Introduction to
Business
Financial
System of
Bangladesh
Group Assignment
Sheikh Shihab Uddin
Group-1 Participants
SL
Group-1
ID
202122103001
202122103007
202122103013
202122103019
202122103025
Name
Md. Mashrafe Mortoza
Arnob Saha
Md. Mostakim Hossen
Md Salman Shaikh
Sheikh Shihab Uddin
Topic
Financial System of
Bangladesh
1
Bangabandhu Sheikh Mujibur Rahman University
Kishoreganj
Department of Accounting
ASSIGNMENT-1
On
Financial System of Bangladesh
Course Title: Introduction to Business
Course Code: ACC 1102
Submitted To:
Asma Akter Sumi
Lecturer
Department of Accounting
Bangabandhu Sheikh Mujibur Rahman University
Submitted By:
Group-1
First Year, Semester-1
Department of Accounting
Bangabandhu Sheikh Mujibur Rahman University
Date of Submission: 08.06.2023
2
Contents
Financial System of Bangladesh ........................................................................................................ 4
Structure of Financial System: .......................................................................................................... 4
Role of Financial markets in the economy................................................................................................ 6
Functions of Financial Markets ................................................................................................................ 7
Constituents of Financial Market .............................................................................................................. 7
Based on market levels ......................................................................................................................... 7
Based on security types ........................................................................................................................ 8
Capital Markets & its instruments .......................................................................................................... 12
Banking and Non Banking Financial Institution’s Differences .............................................................. 15
Central Bank ........................................................................................................................................... 20
State-owned Commercial Banks ............................................................................................................. 21
Private Commercial Banks ..................................................................................................................... 21
Foreign Commercial Banks .................................................................................................................... 21
3
Financial System of Bangladesh
The Financial System is a set of institutional arrangement through which surplus units transfer
their fund to deficit units. At present the financial system in Bangladesh is mainly composed of
two types of institutions like banks and non-bank financial institution (NBFIs). The formal
financial sector in Bangladesh includes: (a) Bangladesh Bank as the central bank, (b) 48
commercial banks, including 4 Government owned commercial banks, 30 domestic private banks
(PCBs) (of which 6 banks are operating under Islamic Shariah), 9 foreign banks (FCBs) (of which
1 bank is operating as Islamic bank); and 5 government-owned specialized banks (DFIs); (c) 28
non-bank financial institutions (NBFIs) – licensed by the Bangladesh Bank); (d) 2 large
government- owned insurance companies (life and general) and 60 private owned (17 life and 43
general) insurance companies; (e) 2 stock exchanges and, (f) some co-operative banks. Besides, a
good number of semi-formal micro finance institutions (MFIs) also are operating in Bangladesh.
Structure of Financial System:
The main constituents of financial system are :
i) Financial Institutions
ii) Financial Instruments, and
iii) Financial Markets.
Financial Institutions
The modern name of Financial Institution is Financial Intermediary (FI), because it mediates or
stand between ultimate borrowers and ultimate lenders and helps transfer funds from one to
another.
The Financial system helps production, capital-accumulation and growth by
i) encouraging savings and
ii) allocating them among the alternative uses and users.
Financial Instruments
Financial Instruments are of two types:
i) Primary (or Direct)
ii) Secondary (or Indirect)
4
Financial markets
Financial markets facilitate the flow of funds in order to finance investments by governments,
corporations, and individuals. It transfers funds from those who have excess funds (surplus units)
to those who need funds(deficit units).
Financial markets facilitate:
•
•
•
•
•
•
The raising of capital (in the capital markets)
The transfer of risk (in the derivatives markets)
Price discovery
Global transactions with integration of financial markets
The transfer of liquidity (in the money markets)
International trade (in the currency markets)
And are used to match those who want capital to those who have it.
Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts
are securities which may be freely bought or sold. In return for lending money to the borrower, the
lender will expect some compensation in the form of interest or dividends. This return on
investment is a necessary part of markets to ensure that funds are supplied to them.
