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financial control and accountability. These measures include recording, verification, and
timely reporting of transactions that affect revenues, expenditures, assets, and liabilities. A
financial system plays a vital role in the economic growth of a country. It intermediates
between the flow of funds belonging to those who save a part of their income and those who
invest in productive assets. It mobilises and usefully allocates scarce resources of a country.
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
The informal financial sector has emerged as a result of the intrinsic dualism of economic
and social structures in developing countries, and financial repression which inhibits the
certain deprived sections of society from accessing funds. The informal system is
characterized by flexibility of operations and interface relationships between the creditor and
the debtor. The advantages are: low transaction costs, minimal default risk, and transparency
of procedures. Due to these advantages, a wide range and higher rates of interest prevail in
the informal sector.
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The financial system is an integral part of the economy. When the system functions properly,
it channels funds from savers to investors. By increasing productivity, the financial system
helps spur economic growth and raise the standard of living. Sometimes, however, the
system breaks down. The financial crisis of 2008 is a very stark example of a breakdown,
with consequences that resulted in a deep recession. This chapter introduces the topic of the
financial system, with the subsequent four chapters providing further details on its various
elements and its effects on the economy.
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Overview of Financial system of Bangladesh
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Financial System of
Bangladesh
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.
Financial Market
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Financial Market: A market in which financial assets (securities) such as stocks and
bonds can be purchased or sold.
Financial markets provide for financial intermediation--financial savings (Surplus
Units) to investment (Deficit Units)
Financial markets provide payments system
Financial markets provide means to manage risk
The financial market in Bangladesh is mainly of following types:
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.
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).
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Central bank
Bangladesh Bank
Pursuant to Bangladesh Bank Order, 1972 the Government of Bangladesh reorganized the
Dhaka branch of the State Bank of Pakistan as the central bank of the country, and named it
Bangladesh Bank with retrospective effect from 16 December 1971.
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 1980s 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 in 2003) are termed as Scheduled Banks. State-owned commercial banks, private
commercial banks, Islamic commercial banks, foreign commercial banks and some
specialized banks are Scheduled Banks.
Non-Scheduled 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
Bangladesh Bank Pursuant to Bangladesh Bank Order, 1972 the Government of Bangladesh
reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of the
country, and named it Bangladesh Bank with retrospective effect from 16 December 1971.
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 1980s 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 in 2003)
are termed as Scheduled Banks. There are FOUR State-owned commercial banks, THIRTY
ONE private commercial banks, EIGHT Islamic commercial banks, NINE foreign
commercial banks and some specialized banks are Scheduled Banks.
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Banks
State-owned
nationalist.
Private banks
Islamic
Commercial Banks
foreign commercial
banks
Non-Scheduled
Banks
Non-banking
financial Specialized Banks
institutions (SDBs)
Private banks are the highest growth sector due to the dismal performances of government
banks (above). They tend to offer better service and products. Here is the list
1. Uttara Bank Limited
2. Mutual Trust Bank Limited
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3. Dhaka Bank Limited
4. Eastern Bank Limited
5. Dutch Bangla Bank Limited
6. Pubali Bank Limited
7. IFIC Bank Limited
8. National Bank Limited
9. The City Bank Limited
10. NCC Bank Limited
11. Mercantile Bank Limited
12. Prime Bank Limited
13. Southeast Bank Limited
14. Standard Bank Limited
15. One Bank Limited
16. Bangladesh Commerce Bank Limited
17. The Premier Bank Limited
18. Bank Asia Limited
19. Trust Bank Limited
20. Jamuna Bank Limited
21. AB Bank Limited
22. NRB Commercial Bank Limited
23. NRB Bank Limited
24. Meghna Bank Limited
25. Farmers Bank Limited
26. Modhumoti Bank Limited
27. South Bangla Agriculture and Commerce Bank
Ltd
28. Midland Bank Limited
29. United Commercial Bank Ltd
30. BRAC Bank Limited
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There are 8 Islamic Commercial Banks:
1. Citibank NA
2. HSBC
3. Standard Chartered Bank
4. Commercial Bank of Ceylon
5. State Bank of India
6. Habib Bank Limited
7. National Bank of Pakistan
8. Woori Bank
9. Bank Alfalah
1. Midland Bank
2. NRB bank ltd
3. South Bangla Agriculture & Commerce Bank
4. Modhumoti Bank
5. Megna Bank
6. Union Bank
7. NRB global bank ltd.
8. Farmars Bank
9. NRB commercial bank ltd.
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Specialized Banks (SDBs): Four 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.
