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- Although Bangladesh has adopted many internationally recognized frameworks, such as Basel III capital requirements, its banking sector remains underdeveloped and is characterized by poor asset quality and low capital buffers. Compared with neighboring India and Thailand, Bangladesh's banking sector is very small relative to its economy.
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Jun 18, 2023 · To improve customer service, the banking sector is adopting innovative technologies such as artificial intelligence, machine learning, robotics, the Internet of Things, quantum computing and more. This technological revolution is radically transforming the banking industry.
Banking Sector Performance. 5.02 Depending on the ownership structure, there are four categories of scheduled banks in Bangladesh: state-owned commercial banks (SCBs), specialised banks (SBs), private commercial banks (PCBs) and foreign commercial banks (FCBs). Total number of scheduled banks operating in FY21 was 61.
Sep 25, 2022 · The adoption of digital technology has significantly transformed Bangladesh’s financial sector in the last one-and-a-half decades, bringing millions under banking services that have even...
- Growth Drivers: Policy Reforms, Infrastructural Investments, and Globalization
- Barriers to Sustainability
- The Banking Sector: Fundamental Constraints
- Policy Interventions: Interest Rate Caps and Market Inefficiency
- Private Sector Credit: Drawbacks to Growing Credit
- Recommendations
- Mitigate Risk Indicators
- Strengthen Corporate Governance and Accountability
- Authors
Before commencing the venture, it is imperative to understand the drivers behind such extraordinary growth. Firstly, infrastructural investment from the public sector and policy reforms for agriculture and education in the 1980s-90s strengthened the economy’s structure. Secondly, in the late 1990s, openness to the international markets and FDI cont...
Given its capital efforts, Bangladesh has been able to reap higher GDP growth compared to its structural peers, namely – Cambodia, Vietnam, and India, in the last decade (2011-2021). Moreover, Bangladesh has ranked 5th among 121 countries in the Nikkei’s COVID-19 Recovery Indexand 1st among South Asian countries, demonstrating considerable resilien...
The banking sector comprises 90% of the total financial sector assets in Bangladesh. As of 2021, a total of 61 banking institutions, including 43 domestic private commercial banks, operate in the country with assets equivalent to 67% of GDP. According to a score of 346.2 on the Herfindahl-Hirschman Index (HHI), Bangladesh’s banking sector is highly...
The cap of 9% on the lending rate from April 2020 was initially a measure to contain high-interest rates during the COVID-19 turmoil, which could have limited access to credit and led to an economic slowdown. Banks cannot charge any borrower an interest rate above 9% until the regulator says otherwise. Frequent meddling in interest rate policies do...
Increasing credit to the private sector denotes higher economic activity in a country as more people are confident in borrowing owing to amicable policies and monetary support. Bangladesh has been improving its private credit to GDP ratio over time but still lags behind compared to its peers, with one of the lowest figures in the category. In 2020,...
1. Deregulate interest rate caps
Reality substantially differed from the initial plans by the government of crafting a contractionary monetary policy. First, to curb inflationary pressures and mitigate risky lending from banks, the interest rate caps should be removed or raised. According to experts from the Centre for Policy Dialogue (CPD), interest rates should be deregulated and be determined by the markets based on the supply of funds and demand for credit. Although this might mean a higher cost of borrowing for any borr...
Clear guidelines and legal support should be catered to by the banks to incentivize effective NPL resolution. A keen eye on each bank’s CAR could effectively deal with separate institutions in this regard. Not only would timely recognition and resolution of NPLs prove profitable to banks but also reduce burdens on the entire economy. This action en...
Strengthening corporate governance, especially in state-owned banks, is imperative to address fundamental flaws in the entire banking sector of Bangladesh. Numerous banks are involved in related party lending, meaning that owners’ acquaintances are given higher priority in terms of debt irrespective of the risk they carry. These activities put the ...
This article was authored by Mehedi Hasan Mahir, a Content Writer at LightCastle Partners. Advisory and editorial support was provided by Samiha Anwar, Business Consultant at LightCastle Partners. For further clarifications, contact here: samiha.anwar@lightcastlebd.com References 1. Gross Domestic Product (GDP) of Bangladesh, The World Bank https:/...
5.2 The banking sector in Bangladesh comprises four categories of scheduled banks- state-owned commercial banks (SCBs), state-owned development financial institutions (DFIs), private commercial banks (PCBs) and foreign commercial banks (FCBs). Total number of 57 banks operated in 2017.
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Banking in Bangladesh. Bangladesh is a developing country with an impoverished banking system, particularly in terms of the services and customer care provided by the government run banks. In recent times, private banks are trying to imitate the banking structure of the more developed countries, but this attempt is often foiled by inexpert or ...
Results revealed that four banks, i.e. Prime Bank Limited, First Security Islami Bank Limited, Citibank NA and Standard Chartered Bank, provided strong performance in CAMELS rating. In contrast, Janata Bank Limited, Sonali Bank Limited, Bank Asia, and Probashi Kallyan Bank exhibited dissatisfactory performance.
