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INTRODUCTION..........................................................................................................................................1 BANGLADESH BANK AS A CENTRAL BANK OF BANGLADESH GOVERNMENT ....................1 GENERAL ROLES OR FUNCTIONS OF CENTRAL BANK.................................................................2 ROLES AS A GOVERNMENT BANK........................................................................................................3 ROLES AS A BANKER OF OTHERS:.......................................................................................................4 DEVELOPMENT FUNCTIONS..................................................................................................................5 OTHER FUNCTIONS...................................................................................................................................6 MONETARY POLICY STRATEGY OF THE BANGLADESH BANK.................................................7 CONCLUSION...............................................................................................................................................8 REFERENCES...............................................................................................................................................9

employment and real income in Bangladesh. Its primary function is to provide the nation's money supply. a central bank charges interest on the loans made to borrowers.  To regulate the issue of the currency and the keeping of reserves. or monetary authority is a banking institution granted the exclusive privilege to lend a government its currency. Khulna. but more active duties include controlling subsidized-loan interest rates.Introduction A central bank. There are some major objectives of Bangladesh Bank. Rajshahi. and one each in Chittagong. It came into existence under the Bangladesh Bank Order 1972 (Presidential Order No. Rangpur and Barisal. . and to other commercial banks. Bangladesh Bank performs all the functions that a central bank of any country is expected to perform. However. And also Central bank is strengthening in money market and to assist to the capital market. Sylhet. rural development. the entire operation of the former State Bank of Pakistan in the eastern wing was transferred to Bangladesh Bank. to ensure that banks and other financial institutions do not behave recklessly or fraudulently. typically as a 'lender of last resort'. and to foster growth and development of the country's productive resources for the national interest. Central Bank tries to develop the banking sector of the country. Bangladesh bank as a Central Bank of Bangladesh government Bangladesh Bank is the Central bank of Bangladesh. 127 of 1972) which took effect on 16 December 1971. Through this order. which is loaned to the government in the form of legal tender. And also Central bank tries to develop the agriculture sector. It is a bank that can lend money to other banks in times of need. the Central Bank plays a vital role for the economic development. So. and acting as a lender of last resort to the banking sector during times of financial crisis (private banks often being integral to the national financial system).  Manage the monetary and credit system of Bangladesh with a view to stabilizing domestic monetary Value  To preserve the par value of the Bangladesh Taka. In economy. It is the monetary authority of the country. Like a normal commercial bank. a central bank is distinguished from a normal commercial bank because it has a monopoly on creating the currency of that nation. Bangladesh Bank headquarters in Motijheel. two in Dhaka city (Sadarghat and Motijheel). The head office discharges its duties with 28 departments. reserve bank. Central bank is the most important part of a country.  To promote and maintain a high level of production. primarily the government of whichever country the bank exists for. It may also have supervisory powers. poverty alleviation and to develop the industry sector in many ways. Bogra. Bangladesh Bank has 9 branch offices.

