Establishment

Bangladesh Bank, the central bank and apex regulatory body for the country's monetary
and financial system, was established in Dhaka as a body corporate vide the Bangladesh
Bank Order, 1972 (P.O. No. 127 of 1972) with effect from 16th December, 1971. At
present it has ten offices located at Motijheel, Sadarghat, Chittagong, Khulna, Bogra,
Rajshahi, Sylhet, Barisal, Rangpur and Mymensingh in Bangladesh; total manpower
stood at 5807 (officials 3981, subordinate staff 1826) as on March 31, 2015.

Functions
BB performs all the core functions of a typical monetary and financial sector regulator,
and a number of other non-core functions. The major functional areas include :

Formulation and implementation of monetary and credit policies.

Regulation and supervision of banks and non-bank financial institutions,

promotion and development of domestic financial markets.

Management of the country's international reserves.

Issuance of currency notes.

Regulation and supervision of the payment system.

Acting as banker to the government.

Money Laundering Prevention.

Collection and furnishing of credit information.

Implementation of the Foreign exchange regulation Act.

Managing a Deposit Insurance Scheme.

Overview of Financial system of Bangladesh

The financial system of Bangladesh is comprised of three broad fragmented sectors:
1. Formal Sector,
2. Semi-Formal Sector,
3. Informal Sector.
The sectors have been categorized in accordance with their degree of regulation.
The formal sector includes all regulated institutions like Banks, Non-Bank Financial
Institutions (FIs), Insurance Companies, Capital Market Intermediaries like Brokerage
Houses,

Merchant

Banks

etc.;

Micro

Finance

Institutions

(MFIs).

The semi-formal sector includes those institutions which are regulated otherwise but do
not fall under the jurisdiction of Central Bank, Insurance Authority, Securities and
Exchange Commission or any other enacted financial regulator. This sector is mainly
represented by Specialized Financial Institutions like House Building Finance
Corporation (HBFC), Palli Karma Sahayak Foundation (PKSF), Samabay Bank,
Grameen Bank etc., Non-Governmental Organizations (NGOs and discrete government
programs.
The informal sector includes private intermediaries which are completely unregulated.

The financial market in Bangladesh is mainly of following types:

1. Money Market: The money market comprises banks and financial institutions as
intermediaries, 20 of them are primary dealers in treasury securities. Interbank clean
and repo based lending, BB's repo, reverse repo auctions, BB bills auctions, treasury
bills auctions are primary operations in the money market, there is also active
secondary trade in treasury bills (up to 1 year maturity).
2. Taka Treasury Bond market: The Taka Treasury bond market consists of primary
issues of treasury bonds of different maturities (2, 5, 10, 15 and 20 years), and
secondary trade therein through primary dealers. 20 banks performing as Primary
Dealers participate directly in the primary auctions. Other bank and non-bank
investors can participate in primary auctions and in secondary trading through their
nominated Primary Dealers. Non-resident individual and institutional investors can
also participate in primary and secondary market, but only in treasury bonds.
Monthly data on primary and secondary trade volumes in treasury bills and bonds and
data on outstanding volume of treasury bonds held by non-residents can be accessed
at Monthly data of Treasury Bills & Bonds .
3. Capital market: The primary issues and secondary trading of equity securities of
capital market take place through two (02) stock exchanges-Dhaka Stock Exchange
and Chittagong Stock Exchange. The instruments in these exchanges are equity
securities (shares), debentures and corporate bonds. The capital market is regulated by
Bangladesh Securities and Exchange Commission (BSEC).
4. Foreign Exchange Market: Towards liberalization of foreign exchange transactions,
a number of measures were adopted since 1990s. Bangladeshi currency, the taka, was
declared convertible on current account transactions (as on 24 March 1994), in terms
of Article VIII of IMF Article of Agreement (1994). As Taka is not convertible in
capital account, resident owned capital is not freely transferable abroad. Repatriation
of profits or disinvestment proceeds on non-resident FDI and portfolio investment
inflows are permitted freely. Direct investments of non-residents in the industrial
sector and portfolio investments of non-residents through stock exchanges are
repatriable abroad, as also are capital gains and profits/dividends thereon. Investment
abroad of resident-owned capital is subject to prior Bangladesh Bank approval, which
is allowed only sparingly. Bangladesh adopted Floating Exchange Rate regime since
31 May 2003. Under the regime, BB does not interfere in the determination of
exchange rate, but operates the monetary policy prudently for minimizing extreme
swings in exchange rate to avoid adverse repercussion on the domestic economy. The
exchange rate is being determined in the market on the basis of market demand and
supply forces of the respective currencies. In the forex market banks are free to buy
and sale foreign currency in the spot and also in the forward markets. However, to
avoid any unusual volatility in the exchange rate, Bangladesh Bank, the regulator of
foreign exchange market remains vigilant over the developments in the foreign
exchange market and intervenes by buying and selling foreign currencies whenever it
deems necessary to maintain stability in the foreign exchange market.

