How Financial Institutions works in Bangladesh?

1. BUSINESS OF FINANCIAL INSTITUTIONS
 Function of BFIs and NBFIs.
 Role of banks in business.
 Money laundering preventions.
 Role of central bank.
 Commercial bank & functions.
 Financial statements analysis
 Mobile banking vs agent banking.

2. INTRODUCTION TO BUSINESS OF FIS
 National strategy for prevention of money
laundering & combating financing of
terrorism.
 BFIU & its functions.
 Sources of fund of BFIs & NBFIs.
 Functions & quality of a manager.
 CRR & SRR.

3. Different Types of Banking System:
MANAGEMENT OF FINANCIAL INSTITUTIONS (MFI)
Unit Banking Chain Banking
Single Office Ownership (single or joint)
Small Local Area So Many Bank in Similar Nature
Small Capital Same Nature in Business
Small Profit, No Competition Within the Group
No Any Branch Separate Authority & Board
Origin in USA Separate Decision
Origin in USA
Branch Banking Group Banking
Many Branches Maximum Share Purchase from Weak
Bank by the Strong bank
Control by Head Office.
Local & foreign. Strong Bank Known as Holding Companies
Large capital. Separate Management
Large profit. Decision by the Central Board
Origin in USA Result of Problem of Unit Banking
Depository Banking Investment Banking
Like Commercial Bank. Industrial Banking.
Long Term Loan.

4. Different Types of Banking System:
(MFI)
Merchant Banking Correspondent Banking
GSP financing company Work as a Clearing House
IDLC
BIFC
Lease Financing
Underwriting of Share/Debenture
Hire Purchase
Advice for Amalgamation of Business

5. State Owned Commercial Bank (SOCB)
There are 6 SOCB’s which are fully or majority owned by the
Government of Bangladesh. After 1973, 2 Banks out of 6 SOCB
converted to private bank. 1. Pubali Bank Limited and 2. Uttara
Bank Limited. Now SOCB’s stands in four:
1.Sonali Bank Limited,
2. Janata Bank Limited,
3. Agrani Bank Limited,
4. Rupali Bank Limited.
Specialized Bank (SDB’s)
Four Specialized bank are now operating which were established for
specific objectives like agricultural or industrial development. These
banks are fully or majority owned by the Government of Bangladesh.
These are
1. BDBL,
2. BASIC Bank limited
3. Bangladesh Krishi Bank,
4. Rajshahi Krishi Unnayan Bank.
Management of Financial Institutions (MFI)

6. Private Commercial Bank (PCB)
There are 40 private commercial banks which are majorly owned by the private entities.
PCB’s can be Categorized into two groups:
Conventional PCB’s:
32 Conventional PCB’s are now operating in the industry. They perform the banking
functions in conventional fashion i.e. interest based operations.
Islami Shariah based PCB’s:
There are 8 Islami Shariah based PCB’s in Bangladesh and they execute banking
activities according to Islami Shariah based principals i.e. profit-loss sharing (PLS)
mode.
Foreign Commercial Bank’s (FCB’s):
9 FCB’s are operating Bangladesh as in the branches of the banks which are
incorporated in abroad.
1. City Bank N.A.
2. HSBC
3. Standard Chartered
4. Commercial bank of Ceylon
5. State bank of India
6. Habib Bank
7. National Bank of Pakistan
8. Bank Al-Falah.
Management of Financial Institutions (MFI)

7. Non Scheduled banks:
The banks, which are established for special and definite
objective and opened under the Acts that are contacted for
meeting up those objective are termed as nonscheduled
banks. These Banks cannot performed all function of
scheduled banks. There are 6 non-scheduled bank in
Bangladesh which are-
1. Ansar VDP Unnayan Bank,
2. Karmashangosthan Bank,
3. Grameen Bank,
4. Somobay Bank (Co-operative bank),
5. Probashi Kollyan Bank,
6. Palli Sanchay Bank.
MANAGEMENT OF FINANCIAL INSTITUTIONS
(MFI)

8. Non-banking Financial Institution :
Non Bank Financial Institutions (FI’s) are those of financial institutions which
are regulated under Financial Institution ACT, 1993 and under controlled by
Bangladesh Bank. Now 33 FIs are operating in Bangladesh .
Out of the total,3 is fully government owned, rest was initiated by private
domestic initiative and by joint venture initiative. Major Sources of funds of
NBFIs are term deposit, credit facility from banks and other FIs, call money
as well as bond and securitization. Main NBFIs are-
 Invest Corporation of Bangladesh (ICB)
 Bangladesh House Building Finance Corporation (BHBFC)
 Bank of Small Industry & Commerce (BSIC)
 Industrial Development Leasing Company of Bangladesh (IDLC)
 Saudia-Bangladesh Industrial and agriculture Investment Company
Limited (SABINCO)
 Industrial Promotion and Development Company Bangladesh (IPDCB)
 United Leasing Company ( ULC)
MANAGEMENT OF FINANCIAL INSTITUTIONS (MFI)

9. Regulators of the Financial System:
Central Bank (Regulator of money market) Bangladesh Bank acts as the Central Bank of Bangladesh
which was established on December 16,1971" through the enactment of Bangladesh Bank Order 1972-
President's Order NoJT7of 7972 (Amended in 2003). The general superintendence and direction of the
affairs and business of BB have been entrusted to a 9 members' Board of Directors which is headed by
the Governor who is the Chief Executive Officer of this institution as well. BB has 45 departments and 10
branch offices.
Regulator of Capital Market Intermediaries Securities and Exchange Commission (SEC) performs
the functions to regulate the capital market intermediaries and issuance of capital and financial
instruments by public limited companies. It was established on June 8, 1993 under the Securities and
Exchange Commission Act, 1993. A 5 member commission headed by a Chairman has the overall
responsibility to administer securities legislation and the Commission is attached to the Ministry of
Finance. The mission of SEC is to protect the interests of securities investors, to develop and maintain
fair, transparent and efficient securities markets and to ensure proper issuance of securities ancl
compliance with securities laws.
Regulator of Micro Finance Institutions To bring Non-government Microfinance Institutions
(NGO - MFIs) under a regulatory framework, the Govemment of Bangladesh enacted "Microcredit
Regulatory Authority Act, 2006' " (Act no. 32 of 2006) which came into effect from August 27, 20A6. Under
this Act, the Govemment established Microcredit Regulatory Authority (MRA) with a view to ensuring
transparency and aecountabilif of microcredit activities of the NGO-MFIs in the country.
Insurance Authority Insurance Development and Regulatory Authority (IDRA) was instituted on January
26, 2011 as the regulator of insurance industry being empowered by Insurance Development and
Regulatory Act, 2010 by replacing its predecessor, Chief Controller of Insurance. This institution is
operated under Ministry of Finance and a 4 member executive body headed by Chairman is responsible
for its general supervision and direction of business.