Industry overview:

1.History of the bank industry:

The history of banking began with the first prototype banks which were the merchants of the
world, who gave grain loans to farmers and traders who carried goods between cities. This was
around 2000 BC in Assyria, India and Sumeria. Later, in ancient Greece and during the Roman
Empire, lenders based in temples gave loans, while accepting deposits and performing
the change of money. Archaeology from this period in ancient China and India also shows
evidence of money lending.
Many histories position the crucial historical development of a banking system to medieval and
Renaissance Italy and particularly the affluent cities of Florence, Venice and Genoa.
The Bardi and Peruzzi Families dominated banking in 14th century Florence, establishing
branches in many other parts of Europe. The most famous Italian bank was the Medici bank,
established by Giovanni Medici in 1397. The oldest bank still in existence is Banca Monte dei
Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since
1472.

Development of banking spread from northern Italy throughout the Holy Roman Empire, and in
the 15th and 16th century to northern Europe. This was followed by a number of important
innovations that took place in Amsterdam during the Dutch Republic in the 17th century, and in
London since the 18th century. During the 20th century, developments in telecommunications
and computing caused major changes to banks' operations and let banks dramatically increase in
size and geographic spread. The financial crisis of 2007–2008 caused many bank failures,
including some of the world's largest banks, and provoked much debate about bank regulation.

The first modern bank in Bangladesh was Dacca bank, established in 1846.It did a very limited
business and did not issue banknotes. It was purchased by Bank of Bengal in 1862.Bank of
Bengal opened branches in Sirajganj and Chittagong in 1873, and in Chandpur in 1900.In 1947,
upon the Partition of Bengal, it had six branches in East Bengal, in Dhaka, Chittagong,
Chandpur, Mymensingh, Rangpur, and Narayanganj. In the beginning of 1971, there were 1130
branches of 12 banks in operation in East Pakistan. The foundation of independent banking
system in Bangladesh was laid through the establishment of the Bangladesh Bank in 1972 by the
Presidential Order No. 127 of 1972 (which took effect on 16th December,1971). Through the
Order, the eastern branch of the former State Bank of Pakistan at Dhaka was renamed as the
Bangladesh Bank as a full-fledged office of the central bank of Bangladesh and the entire
undertaking of the State Bank of Pakistan in, and in relation to Bangladesh has been delivered to
the Bank. 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 1980'sbanking industry achieved significant expansion with the entrance of private banks. 

After the liberation of Bangladesh the twelve Banking companies who were doing business in

Bangladesh, were nationalized by the Government of the People’s Republic of Bangladesh under
president’s order No.26 of 1972 entitled “The Bangladesh Bank (Nationalizations)
Order,1972” on March 26, 1972. These are –
 Existing bank New bank after Authorized Paid up capital (Lac
independence capital(Lac Tk.) tk)
The National Bank of Sonali Bank 500 200
Pakistan, The Bank
of Behawalpur Ltd.
The premier Bank Agrani Bank 500 100
Ltd, The Habib Bank
Ltd, The commerce
bank Ltd.
The united Bank Ltd, Janata Bank 500 100
The union Bank Ltd.
The Muslim Rupali Bank 500 100
Commercial Bank
Ltd, The Standard
Bank Ltd.
The Austrasia Bank Pubali Bank 500 100
Ltd, The Eastern
Mercantile Bank Ltd.
The Eastern Banking Uttara Bank 500 100
Corporation Ltd.

There were no domestic private commercial banks in Bangladesh until 1982; When the Arab-
Bangladesh Bank Ltd. commenced private commercial banking in the country. Five more
commercial banks came up in 1983 and initiated a moderate growth in banking financial
institutions.

2.Current scenario of the bank industry:

As a developing country economy Bangladesh has encouraged to develop its banking industry to
promote economic growth. Over the last three decades or so the country has been spectacular
expansion of the banking industry. The industry in Bangladesh has even gone a step further by
promoting financial inclusion of the very poor in rural areas of which microfinance and
microcredit are the policy instruments to achieve that objective. This has helped to expand the
monetization of the rural economy, and as a economy also facilitated continuous resource
transfer from rural areas to urban areas. Now the biggest threat to achieving sustained economic
growth has become the banking industry itself, especially the state-owned banks. This is despite
Bangladesh adopting internationally recognized banking practices such as basel III Accord.
Bangladesh’s banking system is now faced with a slow motion banking crisis principally at the
government run banks along with some private sector banks. The finance minister himself last
month said the current banking and non banking financial sectors are in the most vulnerable
position. The situation is anything but getting any better largely due to very fast credit growth
and state directed lending and loan restructuring. All this raises the risk of a credit crunch. Six
state-owned commercial banks account for almost a quarter of all bank assests in the country.
Bangladesh bank  the central bank as well as chief authority to regulate the state's monetary and
financial system, was established in Dhaka as a body corporate vide the Bangladesh Bank Order,
1972 (P.O No. 127 of 1972) with effect from 16th December, 1971. Bangladesh Bank started
functioning with all capital and liabilities of Dhaka branch of State Bank of Pakistan.
 
