Banking Industry of Bangladesh

The banking industry of Bangladesh is mainly divided into two sectors, such as Specialized Banks (SBs) and Commercial Banks (CBs). The Specialized Banks are those banks that deal with specific sectors or industries of an economy. For instance, Bangladesh Krishi Bank (BKB) only deals with the agricultural sector of the economy; Bangladesh Shilpa Bank (BSB) only deals with the industrial sector of the economy, etc.

On the other hand, Commercial Banks are Scheduled Banks that are operating in the country under the rules and regulations of the Central Bank. Commercial banks in turn can be grouped as Nationalized Commercial Banks (NCBs); Foreign Commercial Banks (FCBs) and Private Commercial Banks (PCBs) with three different segments, such as 1^st Generation Private Commercial Banks, 2^ndGeneration Private Commercial Banks, and 3^rd Generation Private Commercial Banks.

The Bangladesh Bank (BB) the order created in 1972, authorized Bangladesh Bank (BB) as the central bank of the country. Bangladesh Bank Order 1972 and the Banking / Companies Act 1991 mainly guide the commercial banks in Bangladesh. Commercial Banks in Bangladesh are not allowed to do business other than just banking. Normal activities include borrowing, raising, or taking up of money, lending or advancing of money with or without security. They are also authorized to issue letters of credit, trade-in precious commodities, and buying and selling of foreign goods excluding foreign banknotes. They are also authorized to trade in bills of exchange, promissory notes, coupons, drafts, debentures, certificates, and other instruments approved by Bangladesh Bank (BB). Banking companies are required to provide safe vaults and are authorized to collect money and securities.

After liberation, the banks operating in Bangladesh (except those incorporated abroad) were nationalized. These banks were merged and grouped into six commercial banks. Of the total six commercial banks, Pubali Bank Ltd. and Uttara Bank Ltd. have subsequently been transferred to the private sector with effect from January 1985. Moreover, at present, there are 51 scheduled banks operating all over the country. Out of these, 9 are state-owned (including five specialized banks), 30 are private commercial banks (including four Islami banks) and the remaining 12 are foreign commercial banks (including one Islami bank).

The banking sector in Bangladesh consists of several types of institutions. Bangladesh Bank is the central bank of Bangladesh and the chief regulatory authority in the banking sector.

Pursuant to Bangladesh Bank Order, 1972 the Government of Bangladesh reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of the country and named it Bangladesh Bank with retrospective effect from 16 December 1971. Other than the Central Bank itself, banks in Bangladesh are primarily categorized into 2 types. They are Scheduled Banks and Non-Scheduled Banks.

State-Owned Commercial Banks (SOCBs):

There are 6 state-owned commercial banks (SOCBs) which are fully or majorly owned by the Government of Bangladesh.

1.  Sonali Bank Limited
2. Janata Bank Limited
3.  Agrani Bank Limited
4.  Rupali Bank Limited
5. BASIC Bank Limited
6. Bangladesh Development Bank Limited.

Specialized Bank

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.

1.  Bangladesh Krishi Bank
2. Rajshahi Krishi Unnayan Bank
3. Probashi Kallyan Bank

Privet Commercial Bank (PCBs):

There is a total of 41 PCBs in Bangladesh are in operation right now. They are majorly owned by private entities

and classified into two types.

Conventional:

·         AB Bank Limited

·         Bangladesh Commerce Bank Limited

·         Bank Asia Limited

·         BRAC Bank Limited

·         Community Bank Bangladesh Limited

·         City Bank Limited

·         Dhaka Bank Limited

·         Dutch-Bangla Bank Limited

·         Eastern Bank Limited

·         IFIC Bank Limited

·         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

·         NRB Global Bank Limited

·         One Bank Limited

·         Premier Bank Limited

·         Prime Bank Limited

·         Pubali Bank Limited

·         Shimanto Bank Ltd

·         South Bangla Agriculture & Commerce Bank Limited

·         Southeast Bank Limited

·         Standard Bank Limited

·         The Farmers Bank Limited

·         Trust Bank Limited

·         United Commercial Bank Limited

• Uttara Bank Limited

Islami Shariah Based Privet Commercial Bank (ISBPCBs):

There are 8 Islami Shariah-based PCBs in Bangladesh and execute banking activities according to Islami Shariah-based principles i.e. Profit-Loss Sharing (PLS) model.

·         Al-Arafah Islami Bank Limited

·         EXIM Bank Limited

·         First Security Islami Bank Limited

·         ICB Islamic Bank Limited

·         Islami Bank Bangladesh Limited

·         Shahjalal Islami Bank Limited

·         Social Islami Bank Limited

·         Union Bank Limited

2.3.6 Foreign Commercial Bank (FCBs)

In total 9 FCBs are operating in Bangladesh as the branches of the banks which are incorporated in abroad.^[1]

·         Bank Al-Falah Limited

·         Citibank N.A

·         Commercial Bank of Ceylon PLC

·         Habib Bank Limited

·         HSBC

·         National Bank of Pakistan

·         Standard Chartered Bank

·         State Bank of India

·         Woori Bank

 

2.3.7 Non- Scheduled Bank

Non-Scheduled Banks are licensed only for specific functions and objectives, and do not offer the same range of services as scheduled banks. There are now 5 non-scheduled banks in Bangladesh.^[1]

·         Ansar VDP Unnayan Bank

·         Karmashangosthan Bank

·         Grameen Bank

·         Jubilee Bank

·         Palli Sanchay Bank

2.3.8 Non-Banking Financial Institution (NBFIs)

Non-Bank Financial Institutions (NBFIs), simply known as Financial Institutions (FIs), are those types of financial institutions that are regulated under Financial Institution Act, 1993 and controlled by Bangladesh Bank. Now, 34 FIs are operating in Bangladesh while the maiden one was established in 1981. Out of the total, 2 are 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.

The the list is as follows:

·         Investment Corporation of Bangladesh

·         Agrani SME Financing Company Limited

·         Bangladesh Finance and Investment Company Limited

·         Bangladesh Industrial Finance Company Limited

·         Bangladesh Infrastructure Finance Fund Limited

·         Bay Leasing and Investment Limited

·         CAPM Venture Capital and Finance Limited

·         Delta Brac Housing Finance Corporation Limited

·         Far-east Finance & Investment Limited

·         FAS Finance & Investment Limited

·         First Finance Limited

·         GSP Finance Company (Bangladesh) Limited

·         Hajj Finance Company Limited

·         IDLC Finance Limited

·         Industrial and Infrastructure Development Finance Company Limited

·         IPDC Finance Limited

·         Infrastructure Development Company Limited

·         International Leasing and Financial Services Limited

·         Islamic Finance and Investment Limited

·         LankaBangla Finance Limited

·         Meridian Finance and Investment Limited

·         MIDAS Financing Limited

·         National Finance Limited

·         National Housing Finance and Investments Limited

·         People's Leasing and Financial Services Limited

·         Phoenix Finance and Investments Limited

·         Premier Leasing & Finance Limited

·         Prime Finance & Investment Limited

·         Reliance Finance Limited

·         Saudi-Bangladesh Industrial & Agricultural Investment Company Limited

·         SEAF Bangladesh Venture Limited

·         The UAE-Bangladesh Investment Company Limited

·         Union Capital Limited

·         United Finance Limited

·         Uttara Finance and Investments Limited

2.3.9 Specialized Financial Institution (Semi Formal Sector).

·         Bangladesh House Building Finance Corporation (BHBFC)

·         Palli Karma Sahayak Foundation (PKSF)