Payment System
A country's payment system is the channel through which the central bank passes financial
transaction part of its monetary policy. Central banks' functions in the area of payment
systems are very closely related to their functions in the areas of monetary policy and
financial stability. Monetary stability supports sound investment and sustainable economic
growth, which in turn are conducive to financial stability and support the smooth operation of
payment
systems.
Well-functioning payment systems ensure the efficient and safe execution of monetary policy
operations and facilitate the smooth and homogenous transmission of monetary impulses. The
smooth functioning of payment systems is a precondition for users' confidence in these
systems and, ultimately, public confidence in the currency. Central banks would extend their
concern toward the safe and efficient use of payment instruments with a view to maintain
public confidence in the currency and ensure its smooth circulation. Central banks have a
strong interest in promoting safety and improving efficiency in payment systems as part of
their overall concern with financial stability. The importance that central banks attach to the
stability of financial markets derives from the possibility that financial institutions' actual or
perceived inability to settle their obligations in distressed market conditions could contribute
to a loss of confidence and could also have a negative effect on the stability of financial
markets
and
the
economy
as
a
whole.
In systemically important payment systems, disruption caused by one participant in the
infrastructure can cause disruptions for other participants, propagate financial disturbances
and possibly even amplify such disturbances by inducing chain reactions that might
contaminate the whole financial system. In such systems, central banks aim mainly to:

prevent systemic risk, thereby maintaining financial stability;

promote the efficiency of payment systems and instruments;

ensure the security of and public trust in the currency as the settlement asset; and

Safeguard the transmission channel for monetary policy.

According to the Section 7A (e) of the Bangladesh Bank Order, 1972; one of the main
functions of the Bangladesh Bank is - "to promote, regulate and ensure a secure and efficient
payment
system"
In fulfilling this mandate and considering the importance, Payment Systems Department
(PSD) has been formed on 26 July 2012, prior to this it was a section under Department of
Currency Management and Payment Systems.

Government Securities Market

Government securities market of Bangladesh is consists of tradable and non-tradable
securities. Non-tradable securities include National Savings Certificates i.e. Sanchayapatras
and Sanchayabonds which are only for retail investors. The tradable securities include
Treasury Bills (T-Bills) of 91, 182 and 364 days maturities and Bangladesh Government
Treasury Bonds (BGTB) of 2, 5, 10, 15 and 20 years maturities. T-Bills and BGTBs are
issued through auctions. Only Primary Dealers (PD) can submit bids in the auctions. Other
institutions and individuals can submit bids in auction but through the PDs. At present 20
banks are performing as Primary Dealer. T-Bills and BGTBs can be sold in the secondary
market.
Non-resident individual and institutional investors also eligible to buy BGTBs through a
Non-Resident Foreign Currency Account and Non-Resident Investor's Taka Account
maintained with commercial banks of Bangladesh. Bangladesh Bank has its own depository
system for the transaction and settlement of Government securities in the Market
Infrastructure (MI) Module. In 2011 BB introduced this automated system to expedite the
primary auction and secondary market.

Deposit Insurance Systems

Deposit Insurance Systems (DIS) is now protecting your Deposits in the Bank and insurance
benefits in the unlikely event of a number of Banks. Deposit insurance is a system established
by the Government of Bangladesh to protect depositors against the loss of their deposits in
the event that a scheduled bank is unable to meet its obligations. Deposit Insurance Systems
(DIS)
A sound, competitive banking system is important to a nation's economic strength. Every
scheduled Bank plays an important role as the intermediation of funds from depositors to
consumers and investors as well as in the transmission of monetary policy. So, public
confidence in banking sectors is very crucial. Deposit Insurance Systems (DIS) is the key
element in maintaining confidence and promoting financial stability through increasing
saving in the banking sectors.
Deposit Insurance Systems is a measure to protect bank depositors, in full or in part, from
losses caused by a bank's inability to pay its debts when owing. Deposit Insurance Systems is
one of the components of financial safety net that is meant to promote financial stability.
Importance of DIS: Deposit Insurance plays a key role in maintenance of financial stability
by sustaining public confidence in the banking system through protecting depositors,
especially small and less sophisticated depositors, against loss of deposit to a significant
extent.

Regulators of the Financial System

Central Bank Bangladesh Bank acts as the Central Bank of Bangladesh which was
established on December 16, 1971 through the enactment of Bangladesh Bank Order
1972- Presidents Order No. 127 of 1972 (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.
In Strategic Plan (2010-2014), the vision of BB has been stated as, To develop
continually as a forward looking central bank with competent and committed
professionals of high ethical standards, conducting monetary management and financial
sector supervision to maintain price stability and financial system robustness, supporting
rapid broad based inclusive economic growth, employment generation and poverty
eradication
in
Bangladesh.
to formulate and implement monetary policy;
1. to formulate and implement intervention policies in the foreign exchange market;
2. to give advice to the Government on the interaction of monetary policy with fiscal and
exchange rate policy, on the impact of various policy measures on the economy and to
propose legislative measures it considers necessary or appropriate to attain its objectives
and perform its functions;
3. to hold and manage the official foreign reserves of Bangladesh;
4. to promote, regulate and ensure a secure and efficient payment system, including the issue
of bank notes;
5. to regulate and supervise banking companies and financial institutions.

Core Policies of Central Bank

Monetary policy
The main objectives of monetary policy of Bangladesh Bank are:

Price stability both internal & external

Sustainable growth & development

High employment

Economic and efficient use of resources

Stability of financial & payment system

Bangladesh Bank declares the monetary policy by issuing Monetary Policy Statement
(MPS) twice (January and July) in a year. The tools and instruments for
implementation of monetary policy in Bangladesh are Bank Rate, Open Market
Operations (OMO), Repurchase agreements (Repo) & Reverse Repo, Statutory
Reserve Requirements (SLR & CRR)

Reserve Management Strategy

Bangladesh Bank maintains the foreign exchange reserve of the country in different
currencies to minimize the risk emerging from widespread fluctuation in exchange
rate of major currencies and very irregular movement in interest rates in the global
money market. BB has established Nostro account arrangements with different
Central Banks. Funds accumulated in these accounts are invested in Treasury bills,
repos and other government papers in the respective currencies. It also makes
investment in the form of short term deposits with different high rated and reputed
commercial banks and purchase of high rated sovereign/supranational/corporate
bonds. A separate department of BB performs the operational functions regarding
investment which is guided by investment policy set by the BB's Investment
Committee headed by a Deputy Governor. The underlying principle of the investment
policy is to ensure the optimum return on investment with minimum market risk.