Financial markets attract funds from investors and channel them to corporations—they thus allow
corporations to finance their operations and achieve growth. Money markets allow firms to borrow
funds on a short term basis, while capital markets allow corporations to gain long-term funding to
support expansion.
Without financial markets, borrowers would have difficulty finding lenders themselves.
Intermediaries such as banks, Investment Banks, and Boutique Investment Banks can help in this
process. Banks take deposits from those who have money to save. They can then lend money from
this pool of deposited money to those who seek to borrow. Banks popularly lend money in the
form of loans and mortgages.
More complex transactions than a simple bank deposit require markets where lenders and their
agents can meet borrowers and their agents, and where existing borrowing or lending commitments
can be sold on to other parties. A good example of a financial market is a stock exchange. A
company can raise money by selling shares to investors and its existing shares can be bought or
sold.
5
The following table illustrates where financial markets fit in the relationship between lenders and
borrowers:
Relationship between lenders and borrowers
Lenders
Financial Intermediaries
Individuals
Companies
Banks
Insurance
Pension
Mutual Funds
Financial Markets
Borrowers
Interbank
Individuals
Stock
Exchange Companies
Companies
Money
Market Central
Government
Funds
Bond
Market Municipalities
Foreign Exchange
Public Corporations
Role of Financial markets in the economy
One of the important requisite for the accelerated development of an economy is the existence of
a dynamic financial market. A financial market helps the economy in the following manner.
•
•
•
•
•
Saving mobilization: Obtaining funds from the savers or surplus units such as household
individuals, business firms, public sector units, central government, state governments etc.
is an important role played by financial markets.
Investment: Financial markets play a crucial role in arranging to invest funds thus
collected in those units which are in need of the same.
National Growth: An important role played by financial market is that, they contributed
to a nations growth by ensuring unfettered flow of surplus funds to deficit units. Flow of
funds for productive purposes is also made possible.
Entrepreneurship growth: Financial market contribute to the development of the
entrepreneurial claw by making available the necessary financial resources.
Industrial development: The different components of financial markets help an
accelerated growth of industrial and economic development of a country, thus contributing
to raising the standard of living and the society of well-being.
6
Functions of Financial Markets
•
Intermediary Functions: The intermediary functions of a financial markets include the
following:
o Transfer of Resources: Financial markets facilitate the transfer of real economic
resources from lenders to ultimate borrowers.
o Enhancing income: Financial markets allow lenders to earn interest or dividend
on their surplus invisible funds, thus contributing to the enhancement of the
individual and the national income.
o Productive usage: Financial markets allow for the productive use of the funds
borrowed. The enhancing the income and the gross national production.
o Capital Formation: Financial markets provide a channel through which new
savings flow to aid capital formation of a country.
o Price determination: Financial markets allow for the determination of price of the
traded financial assets through the interaction of buyers and sellers. They provide a
sign for the allocation of funds in the economy based on the demand and supply
through the mechanism called price discovery process.
o Sale Mechanism: Financial markets provide a mechanism for selling of a financial
asset by an investor so as to offer the benefit of marketability and liquidity of such
assets.
o Information: The activities of the participants in the financial market result in the
generation and the consequent dissemination of information to the various
segments of the market. So as to reduce the cost of transaction of financial assets.
•
Financial Functions
o Providing the borrower with funds so as to enable them to carry out their investment
plans.
o Providing the lenders with earning assets so as to enable them to earn wealth by
deploying the assets in production debentures.
o Providing liquidity in the market so as to facilitate trading of funds.
Constituents of Financial Market
Based on market levels
•
Primary market: Primary market is a market for new issues or new financial claims.
Hence it’s also called new issue market. The primary market deals with those securities
which are issued to the public for the first time.
7
•
Secondary market: It’s a market for secondary sale of securities. In other words, securities
which have already passed through the new issue market are traded in this market.
Generally, such securities are quoted in the stock exchange and it provides a continuous
and regular market for buying and selling of securities.