The issue of money was always claimed to be a prerogative of the government.General Roles or Functions of Central Bank Bank of issue: The issue of paper money is the most important function of a central bank. It carries out the government’s transaction involving purchase or sales of foreign currencies. The ultimate responsibility for laying down the monetary policy and maintaining the monetary stared lies with the government. Banker. on important matters of economic policy like deficit financing. 2 . trade policy. As an adviser to the government the central bank gives advice to the govt. Supervision of the Banking System Central Bank is the leader of all banks. the banks are required under some legislation to maintain statutory minimum cash reserves. Custodian of the cash reserves of the commercial Bank: The commercial banks in the country keep a part of their cash balance as deposits with the central bank. In fact the privilege of note-issue was almost everywhere associated with the origin and development of central banks. function of holding the nation’s metallic reserves and its foreign exchange reserves was automatically derived from its functions as the bank of issue and the custodian of commercial banks cash preserves. Central Bank also make project for customer and advice to implement in Other Banks.a) bank examine and b) bank regulation. When a bank takes decision for customer or others. It supervises the banking system of the country. In this capacity. institutions & enterprises. Custodian of the nation’s reserves of international currency: The central banks. The Central Bank helps the member banks in times of crisis. foreign exchange policy etc. Central banks were generally known as ‘bank of issue’ until the beginning of the twentieth century. Lender of last resort: The expression lender of last resort implied the assumption of the responsibility of meeting directly or indirectly. Central Bank examines it and gives permission for implement or eliminates the project. Central Bank may be responsible for banking system. Agent & Adviser to the Government: A central bank functions as a banker to the government of the country. war or other emergency. mostly as a specified proportion of their deposits. either voluntarily because conversion or because of some legal obligation. If the banks can’t manage the money then Central bank helps those commercial banks by supplying them money. In most cases a central bank is required by law to maintain a minimum reserve against its note issue. They collect information from commercial bank and take necessary decision by two ways. In many countries. It makes short-term advances to the Government in normal condition and extra ordinary advances during a depression. it conducts the banking accounts of government departments.

fund. it can easily assume the function of acting as a clearing house or settlement bank for other banks in the country. it also performs a variety of development and promotional factions. It tends generally to strengthen the banking system of a country.” The central bank functions of note-issue. bank all over the world. agent and adviser of the government. are closely associated with the control of credit by the central bank. As all banks maintain their accounts with the central bank.Central clearance. banks. For this reason central bank is called the custodian of govt. which were regarded in the past as being outside the normal preview of central banking. The main objective of a central bank’s monetary policy is to achieve growth with stability within the frame work of the general economic policy of the country. also exercise control over excessive expansion of credit by the commercial banks. Roles as a Government Bank Central bank is known as govt. Collection and transfer of money: 3 . Central bank everywhere fulfills the functions of banker. and the custody of the commercial banks cash reserves along with those of rediscount and lender last resort. For the sake of economic development the central bank should provide sufficient quality of money appropriate to growth process. the management of government accounts. settlement and transfer: As the central bank is the custodian of cash reserves of the commercial banks. Central bank performs the following functions govt. fund and reserve on behalf Govt. Promoter of economic development: The modern central bank is an institution responsible not only for the maintenance of economic stability. An effective monetary management requires a centralized control over both currency and credit. Maintain government fund and accounts: Central bank maintains and monitors govt. Controller of credit: The control of credit is considered to be the main function of a central bank. De Kock observes. provides economy in the use of money in banking operations. the claims of banks against one another are settled by simple transfers from and to their accounts this method of settling accounts through the central bank apart from being of great convenience to the banking system. “It is the function which embraces the most important questions of central banking policy and the one thorough which practically all the other functions are united and made to serve a common purpose. which enjoy the monopoly of note-issue. That is why the central banks.

According to M. Central bank influences the economy through monetary policy. Monetary policy refers to interest rates and money supply. department and institution of govt. including all the statistics. revenues from different sectors and deposit it the account of govt. central banks maintain relationship with central banks of different countries. Handling of government monetary transaction: Central bank performs all monetary transaction of home and abroad on behalf of govt. Implementation of government monetary policy: The implementation of government monetary policy in the timing of impact on the economic inflation in the country. World Bank (WB). different development agencies etc. Maintaining relation with foreign bank: As an agent of govt. 4 . Roles as a Banker of Others: Central bank performs the following functions as a banker of others bank. The decision on monetary policy may be taken by the central bank. Besides it transfers money from one place to another according to directions of govt. It also set up new rules and policies for other commercial bank to open new branches. Adviser and agent of government: Central bank acts as agent of govt.Central bank collects govt.’s involving purchase and sale of foreign currencies. International Monetary Fund (IMF). Sanctioning and supervision of loan: Central banks not only perform monetary transaction on behalf of govt. It also advises govt. in policy making. but also sanctions supervising of loans of different ministry.e. to establish and maintain relationship with different parties inside and outside the country. Regional Development bank (i. For this reason central is always careful whither the commercial banks following /maintaining the conditions of scheduling. Advising the Government on Monetary Policy Monetary policy is a most important issue for economic. The central bank will corporate with the government on economic policy generally and will produce advice on monetary policy and economic matters.H. ADB). De-Kock “it carries out the govt. Scheduling bank: Central gives the license/permission of new banks to start business and schedule them. because of the monetary policy is very important to the investors.