Interest Rate Policy

Under the Financial sector reform program, a flexible interest policy was formulated.
According to that, banks are free to charge/fix their deposit (Bank /Financial
Institutes) and Lending (Bank /Financial Institutes) rates other than Export Credit. At
present, except Pre-shipment export credit and agricultural lending, there is no
interest rate cap on lending for banks. Yet, banks can differentiate interest rate up to
3% considering comparative risk elements involved among borrowers in same

lending category. With progressive deregulation of interest rates, banks have been
advised to announce the mid-rate of the limit (if any) for different sectors and the
banks may change interest 1.5% more or less than the announced mid-rate on the
basis of the comparative credit risk. Banks upload their deposit and lending interest
rate in their respective website.

Capital Adequacy for Banks and FIs

Basel-III has been introduced with a view to strenghening the capital base of banks
with the goal of promoting a more resilient banking sector. The Basel III regulation
will be adopted in a phased manner starting from the January 2015, with full
implementation of capital ratios from the beginning of 2019. Now, scheduled banks in
Bangladesh are required to maintain minimum capital of Taka 4 billion or Capital to
Risk Weighted Assets Ratio (CRAR) 10%, whichever is higher. In addition to
minimum CRAR, Capital Conservation Buffer (CCB) of 2.5% of the total RWA is
being introduced which will be maintained in the form of CET1. Besides the
minimum requirement all banks have a process for assessing overall capital adequacy
in relation to their risk profile and a strategy for maintaining capital at an adequate
level.
For FIs, full implementation of Basel-II has been started in January 01, 2012
(Prudential Guidelines on Capital Adequacy and Market Discipline (CAMD) for
Financial Institutions). Now, FIs in Bangladesh are required to maintain Tk. 1 billion
or 10% of Total Risk Weighted Assets as capital, whichever is higher.

Deposit Insurance
The deposit insurance scheme (DIS) was introduced in Bangladesh in August 1984 to
act as a safety net for the depositors. All the scheduled banks Bangladesh are the
member of this scheme Bank Deposit Insurance Act 2000. The purpose of DIS is to
help to increase market discipline, reduce moral hazard in the financial sector and
provide safety nets at the minimum cost to the public in the event of bank failure. A
Deposit Insurance Trust Fund (DITF) has also been created for providing limited
protection (not exceeding Taka 0.01 million) to a small depositor in case of winding
up of any bank. The Board of Directors of BB is the Trustee Board for the DITF. BB
has adopted a system of risk based deposit insurance premium rates applicable for all
scheduled banks effective from January - June 2007. According to new instruction

regarding premium rates, problem banks are required to pay 0.09 percent and private
banks other than the problem banks and state owned commercial banks are required
to pay 0.07 percent where the percent coverage of the deposits is taka one hundred
thousand per depositor per bank. With this end in view, BB has already advised the
banks for bringing DIS into the notice of the public through displaying the same in
their display board.

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.
IDRA has been established to make the insurance industry as the premier financial
service provider in the country by structuring on an efficient corporate environment,
by securing embryonic aspiration of society and by penetrating deep into all segments
for high economic growth. The mission of IDRA is to protect the interest of the policy
holders and other stakeholders under insurance policy, supervise and regulate the
insurance industry effectively, ensure orderly and systematic growth of the insurance
industry and for matters connected therewith or incidental thereto.

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 and compliance with
securities laws. The main functions of SEC are:

Regulating the business of the Stock Exchanges or any other securities market.

Registering and regulating the business of stock-brokers, sub-brokers, share

transfer agents, merchant bankers and managers of issues, trustee of trust deeds,

registrar of an issue, underwriters, portfolio managers, investment advisers and

other intermediaries in the securities market.

Registering, monitoring and regulating of collective investment scheme including

all forms of mutual funds.

Monitoring and regulating all authorized self-regulatory organizations in the

securities market.

Prohibiting fraudulent and unfair trade practices in any securities market.

Promoting investors education and providing training for intermediaries of the

securities market.

Prohibiting insider trading in securities.

Regulating the substantial acquisition of shares and take-over of companies.

Undertaking investigation and inspection, inquiries and audit of any issuer or

dealer of securities, the Stock Exchanges and intermediaries and any selfregulatory organization in the securities market.

Conducting research and publishing information.

Regulator of Micro Finance Institutions

To bring Non-government Microfinance Institutions (NGO-MFIs) under a regulatory
framework, the Government of Bangladesh enacted "Microcredit Regulatory
Authority Act, 2006" (Act no. 32 of 2006) which came into effect from August 27,
2006. Under this Act, the Government established Microcredit Regulatory Authority
(MRA) with a view to ensuring transparency and accountability of microcredit
activities of the NGO-MFIs in the country. The Authority is empowered and
responsible to implement the said act and to bring the microcredit sector of the
country under a full-fledged regulatory framework. MRAs mission is to ensure
transparency and accountability of microfinance operations of NGO-MFIs as well as
foster sustainable growth of this sector. In order to achieve its mission, MRA has set
itself the task to attain the following goals:

To formulate as well as implement the policies to ensure good governance and

transparent financial systems of MFIs.

To conduct in-depth research on critical microfinance issues and provide policy

inputs to the government consistent with the national strategy for poverty
eradication.