Based on security types
•
•
Money market: Money market is a market for dealing with financial assets and securities
which have a maturity period of up to one year. In other words, it’s a market for purely
short term funds.
Capital market: A capital market is a market for financial assets which have a long or
indefinite maturity. Generally it deals with long term securities which have a maturity
period of above one year. Capital market may be further divided in to: (a) industrial
securities market (b) Govt. securities market and (c) long term loans market.
o Equity markets: A market where ownership of securities are issued and subscribed
is known as equity market. An example of a secondary equity market for shares is
the Bombay stock exchange.
o Debt market: The market where funds are borrowed and lent is known as debt
market. Arrangements are made in such a way that the borrowers agree to pay the
lender the original amount of the loan plus some specified amount of interest.
•
Derivative markets: Derivative securities are financial contracts whose values are derived
from the underlying assets. And derivative markets are Markets that allow for buying &
selling of derivative securities.
•
Financial service market: A market that comprises participants such as commercial banks
that provide various financial services like ATM. Credit cards. Credit rating, stock broking
etc. is known as financial service market. Individuals and firms use financial services
markets, to purchase services that enhance the working of debt and equity markets.
Depository markets: A depository market consist of depository institutions that accept
deposit from individuals and firms and uses these funds to participate in the debt market,
by giving loans or purchasing other debt instruments such as treasure bills.
Non-Depository market: Non-depository market carry out various functions in financial
markets ranging from financial intermediary to selling, insurance etc. The various
constituency in non-depositary markets are mutual funds, insurance companies, pension
funds, brokerage firms etc.
•
•
The financial market in Bangladesh is mainly of following types:
8
1. Money Market: The primary money market is comprised of banks, FIs and primary
dealers as intermediaries and savings & lending instruments, treasury bills as instruments.
There are currently 15 primary dealers (12 banks and 3 FIs) in Bangladesh. The only active
secondary market is overnight call money market which is participated by the scheduled
banks and FIs. The money market in Bangladesh is regulated by Bangladesh Bank (BB),
the Central Bank of Bangladesh.
2. Capital market: The primary segment of capital market is operated through private and
public offering of equity and bond instruments. The secondary segment of capital market
is institutionalized by two (02) stock exchanges-Dhaka Stock Exchange and Chittagong
Stock Exchange. The instruments in these exchanges are equity securities (shares),
debentures, corporate bonds and treasury bonds. The capital market in Bangladesh is
governed by Securities and Commission (SEC).
3. 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.
Money market & its instruments
9
The money market is used by a wide array of participants, from a company raising money by
selling commercial paper into the market to an investor purchasing CDs as a safe place to park
money in the short term. The money market is typically seen as a safe place to put money due the
highly liquid nature of the securities and short maturities, but there are risks in the market that any
investor needs to be aware of including the risk of default on securities such as commercial paper.
The primary money market is comprised of banks, FIs and primary dealers as intermediaries and
savings & lending instruments, treasury bills as instruments. There are currently 15 primary dealers
(12 banks and 3 FIs) in Bangladesh. The only active secondary market is overnight call money
market which is participated by the scheduled banks and FIs. The money market in Bangladesh is
regulated by Bangladesh Bank (BB), the Central Bank of Bangladesh.
The developed money market has the following characteristics:
(i) Existence of Central Bank,
(ii) Highly organized commercial Banking System
(iii) Existence of sub-markets
(iv) Healthy competition in sub-markets
(v) Integrated structure of money market
Money Market Instruments:
The common types of money market securities traded in Bangladesh are given below:
i) Treasury Bills(T-Bills)
ii) Repurchase Agreements( Repo or Reverse Repo)
iii) Commercial Papers
iv) Certificate of Deposit
v) Banker's Acceptance
Treasury Bills or T-Bills:
10
Treasury Bills, one of the safest money market instrument, are short term borrowing instruments
of the Central Government of the country issued through the Central Bank. They are zero risk
instruments. It is available both in the primary market as well as secondary market. T-bills are
short-term securities that mature in one year or less from their issue date. They are issued with
three-month,
six-month
and
one-year
maturity
periods.