Bangladesh Bank as the central bank of Bangladesh executes all the functions that a central bank
traditionally performs as elsewhere in the world. The core functions of BB are briefly discussed
as follows:
1)Bangladesh Bank formulates and implements monetary policy aiming at stabilizing domestic
monetary value and maintaining competitive external per value of taka for fostering growth and
development of country's productive resources in the best national interest.
2)It formulates and implements intervention policies in the domestic money market and foreign
exchange market. BB intervenes the money market with some policy instruments such as
a. open market operation (treasury bills/bonds, repo, reverse repo auctions),
b. variations in reserve ratios such as cash reserve requirements (CRR) and statutory liquidity
ratio (SLR),
c. secondary trading,
d. discounting rate/ bank rate, and
e. moral suasion
3) It monitors and supervises scheduled banks and non-bank financial instructions (NBFIs)that
include off-site supervision and on-site supervision in order to enhance the safety, soundness,
and stability of the banking system to ensure banking discipline, protect depositors' interest and
retain confidence in the banking system.
4) It holds sole responsibility of the management of international reserve representing aggregate
of Bangladesh Bank's holding of gold, foreign exchange SDR and reserve position in the IMF.
5) Bangladesh Bank, as the central bank of Bangladesh reserves sole responsibility to issue bank
note.
6) It performs as a clearing house for the scheduled banks to clear and settle inter-bank payment
arising through drawing cheque, drafts, bills etc. to one another
7) It acts as a banker to the government.
8) It functions as a lender of the last resort for the government as well as for the country's
scheduled banks
9)Bangladesh Bank acts as an advisor to the
government. Additionally, Bangladesh Bank's functions include some other promotional activities s
uch asdevelopment of new instruments, guidelines for money and financial market participants,
providing training to the banks and NBFIs, monitoring and encouraging corporate social
responsibilities (CSR) executed by banks and NBFIs and so on.

The banking sector in Bangladesh is currently experiencing a classic ‘problem of plenty’ with rising volume
of excess liquidity. Press reports state excess liquidity has surpassed BDT 1 trillion. This is certainly a matter
of concern, as it reflects inability of the economy to productively utilize available capital. The commercial
banks are now considered the nerve system of all economic development in the Bangladesh. Commercial
banks are now using latest information technology, competing in the open market with high technology
system, changing from domestic banking to investment banking. Private commercial banks have potential for
foreign expanding. Some private commercial banks are providing one stop services for non- resident
Bangladeshi (NRB) which is very effective for foreign citizens. Such as BRAC Bank, Dutch Bangla Bank,
Islami Bank Bangladesh Limited, National Bank Limited etc.

3.Total number of organization under this bank industry:

The current banking sector of Bangladesh is primarily of two types.
A. Scheduled Bank B. Non-scheduled Bank

Schedule Banks: The banks which get license to operate under Bank Company Act,1991
(amended upto 2013) are termed as schedule Banks. Scheduled banks are classified into four
following types:
 State owned commercial banks (SOCBs) : There are six SOCBs which are fully or
majorly owned by the government of Bangladesh.
 Specialized Banks (SDBs) : Two specialized bank are operating which were established
for specific objectives like industrial development. These banks are also fully or majorly
owned by the government.
 Private Commercial Banks (PCBs) : There are 40 private commercial banks which are
majorly owned by the private entities. PCBs can be categorized into two groups :
 Conventional PCBs : Conventional PCBs are now operating in the industry. They
perform the banking functions in conventional fashion interest based operation.
  Islami shariah based PCBs : There are 8 islami shariah based PCBs in Bangladesh.
They perform the banking activities in islami shariah based.
 Foreign Commercial Banks (FCBs) : FCBs are operating in Bangladesh as the branches
of the banks which are incorporated in abroad.
Non-scheduled Banks: The banks which cannot perform all the functions of scheduled banks
and which are established for special and definite objectives and operate under the acts enacted
for meeting up those objectives are termed as non-scheduled banks.
There are 6 types of non-scheduled banks which are:
 Ansar VDP Unnayan Bank
 Karmashangosthan Bank
 Grameen Bank
 Jubilee Bank
 Probashi kallyan Bank
 Palli Sanchay Bank

