...1. Financial System of Bangladesh: Financial system is a Set of institutional arrangement through which financial surpluses will be mobilized from the surplus units and will be transferred to the deficit units. It is a framework for describing set of markets, organisations, and individuals that engage in the transaction of financial instruments (securities), as well as regulatory institutions. The basic role of Financial System is essentially channelling of funds within the different units of the economy – from surplus units to deficit units for productive purposes. 1.1 COMPONENTS OF FINANCIAL SYSTEM: There are mainly three components of financial system. These are: I. Financial Market II. Financial Intermediaries III. Financial Instrument I. FINANCIAL MARKET Financial markets are a mechanism enabling participants to deal in financial claims. The markets also provide a facility in which their demands and requirements interact to set a price for such claims. Financial markets perform the essential function of channeling funds from economic players that have saved surplus funds to those that have a shortage of funds. At any point in time in an economy, there are individuals or organizations with excess amounts of funds, and others with a lack of funds they need for example to consume or to invest. Exchange between these two groups of agents is settled in financial markets. The first group is commonly referred to as lenders...
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...Development of Non Bank Financial Institutions to Strengthen the Financial System of Bangladesh - MONZUR HOSSAIN∗ -MD. SHAHIDUZZAMAN∗ Abstract Non-bank financial institutions (NBFIs) 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). Starting from the IPDC in 1981, a total of 25 NBFIs are now working in the country. As on June 30, 2001 the total amount of paid up capital and reserve of 24 NBFIs stood Tk.6901.8 million (BB, 2002). 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 focus of this paper is to highlight the necessity and importance of NBFIs to strengthen the financial system for rapid economic development of the country. 1. Introduction...
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...Vision The Bangladesh Bank (BB), through ensuring the quality of services and the competence of its staff, shall operate as a modern, dynamic, effective, and forward-looking central bank to manage the country's monetary and financial system with a view to stabilizing the internal and external value of Bangladesh Taka conducive to rapid growth and development of the economy. ICT in Bangladesh Bank Bangladesh Bank started its ICT journey in 1980 with IBM 370 Mainframe computer and also started in-house software development. Since then Bangladesh Bank along with its own automations assisted different government offices, banks such as President Secretariat, National Board of Revenue, Sonali Bank, Agrani Bank, Janata Bank, Rupali Bank, House Building Finance Corporation etc. for automation of their specific activities. Bangladesh Bank automated several activities in its policy areas, operational areas, prudential supervision areas, enterprise resources management areas and communication areas. So far Eighty different in-house applications have been developed and are in operation. Under networking program, all the departments of Bangladesh Bank Head Office and its nine branch offices have already been brought under a computer network (LAN/WAN) connecting almost 3500 PCs. Now, any official sitting elsewhere in Bangladesh Bank has access to the same kind of resources; sharing knowledge and information; ensure knowledge based management. Centralized email facility has been introduced...
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...International Journal of Islamic Financial Services Vol. 2 No.1 REGULATION OF ISLAMIC BANKING IN BANGLADESH : ROLE OF BANGLADESH BANK Abdul Awwal Sarker As regards the supervision and inspection of the banks in Bangladesh, an equal treatment is being followed for all banks including the Islamic ones by the Bangladesh Bank. In some cases, Bangladesh Bank has given some special provision for the Islamic banks. Yet, for the smooth development and operation of the Islamic banking, Bangladesh Bank should devise the separate regulatory and supervisory guidelines for the Islamic banks and non-bank Islamic financial institutions. 1. Banking System of Bangladesh The banking system of Bangladesh is composed of a variety of banks working as Nationalized Commercial Banks (NCBs), Private Banks, Foreign Banks, Specialised Banks and Development Banks. However, 28 out of 50 banks in Bangladesh are private, of which only 5, namely Islami Bank Bangladesh Limited, Al-Baraka Bank Bangladesh Limited, Al-Arafah Islami Bank Limited, Social Investment Bank Limited, and Faysal Islamic Bank of Bahrain E.C. have been operating as Islamic banks. Besides these full-fledged Islamic banks, two conventional banks in the private sector namely the Prime Bank Limited and Dhaka Bank Limited, have opened two full-fledged Islamic banking branches and Islamic Banking Counter respectively to deal with the Islamic banking business parallel to their conventional operations. The operations and accounts of these...