The Central Government issues T-Bills at a price less than their face value (par value). They are
issued with a promise to pay full face value on maturity. So, when the T-Bills mature, the
government pays the holder its face value. The difference between the purchase price and the
maturity value is the interest income earned by the purchaser of the instrument.
T-Bills are issued through a bidding process at auctions. The bid can be prepared either
competitively or non-competitively. In case of competitive bidding, the return on maturity is
specified in the bid. In case the return specified is too high then the T-Bill might not be issued to
the bidder. In case of non-competitive bidding, return required is not specified and the one
determined at the auction is received on maturity.
Commercial paper:
Commercial paper is short term debt instruments issued by well known, credit worthy firms. It is
generally not issued in Bangladesh. But only types of commercial papers available are- the bills
of exchange and promissory notes, mutual funds etc.
Negotiable Certificates of Deposit (NCDs):
NCDs are certificates that are issued by large commercial banks as a short term source of fund.
The nonfinancial corporations often purchase NCDs. The minimum denomination is not fixed in
Bangladesh. Maturities on NCDs normally range from 15 to 1 years. It provides return in the form
of interest along with the difference between the price at which NCDs is redeemed and the
purchase price.
Repurchase Agreements:
With RA or repo one party sells securities to another party with an agreement to repurchase it back
at a specific date and price. Financial institutions often participate in RA.
Banker’s Acceptance:
It indicates that a bank accepts responsibility for a future payment which is commonly used for
international trade. Maturity of it is ranged from 30 to 270 days. The return from it is above t-bill
yield.
11
Capital Markets & its instruments
A market in which individuals and institutions trade financial securities. Organizations/institutions
in the public and private sectors also often sell securities on the capital markets in order to raise
funds. Thus, this type of market is composed of both the primary and secondary markets. Both
the stock and bond markets are parts of the capital markets. For example, when a
company conducts an IPO, it is tapping the investing public for capital and is therefore using the
capital markets. This is also true when a country's government issues Treasury bonds in the bond
market to fund its spending initiatives.
A. Regulatory Bodies
The Securities and Exchange Commission (SEC) exercise powers under the Securities and
Exchange Ordinance 1969, Securities and Exchange Commission (SEC) Act 1993, Depository
Act, 1999. It regulates institutions engaged in capital market activities.
B. Participants in the Capital Market
The SEC has issued licenses to institutions to act in the capital market of these, 52 institutions
are Merchant Banker & Portfolio Manager while 16 are the Asset Management Companies and 9
(one) acts as Security Custodians beyond these institutions SEC issuing 9 (nine) registration
certificate for Credit Rating Companies.
C. Stock Exchanges
There are two stock exchanges: a) The Dhaka Stock Exchange (DSE) and b) The Chittagong
Stock Exchange (CSE) which deals in the secondary capital market. DSE was established as a
Public Limited Company in April, 1954 thereafter CSE in April, 1995. As on June 15, 2012 the
total number of enlisted securities with DSE and CSE were 237 and 204 respectively. Out of 281
listed securities including mutual fund with the DSE, 237 were listed companies, 41 mutual
funds. Functions of SE are:
12
•
•
•
•
•
•
•
•
•
•
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 relating to securities trading 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 self regulatory organization in
the securities market.
Conducting research and publishing information.
D. 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.
13
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:
a. ICB Capital Management Ltd.,
b. ICB Asset Management Company Ltd.,
c. ICB Securities Trading Company Ltd.
Capital market instruments:
Bonds :
Bonds are long term debt securities issued by corporations & government agencies to support their
operations.
Mortgages :
Mortgages are long term debt obligations created to finance the purchase of real estate.
Stocks:
It is also called equity securities. Stocks are certificates representing ownership in the corporations
that issued them. It has higher rate of return but also exhibit a higher degree of risk.