To provide training of NGO-MFIs and linking them with the broader financial
market to facilitate sustainable resources and efficient management.

To assist the government to build up an inclusive financial market for economic

development of the country.

To identify the priorities in the microfinance sector for policy guidance and
dissemination of information to attain the MRAs social responsibility.

According to the Act, the MRA will be responsible for the three primary functions
that will need to be carried out, namely:

Licensing of MFIs with explicit legal powers;

Supervision of MFIs to ensure that they continue to comply with the licensing
requirements; and

Enforcement of sanctions in the event of any MFI failing to meet the licensing
and ongoing supervisory requirements.

Banks
After the independence, banking industry in Bangladesh started its journey with 6
nationalized commercialized banks, 2 State owned specialized banks and 3 Foreign Banks. In
the 1980's banking industry achieved significant expansion with the entrance of private
banks. Now, banks in Bangladesh are primarily of two types:

Scheduled Banks: The banks which get license to operate under Bank Company Act,
1991 (Amended up to 2013) are termed as Scheduled Banks.

Non-Scheduled Banks: The banks which are established for special and definite
objective and operate under the acts that are enacted for meeting up those objectives,
are termed as Non-Scheduled Banks. These banks cannot perform all functions of
scheduled banks.

There are 56 scheduled banks in Bangladesh who operate under full control and supervision
of Bangladesh Bank which is empowered to do so through Bangladesh Bank Order, 1972 and
Bank Company Act, 1991. Scheduled Banks are classified into following types:

State Owned Commercial Banks (SOCBs): There are 6 SOCBs which are fully or
majorly owned by the Government of Bangladesh.

Specialized Banks (SDBs): 2 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.

Private Commercial Banks (PCBs): There are 39 private commercial banks which are
majorly owned by the private entities. PCBs can be categorized into two groups:

Conventional PCBs: 31 conventional PCBs are now operating in the industry. They
perform the banking functions in conventional fashion i.e interest based operations.

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

Foreign Commercial Banks (FCBs): 9 FCBs are operating in Bangladesh as the

branches of the banks which are incorporated in abroad.

There are now 4 non-scheduled banks in Bangladesh which are:

Ansar VDP Unnayan Bank,

Karmashangosthan Bank,

Probashi Kollyan Bank,

Jubilee Bank

FIs
Non-Bank Financial Institutions (FIs) are those types of financial institutions which are
regulated under Financial Institution Act, 1993 and controlled by Bangladesh Bank. Now, 31
FIs are operating in Bangladesh while the maiden one was established in 1981. Out of the

total, 2 is fully government owned, 1 is the subsidiary of a SOCB, 13 were initiated by

private domestic initiative and 15 were initiated by joint venture initiative. Major sources of
funds of FIs are Term Deposit (at least six months tenure), Credit Facility from Banks and
other
FIs,
Call
Money
as
well
as
Bond
and
Securitization.
The major difference between banks and FIs are as follows:

FIs cannot issue cheques, pay-orders or demand drafts.

FIs cannot receive demand deposits,

FIs cannot be involved in foreign exchange financing,

FIs can conduct their business operations with diversified financing modes like
syndicated financing, bridge financing, lease financing, securitization instruments,
private placement of equity etc.

Capital Market
After the independence, establishment of Dhaka Stock Exchange (formerly East Pakistan
Stock Exchange) initiated the pathway of capital market intermediaries in Bangladesh. In
1976, formation of Investment Corporation of Bangladesh opened the door of professional
portfolio management in institutional form. In last two decades, capital market witnessed
number of institutional and regulatory advancements which has resulted diversified capital
market intermediaries. At present, capital market intermediaries are of following types:
1. Stock Exchanges: Apart from Dhaka Stock Exchange, there is another stock exchange
in Bangladesh that is Chittagong Stock Exchange established in 1995.
2. Central Depository: The only depository system for the transaction and settlement of
financial securities, Central Depository Bangladesh Ltd (CDBL) was formed in 2000
which conducts its operations under Depositories Act 1999, Depositories Regulations
2000, Depository (User) Regulations 2003, and the CDBL by-laws.
3. Stock Dealer/Sock Broker: Under SEC (Stock Dealer, Stock Broker & Authorized
Representative) Rules 2000, these entities are licensed and they are bound to be a
member of any of the two stock exchanges. At present, DSE and CSE have 238 and
136 members respectively.
4. Merchant Banker & Portfolio Manager: These institutions are licensed to operate
under SEC (Merchant Banker & Portfolio Manager Rules) 1996 and 45 institutions
have been licensed by SEC under this rules so far.

5. Asset Management Companies (AMCs): AMCs are authorized to act as issue and
portfolio manager of the mutual funds which are issued under SEC (Mutual Fund)
Rules 2001. There are 15 AMCs in Bangladesh at present.
6. Credit Rating Companies (CRCs): CRCs in Bangladesh are licensed under Credit
Rating Companies Rules, 1996 and now, 5 CRCs have been accredited by SEC.
7.

Trustees/Custodians: According to rules, all asset backed securitizations and mutual

funds must have an accredited trusty and security custodian. For that purpose, SEC
has licensed 9 institutions as Trustees and 9 institutions as custodians.

8. Investment Corporation of Bangladesh (ICB): ICB is a specialized capital market

intermediary which was established in 1976 through the ordainment of The
Investment Corporation of Bangladesh Ordinance 1976. This ordinance has
empowered ICB to perform all types of capital market intermediation that fall under
jurisdiction of SEC. ICB has three subsidiaries:
8.1. ICB Capital Management Ltd.,
8.2. ICB Asset Management Company Ltd.,
8.3. ICB Securities Trading Company Ltd.