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...regime, the ICAB is fast becoming a body of professionals whose have ability. The main research objective is to determine "the development of financial accounting and the role of ICAB". Their literature review describes the main viewpoints in the literature, strategies of various viewpoints and so on. The development of accounting not very easy project or analysis subject in accounting policy. So many companies are trying to do their best to develop their accounting in finance. Which prompt us to formulate some hypotheses; this methodology helps us to see the development of financial accounting as a spot shoot. This methodology also enables us to explain the academic value of our research on this topic; and enable us to define the method and technique of financial accounting. The Institute of Chartered Accountants of Bangladesh (ICAB) has been constantly pursuing that noble duty in the CA professionals. ICAB is the sole apex body responsible for regulating the profession of accountants and the matters connected therewith in Bangladesh established under the Presidential Order No. 2 of 1973. ICAB has two regional Offices and two regional committees in Dhaka and Chittagong. Introduction: A field of accounting that treats money as a means of measuring economic performance instead of as a factor of production. It encompasses the entire system of monitoring and control of money as it...
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...The role of Financial Market and Institution in the Economic Development of Bangladesh Financial market Financial market is created to satisfy particular preferences of market participants.Financial markets transfer funds from those who have excess funs to those who needfunds. That is they facilitate the transfer of funds from surplus unit to deficit unit .Because funding needs vary among deficit units, various financial markets have beenestablished. The primary market allows for the issuance of new securities, while thesecondary market allows for the sale of short term securities, while capital marketsfacilitate the sale of long term securities.The main participants of financial market can be classified as households, businesses andgovernment agencies. Those participants who provide funds to the financial markets arecalled surplus unit . Households are the main type of surplus unit. Participants who usefinancial markets to obtain the funds are called the deficit unit . Money market: Money market an integral part of the financial market of a country. It provides a mediumfor the redistribution of short term loan able funds among financial institutions, which perform this function by selling deposits of various types, certificate of deposits anddiscounting of bills, treasury bills etc. The participants in the money market are: thecentral bank, commercial banks, the government, finance companies, contractual savinginstitutions like the pension funds, insurance companies...
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...Introduction The financial sector is a crucial sector of any economy. A country’s business environment, investment, economic prospects, social dimensions even poverty are affected by financial market. The available vast empirical and analytical literature suggest that in addition to other economic factors, the performance of long term economic growth and welfare of a country are related to its degree of financial sector development. Developed countries’ experience suggests that strong government bond market creates favorable environment for the development of an efficient corporate bond market although it is not always essential for a country to develop a government securities market. The financial markets, pivotal point of financial sector, execute a crucial role within the global economic system such as attracting and allocating savings, setting interest rate and discovering the prices of financial assets (Rose, 2003). A well diversified financial sector is highly dependent on the extreme collaboration of financing from equity market, bond market, and banks. The government bond market forms the backbone of a modern securities market in both developed and developing countries. Bangladesh has not been blessed with the contribution of both Corporate and Government bonds and consequently experiences the poor economic growth. With the current financial structure, characterizing the dominating presence of commercial banks, particularly the State Owned Commercial Banks (SCBs)...
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...Executive Summary The financial institutions industry in our country represents one of the most important industries those control the monetary flow in the economy. From the very first of its journey (Started by Industrial Promotion Company of Bangladesh Limited.) this industry has shown so much prospect as well as progress. Sharing some common characteristics of Banks & some of its own it brought diversification in the financial market. In the same time it witnessed impressive growth during the last years. In our country like most other industries financial institutions are also big city especially Dhaka concentrated. Financial institutions rarely spread their branches outside divisional cities let alone the urban areas. So the fierce competition among as well as across the group is strengthening. So the market segmentation, expansion and product diversification may be some key tools to get out of the situation for the FIs. But currently the industry seems to become matured with so many competitors. The recent inclusion of another two new financial institutions (Bangladesh Infrastructure Finance Fund Limited (BIFFL) & Agrani SME Financing Company Limited) in the market has increased the number of competitors at 31. From the research & provided data it is very clear that the companies are trying to strengthen their position in the market as the investment n fixed asset seems to on the rise. Besides following the stock market crash in 2010 and recent rise in the...