Financial institutions in Bangladesh
14
Banking and Non Banking Financial Institution’s Differences
In Bangladesh now different commercial banks and the non banking financial organizations are
operating their business. And every organization now involved attracting the retail customers that
means the middle income group people of the country. To draw their attention the sells persons of
different organization try to knock every possible door. These activities of different organization
increase the interest about this sector. As both commercial banks and the non financial institutes
are in the market, so it makes confusion to the general people about the activities of these
organizations. This article helps the customers to makes differentiate between these.
Banks, usually a corporation, that accepts deposits, makes loans, pays checks, and performs related
services for the public. The Bank Holding Company Act of 1956 defines a bank as any depository
financial institution that accepts checking accounts (checks) or makes commercial loans, and its
deposits are insured by a federal deposit insurance agency. A bank acts as a middleman between
suppliers of funds and users of funds, substituting its own credit judgment for that of the ultimate
suppliers of funds, collecting those funds from three sources: checking accounts, savings, and time
deposits; short-term borrowings from other banks; and equity capital. A bank earns money by
reinvesting these funds in longer-term assets. A Commercial Bank invests funds gathered from
depositors and other sources principally in loans. An investment bank manages securities for
clients and for its own trading account. In making loans, a bank assumes both interest rate risk and
credit
risk.
The commercial banks are described now a day by many agents of economic development and
social change. Their functions and roll are undergoing revolutionary changes client coverage and
extended
beyond
imagination.
While many people believe that banks play only narrow roll in the economy taking deposit and
making loans the modern banks has bad to adopt new roles to remain competitive and responsive
to public needs. Baking’s principal roles today are as follows:
The intermediary role:
Transforming saving received primarily from household into credit for business firm and others
in order to make investment in new building, equipment and other goods.
The payment role:
Carrying out payment for goods and services on behalf of their customers.
The guarantor role:
Standing behind their customers to pay off customer debts, when those customers are unable to
pay.
15
The risk management role:
Assisting customer in preparing financially for the risk of lost to property and persons.
The saving / investment advisers’ role:
Aiding customers in fulfilling their long rang goals for a better life by building, managing, and
protecting savings.
The safekeeping/certification of value role:
Safeguarding a customer’s valuables and appraising and certifying their true market
The agency role:
Acting on behalf of customers to manage and protect their property or issue and redeem their
securities.
The policy role:
Saving as a conduit for govt. policy in attempting to regulate the growth of the economy and
pursue social goals.
Non-bank financial institutions
Represent one of the most important parts of a financial system. In Bangladesh, NBFIs are new in
the financial system as compared to banking financial institutions (BFIs). A total of 25 NBFIs are
now working in the country. The NBFIs sector in Bangladesh consisting primarily of the
development financial institutions, leasing enterprises, investment companies, merchant bankers
etc. The financing modes of the NBFIs are long term in nature. Traditionally, our banking financial
institutions are involved in term lending activities, which are mostly unfamiliar products for them.
Inefficiency of BFIs in long-term loan management has already leaded an enormous volume of
outstanding loan in our country. At this backdrop, in order to ensure flow of term loans and to
meet the credit gap, NBFIs have immense importance in the economy. In addition, non-bank
financial sector is important to increase the mobilization of term savings and for the sake of
providing
support
services
to
the
capital
market.
The basic difference may include:•
•
•
A Bank is an organization that accepts customer cash deposits and then provides financial
services like bank accounts, loans, share trading account, mutual funds, etc.
A NBFC (Non Banking Financial Company) is an organization that does not accept
customer cash deposits but provides all financial services except bank accounts.
A bank interacts directly with customers while an NBFI interacts with banks and
governments
16
•
•
•
A bank indulges in a number of activities relating to finance with a range of customers,
while an NBFI is mainly concerned with the term loan needs of large enterprises
A bank deals with both internal and international customers while an NBFI is mainly
concerned with the finances of foreign companies
A bank's man interest is to help in business transactions and savings/investment activities
while an NBFI's main interest is in the stabilization of the currency
Besides the differences between the both commercial banks and the non banking financial
institutions they play both for the development of the economic structure of the country. If the both
play positively than it can be said that, the development of the country is sure.
