Bangladesh Bank
From Wikipedia, the free encyclopedia
| Bangladesh Bank | |||
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| Headquarters | Dhaka, Bangladesh | ||
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| Established | 16 December 1971 | ||
| Governoras | Atiur Rahman | ||
| Central bank of | Bangladesh | ||
| Currency | Taka | ||
| ISO 4217 Code | BDT | ||
| Reserves | 10 Billion US $ | ||
| Website | http://www.bb.org.bd | ||
| reserves data up to month of November of Financial Year 2009-2010. source: Dhaka's foreign exchange reserve cross $10 bn |
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Contents[hide] |
[edit] History
After the liberation war, and the eventual independence of Bangladesh, 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. This reorganization was
done pursuant to Bangladesh Bank Order, 1972, and the Bangladesh Bank
came into existence with retrospective effect from 16 December 1971.
The 1971 Mujib regime ran a pro-socialist agenda – in 1972, the
government decided to nationalize all banks in order to channel funds to
the public sector and to prioritize credit to those sectors that sought
to reconstruct the war-torn country – mainly industries and
agricultural sectors.[1]
However, government control at the wrong sectors prevented these banks
from functioning well. This was compounded by the fact that loans were
handed out to the public sector without commercial considerations, that
banks had poor capital lease, provided poor customer services and didn’t
have any market-based monetary instruments. But mostly, because loans
were given out without commercial sense, and because they took a long
time to call a loan non-performing, and once they did so, recovery under
the erstwhile judicial system was so abjectly expensive, their loan
recovery was abysmally poor.[1][2]
While the government made a point of intervening everywhere, it didn’t
set up a proper regulatory system that would diagnose such problems and
correct them. Hence, banking concepts like profitability and liquidity
was alien to bank managers, and capital adequacy took backseat.[2]
In 1982, the first reform program was initiated, where the government
denationalized two of the six nationalized commercial banks and
permitted local private banks to create competition in the banking
sector. In 1986, a National Commission on Money, Banking and Credit was appointed[2]
to recover the problems of the banking sector and a number of steps
were taken for the recovery targets for the nationalized commercial
banks and development financial institutions and prohibiting defaulters
from getting new loans, yet, the efficiency of the banking sectors could
not be improved.[1]
The Financial Sector Adjustment Credit (FSAC) and Financial Sector
Reform Programme (FSRP) were formed in 1990, upon contracts with the World Bank with the objective to remove government distortions and lessen the financial repression.[2]
The policies made use of the McKinnon-Shaw hypothesis which stated that
removing distortions will augment efficiency in the credit market and
increase competition.[1]
The policies therefore involved banks to provide loans on commercial
basis, enhance banks’ efficiency and to limit government control to the
monetary policy only. FSRP forced banks to have a minimum capital
adequacy, to systematically classify loans and to implement modern
accounting systems and computerized systems. It forced the central bank
to free up interest rates, revise financial laws, and to increase
supervision in the credit market. The government also developed the
capital market, which too was performing poorly.
However, FSRP was expired in 1996 and afterward the Government of
Bangladesh formed a Bank Reform Committee (BRC) whose recommendations
were largely remained unaddressed by the then government.
[edit] Functions
Bank performs all the functions that a central bank of any country is
expected to perform, and such functions include maintaining the price
stability through economic and monetary policy measures, managing the
country’s foreign exchange
and the gold reserve and regulating the banking sector of the country.
Like all other central banks across the globe, Bangladesh Bank is both
the Government’s banker and the banker’s bank, a “Lender of the Last
Resort”. Bangladesh Bank, like most of the central banks of different
countries, exercises monopoly over the issue of currency and the banknotes. Except for the 1 and 2 taka notes, it issues all other denominations of Bangladeshi Taka.Credit
control, Clearing House, Control Money Market, Job
creation,Agricultural development, Industrial development,and Natural
resources development are also the functions of Bangladesh Bank. The
bank is active in developing financial inclusion policy and is a member of the Alliance for Financial
http://www.bdwebguide.com/banks-bangladesh.htm
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