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...brings challenges for Bangladesh and private sector of Bangladesh. By facing these challenges if private sector of this country could success then the country will receive opportunities of globalization. I would like to thank my course teacher Dr. Salehuddin Ahmed (Economic Condition Analysis) for giving us this opportunity for assigning us with this paper. It helps me a lot to know about the challenges and opportunities that Bangladesh and private sector of this country faced and received from globalization while I am making this portfolio. This portfolio helps me a lot to know each and every area where globalization brings opportunities for our private sector and those areas that facing challenges. And this paper will also demonstrate that the main driver of progress has been Bangladesh private sector. Then we like to thank those people who really helped us by providing valuable information during prepare the paper. Read more: http://essaybank.degree-essays.com/business/globalization-for-bangladesh.php#ixzz2EWf1f3By ABSTRACT This paper examines the role of private sector in Bangladesh in the context of Globalization since the change of the first government of the independent of Bangladesh. Actually Bangladesh has undertaken a wide range of reforms to open the economy in the areas of trade, finance and investment. The globalization efforts in these areas have produced some positive results. But in the overall assessment Bangladesh seems to have opened...
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...Submitted By Nasrin Akter ID: 082011081 Sadia Afrin ID: 082011094 Tanzila Islam ID: 082011086 Tasniya Hoque ID: 082011085 Submitted to Shahriar Kabir Lecturer Financial Markets and Institutions ULAB 12/28/2011 Department: USB Section: 01 Islamic banking system Letter of Transmittal December 28, 2011 Shahriar Kabir Lecturer Financial Markets and Institutions ULAB Subject: Request to Accept Term Paper regarding “Islamic Banking System” Dear Sir, We are very pleased to submit the term paper on “Islamic Banking System”. We were assigned to prepare and submit this term paper as the partial fulfillment of the course Financial Markets and Institutions (Course Code: Bus 421). We have tried our best to prepare this term paper perfectly. Nevertheless, this paper has been suffered by time and other resource limitation. We will be obliged, if you kindly accept this term paper. We are ready to make you clear regarding any confusion or further clarification from this term paper. Sincerely yours, Nasrin Akter (On the behalf of all the group members) Table of contain ...
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...Introduction: The stock market of Bangladesh is considered to be one of the emerging markets in the context of the global financial system. The market has immense potentials for country’s industrialization, development of infrastructure in particular and economic growth in general. The government and the Securities and Exchange Commission (SEC) have undertaken a good number of initiatives to meet Bangladesh's development financing requirements with a particular focus on developing long term infrastructure financing and strengthening financial stability through promotion of capital market. In this regard formulation of a Master Plan is of crucial importance. Stock markets or Stock exchanges play an important role in the modern capitalized economy by providing the strength to nation's economic infrastructure. Now the stock market is one of the most important sources for companies to raise capital. Stock market allows businesses to raise additional capital for expansion by transferring the ownership of the company. It provides individuals the opportunity to invest in corporations. The size of the world stock market was estimated at about $36.6 trillion at the beginning of October 2008. In Bangladesh, there are two stock exchanges, the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE), DSE was setup on April 28, 1954 that started formal trading in 1956. In 1995, CSE was setup. However, in its fifty-eight year’s history the stock market of Bangladesh crashed two times, first...