Offshore Banking
17
Offshore banking refers to the practice of holding bank accounts and conducting financial
transactions in a foreign country with the intention of taking advantage of favorable regulations,
tax benefits, and privacy offered by offshore jurisdictions. However, it's important to note that
offshore banking can be a complex and highly regulated area, subject to the laws and regulations
of both the home country and the offshore jurisdiction.
In the case of Bangladesh, offshore banking is not commonly practiced or widely available. The
country's financial system is primarily focused on domestic banking activities, and the regulatory
framework is designed to promote financial stability and prevent money laundering and other illicit
activities.
The central bank of Bangladesh, known as the Bangladesh Bank, regulates and supervises the
banking sector within the country. It sets the guidelines and policies for banking operations,
including foreign exchange transactions and cross-border financial activities.
Bangladesh does have a few special economic zones (SEZs) where certain incentives are provided
to attract foreign direct investment. These SEZs may have specific regulations and provisions that
facilitate international transactions, including offshore banking services. However, the scope and
scale of offshore banking activities within these SEZs are limited compared to traditional offshore
financial centers.
It's worth mentioning that Bangladesh has been actively working to strengthen its financial system
and prevent money laundering and illicit financial activities. The government has introduced
various measures, including stricter regulations and enhanced supervision, to ensure transparency
and accountability within the banking sector.
In summary, while Bangladesh has taken steps to attract foreign investment through special
economic zones, offshore banking is not a prominent feature of the country's financial system. The
regulatory environment is designed to prioritize domestic banking activities and prevent illicit
financial flows. If you require specific information about banking regulations or investment
opportunities in Bangladesh, it is advisable to consult with a financial professional or contact the
Bangladesh Bank directly for the most up-to-date and accurate information.
18
Here are some additional details regarding offshore banking in the financial system of Bangladesh:
Special Economic Zones (SEZs): Bangladesh has established several SEZs to attract foreign direct
investment and promote economic growth. These zones offer various incentives and facilities to
encourage international trade and business activities. While offshore banking services may be
available within these SEZs, the scope and scale of such services are relatively limited compared
to traditional offshore financial centers.
Foreign Currency Accounts: Bangladeshi residents and non-resident Bangladeshis (NRBs) have
the option to open foreign currency accounts in designated banks within the country. These
accounts allow individuals to hold foreign currencies, such as the US dollar, Euro, or British
pound, and conduct international transactions. However, it's important to note that these accounts
are subject to certain regulations and restrictions imposed by the Bangladesh Bank.
Foreign Direct Investment (FDI): Bangladesh encourages foreign direct investment to boost
economic development. Foreign investors can establish wholly owned subsidiaries or joint
ventures with local partners in various sectors. While these investments involve opening local bank
accounts, they are not considered offshore banking in the traditional sense.
Regulatory Environment: The Bangladesh Bank plays a crucial role in regulating and supervising
the country's banking sector. It formulates policies, issues guidelines, and monitors compliance to
ensure the stability and integrity of the financial system. The bank has implemented stringent
measures to combat money laundering, terrorism financing, and other illicit financial activities.
These measures include Know Your Customer (KYC) requirements, Anti-Money Laundering
(AML) regulations, and transaction monitoring systems.
Capital Controls: Bangladesh has certain capital controls in place to manage foreign exchange
transactions and maintain monetary stability. These controls aim to prevent excessive outflows of
foreign currency and maintain a balance in the country's external payments. The controls may
impact the ease and flexibility of conducting offshore banking activities.
Taxation and Reporting: Bangladeshi residents and entities are subject to taxation on their
worldwide income. It's essential for individuals and businesses to comply with tax laws and
reporting requirements, including the disclosure of offshore assets and income. The government
19
has been actively working to improve tax administration and increase transparency in financial
transactions.