As a result commercial banks are bound to maintain properly books of accounts. Acts as adviser and agent: Central bank advises and directs commercial bank for the betterment of their operations of banking activities/function. Central bank carefully monitor about this. Sanction of loan: Central bank gives loan to scheduled commercial bank if necessary. Even. Besides it acts as the agent of scheduled bank in home and abroad. According to the direction of Govt. Assistance in collecting credit: Central bank extends the helping hands to the commercial banks in collecting loans by enacting new rules and regulation about loan and default loan and its report publication. These development activities are as follows: Development of different production oriented sectors: 5 . when the commercial banks are in financial crisis and cannot collect loan from other sources. Audit of accounts: Central bank carefully check the book of accounts of commercial bank and its proper maintenance .Functions as a clearing house: Inter banks indebtedness is arisen from operations of day to day banking activities. Supervision of loan: Central banks not only sanction loan but also manage how & when scheduled commercial banks are granting loan and in different sectors. Collection and preservation of deposits: All the scheduled commercial banks have to maintain a certain percentage of their deposits into central bank. central bank undertake different development activities and tries to implement. then central bank acts as lender of last report. Development functions The objective of central bank is to ensure economic development. For this reason central perform the function as clearing house all over the world. Sometimes it becomes very difficult for commercial bank to settle inter banks indebtedness.

So it helps for the development of the quality of economic plan taken by Govt. central bank also provides some others functions. import and export). For this reason it extends financial help assistance those institution engaged in extracting these natural resources. Central bank tries to stabilize exchange rate of a country. Improving the quality of economic plan: Central bank is the top most financial institution in the country and the banker of Govt. Collection and supply of data: Central bank has to collect different data to act act as the banker of the other banks and the banker of government. formulation of different policy of government etc. Development of foreign trade: Central bank under take different activities for the development of foreign trade (i. Development of natural resources: Central bank provides assistance and help to extract natural resources for use of these resources to the enhancement of the economic welfare of the people. For this reason. industrial bank. central extends it help.e. 6 . Central bank supply information to various departments of government and different scheduled bank. investment bank etc. the central bank arranges training facilities. It motivates scheduled commercial banks to manage adequate training facility for the development of quality of their manpower. OTHER FUNCTIONS In addition to above function. Improving the quality of manpower: Central bank tries to improve the quality of manpower in the banking sector. For this reason it extend helping hands to establish specialized banks like agricultural bank.Central bank helps to argent extent in the production oriented sectors like the development of agriculture and industry etc. It creates confidence among the foreign exporters about country’s banking system. central bank set up different rules and regulations when banking institutions are in danger. For the development of its own manpower inside the bank. Development of banking system: Central bank is always engaged in the development of banking system as the leader of banking empire. These are as follows Economic research: Central bank has to undertake different Economic research activities for the development of banking system effective operation of money market.