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.
1. Grameen Bank,
2. Probashi Kallyan Bank,
3. Karmasangsthan Bank, Progoti Co-operative Land Development Bank
Limited (progoti Bank) and
4. Answer VDP Unnayan Bank are Non-Scheduled Banks.
5. Progoti Co-operative Land Development Bank Limited (progoti Bank)
6. Bangladesh Somobay Bank Limited (Cooperative Bank).
7. Land development bank,
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10. People's Leasing and Financial Services Ltd
11. National Housing Finance and Investments Limited
12. National Finance Ltd
13. MIDAS Financing Ltd. (MFL)
14. LankaBangla Finance Ltd.
15. Islamic Finance and Investment Limited
16. International Leasing and Financial Services Limited
17. Infrastructure Development Company Limited (IDCOL)¿
18. Industrial Promotion and Development Company of Bangladesh
Limited(IPDC)
19. Industrial and Infrastructure Development Finance Company (IIDFC)
Limited
20. IDLC Finance Limited
21. Hajj Finance Company Limited
22. GSP Finance Company (Bangladesh) Limited (GSPB)
23. First Lease Finance & Investment Ltd.
24. FAS Finance & Investment Limited
25. Fareast Finance & Investment Limited
26. Delta Brac Housing Finance Corporation Ltd. (DBH)
27. Bay Leasing & Investment Limited
28. Bangladesh Industrial Finance Company Limited (BIFC)
29. Bangladesh Finance & Investment Co. Ltd.
30. Bangladesh Infrastructure Finance Fund Limited
31. Agrani SME Finance Co. Ltd.
Insurance is nothing but a system of spreading the risk of one onto the shoulder of many.
Whilst it becomes somewhat impossible for a man to bear himself 100% loss to his own
property or interest arising out of an unforeseen contingency, insurance is a method or
process which distributes the burden of loss on a number of persons within the group formed
for this particular purpose.
So, Insurance is a way of reducing your potential financial loss or hardship. It can help
cover the cost of unexpected events such as theft, illness or property damage. Insurance can
also provide you‟re loved.
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THE INSURANCE COMPANIES IN PUBLIC SECTOR
GENERALLY TWO TYPES:
Insurance companies
The third in the list of development is the life insurance business. The earliest policy of
which there is a record dates back to 1583. During this period only short term polices were
used be issued meaning that only at the death of the life assured during the term period the
money was to be paid. On survival nothing was payable. In 1693 Halley introduced the
mortality table giving a definite value to risk of death. In 1974, the life Assurance Act was
passed in the British parliament requiring the presence of insurable interest before one could
effect a life policy on the life of another. All these gradually gave life assurance a sound,
systematic and scientific basis as we see in the present day.2.3 Development of Insurance in
Bangladesh Insurance is not a new idea or proposition to the people of Bangladesh.
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10. Prime Life Insurance Co. Ltd.
11. National Life Insurance CO. LTD.
12. Progressive Life Insurance Company Ltd
13. Rupali Life Insurance Co. Ltd.
14. Jamuna Life Insurance Co. Ltd
15. Baira Life Insurance Co.Ltd
16. Homeland Life Insurance Co.Ltd
17. Green Delta Life Insurance Co.Ltd
18. Far-East Islami Life Insurance Co.Ltd
19. Golden Life Insurance Co.Ltd
20. Sunflower Life Insurance Co.Ltd
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8. Eastland Insurance Co. Ltd.
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33. Asia Pacific General Insurance Co. Ltd.