Insurance
Insurance sector in Bangladesh emerged after independence with 2 nationalized insurance
companies- 1 Life & 1 General; and 1 foreign insurance company. In mid 80s, private sector
insurance companies started to enter in the industry and it got expanded. Now days, 62
companies are operating under Insurance Act 2010. Out of them

18 are Life Insurance Companies including 1 foreign company and 1 is state-owned

company,

44 General Insurance Companies including 1 state-owned company.

Insurance companies in Bangladesh provide following services:

1. Life insurance,
2. General Insurance,
3. Reinsurance,
4. Micro-insurance,
5. Takaful or Islami insurance.

MFIs
The member-based Microfinance Institutions (MFIs) constitute a rapidly growing segment of
the Rural Financial Market (RFM) in Bangladesh. Microcredit programs (MCP) in
Bangladesh are implemented by various formal financial institutions (nationalized
commercial banks and specialized banks), specialized government organizations and NonGovernment Organizations (NGOs). The growth in the MFI sector, in terms of the number
of MFI as well as total membership, was phenomenal during the 1990s and continues till
today. Despite the fact that more than a thousand of institutions are operating microcredit
programs, but only 10 large Microcredit Institutions (MFIs) and Grameen Bank represent
87% of total savings of the sector and 81% of total outstanding loan of the sector. Through
the financial services of microcredit, the poor people are engaging themselves in various
income generating activities and around 30 million poor people are directly benefited from
microcredit programs. Credit services of this sector can be categorized into six broad
groups: i) general microcredit for small-scale self employment based activities, ii)
microenterprise loans, iii) loans for ultra poor, iv) agricultural loans, v) seasonal loans, and
vi) loans for disaster management. Currently, 599 institutions (as of October 10 2011) have
been licensed by MRA to operate Micro Credit Programs. But, Grameen Bank is out of the
jurisdiction of MRA as it is operated under a distinct legislation- Grameen Bank Ordinance,
1983.

Recent Developments in Financial Sector of Bangladesh

Automation and Technological Development: Banking sector experienced
remarkable progress in respect of automation in functioning in last several years. For
the pro-active and forward-visioning approach of Bangladesh Bank, numbers of
automation initiatives have been implemented in banking sector. These initiatives
include:
Bangladesh introduced the Market Infrastructure (MI) Module for automated auction
and trading of government securities.

To create a disciplined environment for borrowing, the automated Credit Information

Bureau (CIB) service provides credit related information for prospective and existing
borrowers. With this improved and efficient system, risk management will be more
effective. Banks and financial institutions may furnish credit information to CIB
database 24 by 7 around the year; and they can access credit reports from CIB online
instantly.

L/C Monitoring System has been introduced for preservation and using the all
necessary information regarding L/C by the banks through BB website. This system
allows the authorized users of banks to upload and download their L/C information.

In terms of article 36(3) of Bangladesh Bank Order, 1972, all scheduled banks are

subject to submit Weekly Statement of Position as at the close of business on every

Thursday to the Department of Off-site Supervision. This statement now is submitted
through on-line using the web upload service of BB website within o3 (three) working
days after the reporting date which is much more time and labor efficient that the
earlier manual system.

The e-Returns service has been introduced which is An Online Portal Service for
Scheduled Banks to submit Electronic Returns using predefined template for the
purpose of Macro Economy Analysis through related BB Departments.

Online Export Monitoring System is used for monitoring export of Bangladesh.

Through this service, Banks and AD Branches of Banks issue & reports export report.

Bangladesh Automated Clearing House (BACH) started to work by replacing the

ancient manual clearing system which allows the inter-bank cheques and similar type
instruments to be to settled in instant manner.

Electronic Fund Transfer (EFT) has been introduced which facilitates the banks to
make bulk payments instantly and using least paper and manpower.

The initiation of Mobile Banking has been one of the most noteworthy advancement in
banking. Through this system, franchises of banks through mobile operators can
provide banking service to even the remotest corner of the country.

Almost every commercial bank is now using their own core banking solution which
has made banking very faster and efficient. Usage of plastic money has much more
increased in daily life transactions. Full or partial online banking is now being
practiced by almost every bank.
Inauguration of internet trading in both of the bourses (DSE & CSE) in the country is
the most significant advancement for capital market in last several years. Micro
Finance Institutions submit their reports to the regulator through the Online Report
Submission Tools for MFIs.

Institutional Development:
Through the Central Bank Strengthening Project, there have been a good number of
achievements regarding the institutional development in BB which can be observed below:

The implementation of Enterprise Resource Planning (ERP) has been a big step in
automation of operational structure of BB.

The establishment of Enterprise Data Warehouse (under process) will bring the whole
banking and FI industry under a single network through which data sharing, reporting
and supervision will enter in a new horizon.

Bangladesh Bank now possesses the most informative and resourceful website of the
country regarding economic and financial information.

Internal networking system with required online communication facilities have been
developed and in operation for the officers of BB.

BB has hosted number of international seminars on different economic and financial

issues over last several years.

MRA was established in 2006 for bringing NGO-MFIs under supervision. For the pro active
role of MRA, this sector (MFI) is now in a good shape regarding the accountability and
regulation.
For abolishing anomaly and fetching discipline in insurance industry, IDRA was established
in 2011. In one year, IDRA has taken number of appreciable steps to regularize this industry.
After the massive crash of local bourses in 2010-2011, the executive body of SEC was
redesigned in full and some good results have come after that.