The following table contents the list of existing and running banks in Bangladesh –

Scheduled Banks

A. Central Bank

Bangladesh Bank Commenced on 1972

B. State Owned Commercial Banks

Banks Established

1. Agrani Bank Limited 26 March 1972

2. Janata Bank Limited By Bank Nationalisation Ordinance of 1972

3. Rupali Bank Limited By Bank Nationalisation Ordinance of 1972

4. Sonali Bank Limited By Bank Nationalisation Ordinance of 1972

5. Bangladesh Development Bank On 16 November, 2009 by amalgamation

Limited of Bangladesh Shilpa Bank (BSB) and
Bangladesh Shilpa Rin Sangstha (BSRS)

6. BASIC Bank Limited 21 January, 1989

C. State Owned Specialized Banks

1. Bangladesh Krishi Bank 1973

2. Rajshahi Krishi Unnayan Bank 15 March 1987 (President's Ordinance No. 58

(RAKUB) of 1986)

D. Private Commercial Banks (PCBs):

I. Conventional PCBs

1. AB Bank Limited 12 April, 1982

2. Bangladesh Commerce Bank Limited 16 Sep, 1999

3. Bank Asia Limited 27 November, 1999

4. BRAC Bank Limited 4 July, 2001

5. City Bank Limited 27 March, 1983

6. Dhaka Bank Limited 5 July, 1995

7. Dutch-Bangla Bank Limited 3 June, 1996

8. Eastern Bank Limited 1992

9. IFIC Bank Limited 1976

10. Jamuna Bank Limited 3 June, 2001

11. Meghna Bank Limited 21 April, 2013

12. Mercantile Bank Limited 2 June 1999

13. Midland Bank 9 April, 2013

14. Modhumoti Bank Limited 19 September, 2013

15. Mutual Trust Bank Limited 24 October, 1999

16. National Bank Limited 28 March, 1983

17. National Credit & Commerce Bank Limited In 1993 as commercial bank
18. NRB Bank Limited 2013

19. NRB Commercial Bank Limited 2013

20. NRB Global Bank Limited 2013

21. One Bank Limited May, 1999

22. Premier Bank Limited 10 June, 1999

23. Prime Bank Limited 17 April, 1995

By Bank Nationalisation Ordinance of

24. Pubali Bank Limited
1972; denationalized in the year 1983

25. South Bangla Agriculture & Commerce Bank 25 March, 2013

Limited

26. Southeast Bank Limited March, 1995

27. Standard Bank Limited 3 June, 1999

28. The Farmers Bank Limited 11 September, 2012

29. Trust Bank Limited 1999

30. United Commercial Bank Limited 1983

31. Uttara Bank Limited By Bank Nationalisation Ordinance of

1972; denationalized in the year 1983

32. Shimanto Bank Ltd 21 July, 2016

II. Islami Shariah based PCBs

1. Al-Arafah Islami Bank Limited 27 September, 1995

2. EXIM Bank Limited 3 August, 1999
3. First Security Islami Bank Limited August 29, 1999
4. ICB Islamic Bank Limited April, 1987
5. Islami Bank Bangladesh Limited 13 March, 1983
6. Shahjalal Islami Bank Limited 10 May, 2001
7. Social Islami Bank Limited 22 November, 1995
 8. Union Bank Limited 2013

E. Foreign Commercial Banks

Banks Started Operations in Bangladesh

1. Bank Al-Falah Limited 2005
2. Citibank N.A 1995
3. Commercial Bank of Ceylon PLC 2003
4. Habib Bank Limited 1976
5. National Bank of Pakistan August, 1994
6. Standard Chartered Bank 1905 (including ANZ Grindlays experience;
SCB originally established its first branch in
Chittagong in 1948)
7. State Bank of India
8. Woori Bank September 1996
9. HSBC Bank 1996

Non-scheduled Banks

1. Ansar VDP Unnayan Bank

2. Karmashangosthan Bank
3. Grameen Bank
4. Jubilee Bank
5. Probashi Kollyan Bank
6. Palli Sanchay Bank