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.