Regulatory Development:
Banking and FI industries have experienced diversified regulatory development over last few
years:

Basel-III has been introduced in a phased manner starting from the January 2015, with
full implementation of capital ratios from the beginning of 2019.

Guidelines on Environmental and Climate Change Risk Management for banks and
FIs have been circulated. Policy guidelines on Green Banking also have been issued.

Guidelines on Stress Testing for banks and FIs have been issued which is aimed to
assess the resilience of banks and FIs under different adverse situations.

Number of Policy initiatives for Financial Inclusion has been undertaken.

Banks have been asked to build up separate Risk Management Unit for
comprehensive and intensive risk management.

Banks have been instructed to create separate subsidiary for capital market operations
and capital market operations of banks are now minutely monitored.

Supervision has been intensified to increase the participation of banks in Corporate

Social Responsibility (CSR).

For the efficient and timely action of BB, foreign exchange reserve of Bangladesh did
not face any adversity during global financial turmoil of 2007-09.

To meet international standard on Anti Money Laundering (AML)/Combating

Financing of Terrorism (CFT) issues, guidelines for Money Changers, Insurance
Companies and Postal Remittance have already been circulated.

SEC has updated Public Issue Rules, 2006 and Mutual Fund Rules, 2001. Apart from that,
numbers of AMCs, merchant banks and are Mutual Funds are permitted by SEC which has
increased the participation of institutional investors. The trend of capital market research has
been upward which indicates the potential of analytical investment decision.
Insurance Act 2010 was formulated to meet demand of concurrent time for shifting the
insurance industry in a better shape. Apart from that, several initiatives have been undertaken
by IDRA for prohibiting the malpractices in the industry regarding insurance commission,
agent, premium etc and corporate governance issues.

Recent reviews and pronouncements of monetary policy

Bangladesh Bank Open Data Initiative

Bangladesh Bank took another step forward in making its vast repository of data
accessible to the general public. Data from the Monthly Economic Trends publication
can now be easily downloaded by anyone interested, free of cost, into an Excel file . This
includes detailed data, some dating back almost twenty years, on balance of payments,
money supply, various consumer price indices, national accounts, stock price indices,
interest rates, remittances, exchange rates, commodity prices and tax revenue. This file
will be updated monthly.
Moreover for those researchers interested in analyzing time series
data as far back as 1972 the Statistics Department has prepared a
historical data set in Excel which includes the indicators in the Monthly
Economic Trends Publication. This file will be updated yearly.
For detailed banking sector data please click on the following link which has all the
Excel tables in the latest edition of the quarterly Scheduled Bank Statistics publication.
For a detailed analysis of some of this data you will also find attached our first Financial
Stability report which presents summary statistics and analysis of the banking sector.
Data on the weighted average rate of interest on deposits and loans for each bank is now
available. In addition to this summary data we also have detailed interest rate data by
type of deposit and loan product. We will progressively bring out other data in easily
downloadable format, and develop new user-friendly applications, as part of this
Bangladesh Bank Open data initiative to promote greater use of data for more
effective policymaking.
The Bank also compiles and publishes a range of economic data in html format.

Balance of Payment
Exchange rate of Taka
Balance of payments
Interest rate (average)

Commodity wise export shipments

International reserves

Commodity-wise import statistics

recorded by customs

Bank credit & deposit

Foreign aid receipts and debt repayments
Transactions with the IMF
Govt's domestic debt
Inflation
Central Bank Survey
Official Reserve Assets
Declared Exchange Rates of Banks
Cost of Funds Index of NBFIs
Foreign Direct Investment
Money supply
Monetary survey
National income aggregates
Wage earner's remittance inflow
Interest Rate Spread

Services and income account

Export
The overall position of export receipts
Commodity-wise export receipts
Major country/commodity-wise export
receipts
Bloc/Group/Community - wise export
receipts
Country-wise export receipts
Export of Export Processing Zone
(EPZ)
Import
The overall position of payments
Major commodity-wise cash import
Commodity-wise cash import
Major country/commodity-wise
imports
Top twenty import countries
Bloc/Group/Community - wise Import
payments
Total import payments by countries /
territories
Imports of EPZ
Category-wise imports
Import LCs
Monthly position of Import LC
Weekly position of Import LC
Data Relating to L/C Opening &
Settlement for 5 days
Value & Quantity of some selected
items
Position of Import LCs of essential
items related ramadan
Import of rice & wheat
Revised Format for 34 Items:

Import LCs Opened & Settled

Revised Format for 23 Items:
Import LCs Opened & Settled

Information Center
This part is linked to Press releases, Circulars, Notices etc published from BB. Different
departments are engaged in circulating policy, rules and guidelines for regulating the
financial sector of Bangladesh. Department of Printing and Publications issued press releases
on different activities of BB like repo-treasury auction notice, new note release etc which are
available in Press Release section.

Publications of Bangladesh Bank

Bangladesh Bank publishes a range of periodical publications, research paper and reports that
contain monetary & banking developments, economic reviews, as well as various other
statistical data.

Investment facilities through Bonds

Bangladesh offers generous opportunities for investment under its liberalised Industrial
Policy and export-oriented, private sector-led growth strategy. The government's role is that
of a facilitator which helps create an enabling environment for expanding private investment,
both domestic and foreign. The Board of Investment (BOI), established by the government

for accelerating private investment, provides institutional support services to intending

investors.
Non Resident Bangladeshis have numbers of opportunities to invest their money in different
bonds to earn attractive profit like premium bond, investment bond etc.
Bangladeshi nationals living abroad can send Foreign Exchange very easily and directly to
bank accounts maintained in Bangladesh. For this, drawing arrangements is created with
Foreign banks and Exchange houses .Persons willing to remit their earnings through official
channels can buy either Taka draft or US dollar draft from these Foreign banks and Exchange
houses having drawing arrangements with different banks in Bangladesh.
Prize bond and Shanchaypatra are two facilities for local Bangladeshi citizens.

