Financial Institutions :Banking Structure of Bangladesh

Financial Institutions: Financial Institutions (FI) are companies engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange. Financial institutions encompass a broad range of business operations within the financial services sector including banks, trust companies, insurance companies, brokerage firms, and investment dealers. Financial Institutions can be divided into the following categories:

  1. Non-Bank Financial Institutions (NBFI)
  2. Bank
  3. Special Financial Institutions

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Prepared By: Anowar Parves, ACCA

A. Non-Bank Financial Institutions (NBFI – 34):

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, 34 Financial Institutions are operating in Bangladesh while the first one was established in 1981. Out of the total 34 –

a. fully government owned – 2;

b. subsidiary of a SOCB – 1;

c. initiated by private domestic – 15 and

d. joint venture initiative – 15.

Major sources of funds of Non-Bank Financial Institutions are Term Deposit (at least three months tenure), Credit Facility from Banks and other Financial Institutions , Call Money as well as Bond and Securitization.

The major features of these are as follows:

  1. cannot issue cheques, pay-orders or demand drafts;
  2. cannot receive demand deposits;
  3. cannot be involved in foreign exchange financing;
  4. cannot be a member of Clearing House etc.

The 34 NBFI’s include:

1Agrani SME Financing Company Limited18Islamic Finance and Investment Limited
2Bangladesh Finance & Investment Co. Ltd.19LankaBangla Finance Ltd.
33.     Bangladesh Industrial Finance Company Limited20Lankan Alliance Finance Limited
4BIFFL21Meridian Finance and Investment Ltd.
5Bay Leasing & Investment Limited22MIDAS Financing Ltd. (MFL)
6CVC Finance Limited23National Finance Ltd
7Delta Brac Housing Finance Corporation Ltd. (DBH)24National Housing Finance and Investments Limited
8Fareast Finance & Investment Limited25People’s Leasing and Financial Services Ltd
9FAS Finance & Investment Limited26Phoenix Finance and Investments Limited
10First Finance Limited27Premier Leasing & Finance Limited
11GSP Finance Company (Bangladesh) Limited (GSPB)28Prime Finance & Investment Ltd
12 Hajj Finance Company Limited29Reliance Finance Limited
13IDLC Finance Limited30Saudi-Bangladesh Industrial & Agricultural Investment Company Limited (SABINCO)
14 Industrial and Infrastructure Development Finance Company (IIDFC) Limited31The UAE-Bangladesh Investment Co. Ltd
15Infrastructure Development Company Limited (IDCOL)32Union Capital Limited
16International Leasing and Financial Services Limited33United Finance Limited
17IPDC Finance Limited34Uttara Finance and Investments Limited

Bank: An establishment authorized by a government to accept deposits, pay interest, clear checks, make loans, act as an intermediary in financial transactions, and provide other financial services to its customers is termed as Bank. After the independence, banking industry in Bangladesh started its journey with 6 nationalized commercialized banks, 3 State owned specialized banks and 9 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:

B. Scheduled Banks:

The banks that remain in the list of banks maintained according to Article 36(2) of Bangladesh Bank Order, 1972 are Scheduled Banks. There are 59 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:

E. Specialized

F. Commercial

E. Specialized banks (SDBs): 3 specialized banks are now operating which were established for specific objectives like agricultural or industrial development. These banks are also fully or majorly owned by the Government of Bangladesh.

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

F. Commercial: Commercial Banks are of 3 types:

  1. G. State owned commercial banks (SOCBs)
  2. H. Foreign commercial banks (FCBs)
  3. I. Private Commercial Banks

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

1Agrani Bank Limited4Janata Bank Limited
2Bangladesh Development Bank Limited5Rupali Bank Limited
3BASIC Bank Limited6Sonali Bank Limited

H. Foreign commercial banks (FCBs): In total 9 FCBs are operating in Bangladesh as the branches of the banks which are incorporated in abroad.

1Bank Al-Falah Limited6National Bank of Pakistan
2Citibank N.A7Standard Chartered Bank
3Commercial Bank of Ceylon PLC8State Bank of India
4Habib Bank Limited9Woori Bank
5HSBC

I. Private Commercial Banks: Private Commercial Banks are of two types:

J. Conventional PCBs

K. Private Islamic

J. Conventional PCBs: In total 33 conventional PCBs are now operating in the industry. They perform the banking functions in conventional fashion i.e. interest based operations.

1AB Bank Limited18 National Credit & Commerce Bank Limited
2Bangladesh Commerce Bank Limited19NRB Bank Limited
3Bank Asia Limited20 NRB Commercial Bank Ltd
4BRAC Bank Limited21NRB Global Bank Limited
5City Bank Limited22One Bank Limited
6Community Bank Bangladesh Limited23Padma Bank Limited
7Dhaka Bank Limited24Premier Bank Limited
8Dutch-Bangla Bank Limited25Prime Bank Limited
9Eastern Bank Limited26Pubali Bank Limited
10IFIC Bank Limited27Shimanto Bank Ltd
11Jamuna Bank Limited28South Bangla Agriculture and Commerce Bank Limited
12Meghna Bank Limited29Standard Bank Limited
13Mercantile Bank Limited30Trust Bank Limited
14Midland Bank Limited31United Commercial Bank Ltd
15Modhumoti Bank Limited32Uttara Bank Limited
16 Mutual Trust Bank Limited33Southeast Bank Ltd.
17National Bank Limited

K. Private Islamic: 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.

1Al-Arafah Islami Bank Limited5Islami Bank Bangladesh Limited
2EXIM Bank Limited6Shahjalal Islami Bank Limited
3First Security Islami Bank Limited7Social Islami Bank Limited
4ICB Islamic Bank Limited8Union Bank Limited

C. Non-scheduled banks:

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

1Ansar VDP Unnayan Bank4Karmashangosthan Bank
2Grameen Bank5Palli Sanchay Bank
3Jubilee Bank

D. Special Financial Institutions:

There are some specialized FIs 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. Such as:

  1. House Building Financial Corporation(HBFC)
  2. Palli Karma Sahayak Foundation(PKSF)
  3. Bangladesh Samabaya Bank Limited

[This has been prepared with the help of Wikipedia and Bangladesh Bank]

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