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...sector into severe financial depression. With the banking conditions now of Sonali Bank Limited & Bangladesh Bank (Central Bank) with all those issues that have been thrown into them due to the deregulation in the banking sector in the country. According to Alam (2012), if there is a proper implementation of banking regulations and supervision structures, definitely, banking efficiency and profitability would follow. The efficient and effective banking regulations serve as a unified power to control the creation, operation and liquidation of the banking sector as well as a proper control in the stability of the economy of the country. Hence, BB as the Central Bank of the country should put into appropriate places all the specialized banking supervisory regulations and policies that can protect the depositors from higher risks of losing their deposited money in the banks. The core objective of the banking sector is to provide total protection to the investors with their money and funds. Both businesses and individuals have the rights to be ensured with certainty and safety about their funds in the banks. A smooth and acceptable public confidence and trust should be sustained and continually developed into more trusted banking system environment that can provide a high level of banking services all throughout the economy. In addition, to attain total efficiency and competitiveness that can project a positive impact on the entire banking sector in the Bangladesh. 2. Purpose...
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...Major Problems of the Banking Industry and Strategies to overcome them: A study on Bangladesh. Table of Content Topic Page# 1.0 Introduction ------------------------------------------------------------------------------------3 2.0 Review of Previous Empirical Literature------------------------------------------------4 3.0 Banking Industry in Bangladesh---------------------------------------------------------- 3.1 What is a Bank? ----------------------------------------------------------------------5 3.2 Definitions of Bank form different view -------------------------------------5 3.3 Where does the word BANK come from? ------------------------------------6 3.4 Why Banks? Why don’t go to another financial institution? -------------7 3.5 Banking System in Bangladesh---------------------------------------------------7 3.6 Banking system is very from country to country because of Following 3 reasons---------------------------------------------------------------------12 3.7 There are different kinds of financial services firms calling themselves Banks---------------------------------------------------------------------------------------12 4.0 Major Problems Faced by Bangladeshi Banking Industry-------------------------14 4.1 Lack of Good Governance, Accountability and Transparency------------14 4.2 Low quality of asset ---------...
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...prospect and growth potentials of Islamic banks in Bangladesh as perceived by Islamic and conventional bankers. The study noted that there is a high demand for interest-free banking services from a segment of people in Bangladesh who have a strong desire to abide by the rules and principals set by Shariah. Along with religious requirement, economic exigencies provide a new outlook to the role of banking in promoting investment/ productive activities, influencing distribution of income and adding stability to the economy. The Islamic banking sector is, however, criticized on several grounds by the Conventional bankers. The banks are believed not to apply the rules of Shariah completely. Islamic banks are said to include interest in their dealings to compete effectively with the Conventional banks. Moreover, conventional banks offering Islamic banking as a parallel service are thought to do so only to add to their profitability, by attracting people who value the Shariah based system by enjoying the advantages of the special treatments from the Central bank. According to the survey, suitable and supportive legal framework would facilitate better growth of this sector. Moreover, the lack of an inter-bank money market and sufficient supportive and link institutions in the sector, act as impediments to growth of Islamic banking. Also, banks perceive the availability of training and education on Islamic banking to be inadequate in Bangladesh. To deliver superior services to the clients and...
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...World Review of Business Research Vol. 2. No. 2. March 2012. Pp. 16 - 31 Corporate Governance-Its Problems & Prospects in Banking Industry in Bangladesh Begum Ismat Ara Huq* and Mohammad Zahid Hossain Bhuiyan** Corporate Governance ensures to bring transparency, accountability and professionalism in the management system of a corporate body that enhances the credibility and acceptability to the shareholders, employees, potential investors, customers, lenders, governments and all other stakeholders. This is more true in case of Banking Industry. Since Banks deal in public money, public confidence is of outmost importance in this Industry. The study aims at finding out problems & deficiencies involved in Corporate Governance practice in Banking Industry in Bangladesh and also suggesting ways and means to remove the same in order to make the Corporate Governance practice sound and effective. In this study, both the primary and secondary data were used. The primary data relating to problems involved in Corporate Governance practice and suggestions to remove the same were collected on the basis of a questionnaire by interviewing 24 randomly selected Bank personnel such as Directors of the Board as the internal part of management and the Auditors as the external group. The secondary data were collected through an extensive literature survey on the subject. The study has identified some major problems in Corporate Governance practice in the Banking Industry of the country. The prospect...
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