Services for general public

Bangladesh Bank serves the people in many ways. The Bank issues banknotes with special
security features so that owner knows the money is genuine. View the security posters to
know the features.
If you have deposited your money in scheduled banks, and have not made transaction for last
ten years, you can check your account from 'Claim your money' link.
Any client, person or agency having complaint(s) against a Scheduled Bank/FI/Bangladesh
Bank or related official may write down his/her complaint(s) in the 'Customer Complaint'
link.

Find out some important BB forms from 'BB Forms' link.

The list shows names and other few particulars of the account holders who did not make any
transactions for long 10 years into their accounts maintained with the scheduled banks in
Bangladesh. The scheduled banks have transferred the funds to Bangladesh Bank during the
period from 16 February 2014 to 15 February 2015 under Section 35 of the Banking
Companies' Act, 1991. The funds will be transferred, if no claim is received for refund of any
amount from these deposits, to the Banking Regulations and Policy Department of
Bangladesh Bank through the banks concerned, to the government account after completion
of one year under the provisions of the same Section of the said Act.
Find your information from PDF files of following banks:
Uttara Bank Limited
Agrani Bank Ltd.

Bank Asia Limited

Exim Bank Limited

Financial Integrity & Customer Services Department (FICSD)

Search your account information of following banks:

Al-Arafah Islami Bank
Limited
The City Bank Ltd.

Bangladesh Development
Bank Limited
Standard Chartered Bank

BASIC Bank Limited

United Commercial
Bank Limited

Bangladesh Bank, the Central Bank of Bangladesh, always safeguards the interests of the
depositors/customers of banks and financial institutions of the country. As the regulator as
well as the supervisor of the banks and financial institutions, Bangladesh Bank has, therefore,
established a full-fledged department known as "Financial Integrity & Customer Services
Department (FICSD)" with the following objectives:

To protect the interests of the customers related to Banks & Financial Institutions (FI)
within the legal and regulatory frame-works.

To redress the grievances of the customers and to attend the complaints received
against Banks/FIs or its any official.

To improve banker-customer relationship.

To ensure the standard of customer-services of the Banks/FIs.

Lodge your complaint to the FICSD by the following modes:

Dial 16236 during office time on all the working days to lodge your complaint/ for any
query regarding banking/financial services.
Send your e-mail to us at bb.cipc@bb.org.bd, Send your complaint to Fax :0088-029530273, Send your complaint using the electronic complaint form
http://www.bb.org.bd/complainbox/complainbox.php, Send your complaints against
Banks/Financial Institutions to the following address
General Manager
Financial Integrity & Customer Services Department
Bangladesh Bank, Head Office,
2nd Annex Building (17 floor)
Motijheel, Dhaka-1000.

Complaint Lodgment Procedure

STEP-1:

Contact your Bank/Financial Institution's Branch first

You should first refer your problem to your Bank/Financial Institution's
Branch. You may talk to the concerned official who deals with your case on
how you would like the problem to be resolved.

STEP-2 :

Complaining to the Complaint Cell of your Bank/FI

If your Complaint is not resolved at the desk level, you may make a formal
complaint to the Complaint Cell of your Banks & Financial Institutions (FI)
.
All Banks/Financial Institutions licensed by Bangladesh Bank have set up
Complaint Cell in their Head Offices as well as Zonal Offices to handle

Bangladesh Bank, the Central Bank of Bangladesh, always safeguards the interests of the
depositors/customers of banks and financial institutions of the country. As the regulator as
well as the supervisor of the banks and financial institutions, Bangladesh Bank has, therefore,
established a special centre known as "Customers' Interests Protection Centre" (CIPC) in
its Head Office as well as Branch Offices with the following objectives:

To protect the interests of the customers related to Banks & Financial Institutions (FI)
within the legal and regulatory frame-works.

To redress the grievances of the customers and to attend the complaints received
against Banks/FIs or its any official.

To improve banker-customer relationship.

To ensure the standard of customer-services of the Banks/FIs.

Complaint Lodgment Procedure

Complaint subject
*
:

Company type
*
:

Branch
Office
name

/*:

Branch /*:
Office
address
Official
name

Complain *:
t
/
Grievance
detail

Upload a :
file
Customer :
*
name
Customer :
*
address
Customer :
*
email
Customer :
telephone

Customers' Interests Protection Centre (CIPC) deals with all types of Bank/FI related
complaints except the following:

Complaint against an institution/person which is not within the purview of

Bangladesh Bank.

Complaint submitted by a third party without the written permission of the account
holder.

Complaints relating to the matters which are sub judice in the court.

Complaint that is not signed by the complainant or without any name and address &
contact number of the complainant.

