
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.
Money Market Vs Capital
Market
Money Market Capital Market
Money Market deals with the financial Capital Market deals with the Financial
Instruments which have duration less instruments which have duration more
than one year. than one year.
Example: Commercial Paper, T-bill etc. Example: Share, Bond and Debenture.
The capital market secures long term
The money market secures short term
financing and investment
liquidity for both investors and sellers.
opportunities.
Money markets are considered low Capital markets are potentially high
risk. risk depending on the asset.
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]
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 For Specific events
of time or entire life or risks
of the insured Called Insurance
Called Assurance
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
Fig-Institution wise
10% are from
cumulative
loan disbursement urban area
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.
Different types of Stocks
Common
share
• Cumulative preference
share
Preference • Non-Cumulative
preference share
share
• Convertible preference
share
• Redeemable preference
share
Seasoned
share