it ought to be stressed that this forward looking analysis assumes a stable and predictable import regime (including the petroleum price behaviour). On the positive side. but well in excess of the average recorded over the past five years. Further. Besides. Sectoral Growth Outlook: An analysis of sub-sectoral growth rates suggests the overall growth for the agricultural sector is likely to be in the 3.Preparation of report and publication: Central bank is to prepare many reports to meet the need of government and the bank itself. To do this bank has separate publication and cell department. the possibility of another round of upward revision in the set of administered energy tariffs cannot be ruled out. The most important thinks of monetary policy is followedMonetary Policy Framework: It starts by articulating the monetary policy framework (in terms of the goals. Growth Outlook: In view of strong consumer demand. the service sector in FY06 is expected to build on the past year’s performance. These sectoral growth projections are consistent with the overall growth predicted for FY06.0 to 8. the 12-month average inflation in FY06 is unlikely to exceed 7. however.8-4. and the steady growth of remittances offsetting the deficit in the trade balance. robust service sector growth. However. which is a shade lower than the 8. the instruments. the food component of CPI is unlikely to register much further growth over the balance of FY06.0 percent. and the analytic channels of transmission) for greater clarity and transparency benefiting both the policy makers as well as the stakeholders. and the continuation of an appropriate cautionary (i.5 percent. tight) monetary policy stance in light of inflationary pressures currently at play. In the domestic scene. Achieving price stability: 7 . adequate private sector credit flows.0 percent. Inflation Outlook: Over and above the risks posed by the high price of crude oil and the consequent balance of payments pressure.6 percent figure realised in FY05.8 percent range. agricultural growth. the source of most of national imports. there is the spectre of rising real interest rate in the global economy (led by the US) and the associated increase in the inflationary expectations in the industrial countries. MONETARY POLICY STRATEGY OF THE BANGLADESH BANK Monetary policy strategy of the Bangladesh bank was first issued in January 2006. the principal contribution coming from the crop sub-sector.. It is also believed that industrial growth for FY06 would lie in a range of 8. the FY06 real GDP growth is expected to come in at the 6.e. and on the assumption that the tightened monetary policy stance will be maintained. stable industrial growth. in view of the bumper aman harvest. a stable exchange rate regime. central banks publish annual report and sell it.3 percent range in FY06. and yield a growth rate of 6. Taking the above factors into account.5 to 7. The appropriate monetary policy goal in the Bangladesh context is to achieve price stability with the highest sustainable output growth.3 to 6.

Employment and economic growth: Bangladesh is over populated country. No bank can commence banking business in the country and no existing bank can open a new branch in or outside the country or shift any branch from one place to another without obtaining a license/permission from the Central Bank. In Bangladesh many people depends on cultivation of land. and all scheduled banks are accountable to Central Bank. Central Bank is empowered to act as the watchdog of the country's banking system. and also try to develop the agricultural sector. rural development and overall economic development of the country.The central bank of a country control the money supply. Conclusion After a little bit of discussion on the Roles of Central Bank. 8 . The bank acts as the banker to the government and accepts government deposits. So. and undertakes collection of cheques and drafts drawn on other banks. cheques and drafts. industry sector. making rules and regulation for several financial organizations. The government deposits all its cash balances with the Bangladesh Bank free of interest. economic development. our government announced they will try to provide job at least one people in a family. When in every family get the job. cost of money or rate of interest rate in order to set of objectives oriented towards the growth and stability of the economy. As a result. As a result. which has extensive powers to ensure soundness of the banking system. For that reason our economic growth is low. Bangladesh bank maintains the high level of production. The bank transfers government funds from one place to another as requested by the government and its agencies. many people are in under unemployment. the economic growth will also increase day by day. For the high level of production many times Bangladesh bank provides different types of facilities to the farmer. Central Bank is an Important part of a countries it try to develop the economy of the country. controlling the money market and social development works etc. making policies. central bank plays a significant role for economic development of the country. Maintaining high levels of production: Bangladesh is food crops country. we can easily understand about the whole activities of Central Bank relating to improving the banking sector. As a result. availability of money. doing job for the government.

scribd.bangladesh-bank.scribd.com/doc/34331402/The-Functions-of-Bangladesh-Bank  http://www.pdf  http://www.References  http://www.com/doc/32115544/Bangladesh-Bank-Report-Final 9 .org/research/policynote/pn0602.

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