Policy and relavent information of SME

Distribution of Booklet on 'Contact persons of Women
Entrepreneurs Development Unit' Details
Industrial credit Report Executive Summary Details
Small and Medium Enterprise (SME) Credit Policies &
Programmes English Bangla
BB policy on agri based industry and SME
List of authorized agri based industry
Sectors of SME
Checklist for needful deed and documents for SME loan sancti

Time series(Economic data)

Bangladesh Bank (BB), the central bank of Bangladesh, has
rich traditions of publishing data on various aspects of the
Bangladesh Economy through several of its publications.
Using this Data Warehouse application, data are mainly
presented through time-series formatted reports.
Reports can be saved as excel format for further analysis.
Users: Banks, FIs, Economists, Researchers, Analysts
Instruction:
For best view, use latest Mozilla Firefox with
Adobe flash player installed.
If needed, please login using User: bbguest and
Password: bbguest

Online
Foreign
Monitoring System

Exchange

Transaction

Online Foreign Exchange Transaction Monitoring

System is used for monitoring total foreign exchange
transactions of Bangladesh. The system includes
Export, Import, Inward remittance (Wage Earners'
remittance and other) and Outward remittance

(Traveling and Miscellaneous). Through its services,

Banks and AD Branches issue & reports Foreign
Exchange Transactions to Bangladesh Bank.
Users: Banks, AD Branch of Banks and Customs

Bangladesh Bank tender System

Bangladesh Bank introduces the online tendering
system to facilitate the procurement process of
Bangladesh Bank. The system will help you to
participate in the local and international
tender/procurement of Bangladesh Bank.
Users: Interested Bidders

returns
An Online Portal Service for Scheduled Banks to
submit Electronic Returns using predefined template
for the purpose of Macro Economy Analysis through
related BB Departments.
Users: All
Schedule
Bank
User Guide: Rationalized Input Template has been
provided to all Schedule Bank

Special Foreign Currency Account Monitoring

System (SFCAMS)
Online Special Foreign Currency Account Monitoring
System is used for monitoring FC account
transactions of Bangladesh. Through it's services, AD
Branches of Banks report day to day Transactions
(Only Special FC A/C) to Bangladesh Bank.
Users: AD Branch of Banks

Information for Deposit Insurance Premium

Assessment (IDIPA)
Deposit Insurance System (DIS) is now contributing
financial stability, protecting bank's depositors and

assuring insurance benefits in the unlikely event of

Scheduled Banks. The key elements of DIS are to
maintain public confidence and promote financial
sector's resilience through increasing savings. DIS in
Bangladesh is now being administrated by 'The Bank
Amanat Bima Ain, 2000'.
Users: All scheduled banks

Corporate
(CMMS)

Memory

Management

Systems

Corporate Memory Management Systems is a webbased application to monitor the errors, omission and
violation of regulations and policies by the Schedule
Commercial Banks/FI's and their executives..
Users: All Scheduled Banks and FIs

e-statement for CRR & SLR

In terms of article 36 of Bangladesh Bank Order, 1972
and Bank Company Ain, 1991,all scheduled banks
(both Conventional and Islamic Banking) in
Bangladesh are subject to submit Thursday Positions
of Demand And Time Liabilities for calculating CRR
and SLR at the close of business. This statement must
be submitted through on-line using this web service to
Department of Off-site Supervision (DOS) within the
10th of the following month.
Users: All Scheduled Banks

Online CIB services

To create a disciplined environment for borrowing,
the automated CIB service provides credit related
information for prospective and existing borrowers.
With this improved and efficient system, risk
management will be more effective. Banks and
financial institutions may furnish credit information to
CIB database 24 by 7 around the year; and they can
access credit reports from CIB online.
Users: Banks and FIs

Online Agent Information Management System

This system is to be used to send the required
information and documents by the Authorized Dealer
Bank for granting permission under Section-18A of
Foreign Exchange Regulation Act, 1947 to work as
local agent of foreign principal(s).
Users: AD Branch of Banks
User Guide: Online Agent Information Management
System

Reporting goAML
goAML is a UNODC response to combat moneylaundering. The goAML Client application is an
intelligence analysis system intended to be used by
Bangladesh Financial Intelligence Unit (BFIU) which
is the central agency of Bangladesh responsible for
analyzing Suspicious Transaction Reports (STRs),
Cash Transaction Reports (CTRs) & information
related to money laundering (ML)/financing of
terrorism (TF) received from reporting organizations
&
other
sources
and
disseminating
information/intelligence thereon to relevant law
enforcement agencies for further action. The goAML
Web application provides a secure web based
interface between the BFIU and its reporting
organizations for the electronic upload of reports such
as XML files, filling out the online report forms or
sending XML files as attachments by secure e-mail,
information sharing among stakeholders and other
information.
Users: All scheduled Banks, Stakeholders & other
reporting agencies

Market Infrastructure
Web Upload
In terms of article 36(3) of Bangladesh Bank Order,
1972,all scheduled banks are subject to submit
Weekly Statement of Position as at the close of
business on every Thursday to the Department of Offsite Supervision. This statement must be submitted
through on-line using this web service within o3
(three) working days after the reporting date.
Users: All scheduled banks

Prize bond Matching

Using this service you can search single or multiple
numbers at a time.

Dispute Management System for Payment Card

Transactions (NPSB-DMS)
For card-based electronic transactions routed through
NPSB, disputes are very common. For this cardholder
has to raise claim to card issuing bank and issuing
bank investigates the claim and either proceeds or
rejects. For a valid claim, a chargeback request is to
be initiated by the issuing bank in the DMS portal. All
such claims are settled down at NPSB settlement and
accordingly funds are credited to the issuing bank and
finally credited to the cardholder account. The DMS
solution supports full cycle dispute management
procedure including chargeback, re-presentment,
second chargeback and arbitration.
Users: All Cards Issuing Banks
Guideline: NPSB Switch Operating Rules & User
Manual: Disputes Management Rules

Currency in circulation
View the banknotes currently in circulation and learn how
to check that they are genuine using the security features.

Coinage

Currency notes

Links of important organizations

Find out links of Scheduled Banks of Bangladesh, Financial Institutes, and important
government and other financial organization.