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Definition of 'Microfinance'
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15. MITALI
16. BRES
21. Hitaishi-Bangladesh
23. Samadhan
26. Sojag
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41. Nazrul Smriti Sangsad (N.S.S)
55. Graush
57. RUPA
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67. Bangladesh Agricultural Working People Association (BAWPA)
69. Udayan-Bangladesh
74. SHESO
78. Charcha
81. BEDO
91. DRISHTIDAN
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93. Bangladesh Association of Womenfor Self Empowrment (BAWSE)
97. ATMABISWAS
101. SHUSHILAN
104. Support
112. SETU
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118. Association for Renovation of Community Health Education Services
(ARCHES)
127. BRAC
132. BIVA
133. LUSTRE
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142. Grameen Seba Sangstha
157. CHIRANTANI
159. ASA
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168. Gono Kalyan Sangstha
171. UNNAYAN
186. Karmarjan
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192. Grameen Prosar Society
196. Prottyashi
200. Koinonia
208. Ghashful
215. Nowjuwan
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217. Centre for Action Research-Barind ( CARB )
236. Agragati
241. Prodipan
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243. Shaplaful
247. Ashrai
252. Rural Economic Support & Care for the Under Privileged
258. Sachetan
264. Mamata
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269. Mother Advancement Assistance (MAA)
277. Anando
285. Mousumi
291. SOLIDARITY
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295. Digonta
318. Uttaran
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SOPIRET )
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345. Self-Help & Rehabilitation Program
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370. Jagarani Mohila Kallyan Sangstha ( JMKS )
373. Zagoroni
377. SOMAN
389. Partner
390. Banglar Mela Sangstha
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395. Mukti Nari-O-Shishu Unnayan
409. Nishkriti
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419. Abdul Momen Khan Memorial Foundation
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444. Society of Renaissa Bangladesh
450. NEED
463. The Coastal Rural and Urban Poor Development Association (The
Crupda)
468. Proyash
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469. Palli Unnayan Parishad
473. Barnaly
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495. Shiropa Development Society
500. DRISTI
509. USA
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521. Sotodol
528. INSAF
541. HOPE
546. Tarango
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547. Organization for Social Advancement (OSA)
548. Alokon
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573. Young Women's Christian Association
577. Crescent
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598. "Udayan Sangstha"
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624. SAGAR
626. Briste
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650. Gender Relation Advancement & Marginalized Development Society
673. Relation
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676. Dharani Samaj Kallayan Sangstha
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Microcredit Regulatory Authority
The Microcredit Regulatory Authority (MRA) has been established by the Government of the
People‟s Republic of Bangladesh under the "Microcredit Regulatory Authority Act 2006” to
promote and foster sustainable development of microfinance sector through creating an
enabling environment for NGO-MFIs in Bangladesh. MRA is the central body to monitor
and supervise microfinance operations of NGO-MFIs. License from the Authority is
mandatory to operate microfinance operations in Bangladesh as an NGO.
Microcredit Regulatory Authority (MRA) is the central body to monitor and supervise
microfinance operations of non- governmental organizations of the Republic of Bangladesh.
It was created by the Government of Peoples‟ Republic of Bangladesh under the Microcredit
Regulatory Authority Act (Act no. 32 of 2006). License from the Authority is mandatory to
operate microfinance operation in Bangladesh as an NGO. On September 28, 2012 at the
Alliance for Financial Inclusion‟s Global Policy Forum 2012, the bank made a commitment
under the Maya Declaration to promote agent and mobile banking, implement consumer
protection initiatives, and establish a credit bureau for the MFI sector.
Microcredit in Bangladesh
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Act, 1860 (Act XXI of 1860); The Trust Act, 1882 (Act II of 1882); The Voluntary Social
Welfare Agencies (Registration and Control) Ordinance, 1961 (Ordinance No. XLVI of
1961); TheCompanies Act, 1994 (Act XVIII of 1994). Financial inclusion The Authority is
active in the realm of financial inclusion and is a member of the Alliance for Financial
Inclusion.
BANGLADEASH SECURITIES AND EXCHANGE COMMISSION
The Bangladesh Securities and Exchange Commission (BSEC) is the regulator of the capital
market of Bangladesh, comprising Dhaka Stock Exchange (DSE) and Chittagong Stock
Exchange (CSE). The Commission is a statutory body and attached to the Ministry of
Finance.
BSEC
BSEC was established on 8 June 1993 under the Securities and Exchange Commission Act,
1993. The Chairman and Members of the Commission are appointed by the government and
have overall responsibility to administer securities legislation. The Commission, at present
has three full-time members, excluding the Chairman. The Commission is a statutory body
and attached to the Ministry of Finance. Mission
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Functions
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.
Referance:
www.bangladeshbank.org.bd
www.idra.org.bd
Suggested books
End
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