It's important to keep in mind that the financial landscape and regulations in any country can evolve
over time. Therefore, it is advisable to consult with local financial professionals, legal experts, or
the Bangladesh Bank for the most accurate and up-to-date information on offshore banking
regulations and practices in Bangladesh.
Depository institutions of Bangladesh
1. Commercial banks :
Central Bank
20
•
Bangladesh Bank
State-owned Commercial Banks
Nationalized Commercial Bank of Bangladesh:
•
•
•
•
Sonali Bank
Agrani Bank
Rupali Bank
Janata Bank
Private Commercial Banks
•
•
•
•
•
•
•
•
United Commercial Bank Limited
Mutual Trust Bank Limited
BRAC Bank Limited
Eastern Bank Limited
Dutch Bangla Bank Limited
Dhaka Bank Limited
Islami Bank Bangladesh Ltd
Uttara Bank Limited
Foreign Commercial Banks
10 Foreign Commercial Banks are operating in Bangladesh. These are •
•
•
•
•
•
•
•
•
•
Citibank
HSBC
Standard Chartered Bank
Commercial Bank of Ceylon
State Bank of India
Habib Bank Limited
National Bank of Pakistan
Woori Bank
Bank Alfalah
ICICI Bank
The Specialized banks
•
Karmasangsthan Bank
21
•
•
•
•
•
Bangladesh Krishi Bank
Rajshahi Krishi Unnayan Bank
Progoti Co-operative Landmortgage Bank Limited (Progoti BanK)
Grameen Bank
Bangladesh Development Bank Ltd
2. Credit unions:
1. The Christian Co-operative Credit Union Ltd.
2. Mausaid Christian Co-operative Credit Union Ltd Dhaka Dhaka City
3. Nagori Christian Co-operative Credit Union Ltd Gazipur Kaliganj
4. Rangamatia Christian Co-operative Credit Union Ltd Gazipur Kaliganj
5. Tumilia Christian Co-operative Credit Union Ltd Gazipur Kaliganj
Non-depository institutions of Bangladesh
1.Finance companies:
Organisations
Agrani SME Finance Co. Ltd.
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Bangladesh Finance & Investment Co. Ltd.
Bangladesh Industrial Finance Company Limited (BIFC)
Bay Leasing & Investment Limited
Delta Brac Housing Finance Corporation Ltd. (DBH)
Fareast Finance & Investment Limited
FAS Finance & Investment Limited
First Lease Finance & Investment Ltd.
GSP Finance Company (Bangladesh) Limited (GSPB)
Hajj Finance Company Limited
IDLC Finance Limited
2.Mutual funds:
NAME
1st Bangladesh Shilpa Rin Sangstha MF (STBSRS)
AB Bank 1st Mutual Fund (ABB1STMF)
AIBL First Islamic Mutual Fund (AIBL1STI)
AIMS First Guaranteed Mutual Fund (AIMS1ST)
DBH First Mutual Fund (DBH1ST)
3. Insurance companies:
LIST OF NON-LIFE INSURANCE COMPANIES
1. Agrani Insurance Company Ltd.
2. Asia Insurance Ltd.
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3. Asia Pacific Gen Insurance Co. Ltd.
4. Bangladesh Co-operatives Ins. Ltd.
5. Bangladesh General Insurance Co. Ltd.
LIST OF LIFE INSURANCE COMPANIES
1.
2.
3.
4.
5.
American Life Insurance Company (Foreign Company)
Baira Life Insurance Company Ltd.
Delta Life Insurance Company Ltd.
Farest Islami Life Insurance Co. Ltd.
Golden Life Insurance Ltd.
LIST OF THE INSURANCE COMPANIES IN PUBLIC SECTOR
1. Sadharan Bima Corporation(Gen. Ins)
2. Jiban Bima Corporation (Life Ins.)
Reference: https://www.wikipedia.org/
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