A Term Paper On

“ENVIRONMENT OF DOING BUSINESS WITH

BANKING SECTOR”

Contents Page
Serial no.
no.
1 Group list
2 Letter of transmittal

3 Executive summary
4 Classification of the Bank in Bangladesh
4.1 Scheduled Bank
4.2 Non-Scheduled Bank
4.3 Classification of Bank
5 Central Bank of Bangladesh
5.1 History
Function of Central bank
5.2 Organization
5.3
6 Strategic Planning (2020-2024)
7 Products and services of the Bank
8 Functions of Banks
9 Microenvironment Analysis of Banking Sector in
Bangladesh
9.1 Threat for New Entrants
9.2 Rivalry Among Existing Companies
9.3 Bargaining Power of Buyers
9.4 Bargaining Power of Suppliers
9.5 Threat of Substitutes products
10 Macroenvironmental Factors and its Effect
11 Demographic data of Banking sector
12 Globalization in Banking
12.1 Current Situation of Banks in Bangladesh

12.2 Necessary Initiatives

13 Climate Responsible Banking
1. Group list

1. Sumaiya Khatun Nisat

ID: SK-097-017
2. Khalid Hasan Munna
ID: SM-097-026
3. Mazharul Islam Shuvo
ID: MM-097-047
4. Yasir Ahmed
ID: FR-097-048
5. Jahangir Alam Limon
ID: ZR-097-091
2. Letter of Transmittal

Date: 27.02.2022

Muhammad Abdul Aziz

Lecturer
Organization Strategy and Leadership
University of Dhaka

Subject: Letter of transmittal.

Dear sir,
With due respect, we are the undergraduate students of BBA, OSL 3rd
batch have ready a term paper on Environment of doing business with
banking sector.
As we are in learning curve, this term paper has enabled us to gain insight
into the core fact of banking sector in Bangladesh. So, it becomes an
extremely challenging and interesting experience. Thank you for your
supportive consideration for formulating this. Without your inspiring this
report would have been an incomplete one.

Lastly, we would be thankful once again if you please give your judicious
advice on effort.

Yours sincerely,
Group no. 1
3. Executive Summary
The Banking sector has a number of banks in various categories. Industry may be
classified into four major categories such as Nationalized Commercial Banks,
Specialized Banks, Private Commercial Banks and Trans-National Banks.
Bangladesh Bank is the Central Bank of Bangladesh and it is the principal
controller of the bank sector. Non-Scheduled Banks are those that are created for a
specific and well-defined purpose and operate under legislation designed to
achieve those goals. A central bank, reserve bank, or monetary authority is a
banking organization with the only ability to lend money to a government. Its
major responsibility is to supply the nation's money supply, although it also has
other responsibilities. It may also have supervisory authority to guarantee that
banks and other financial institutions do not engage in fraudulent behavior. The
Bangladesh Bank has a monopoly on currency and banknote production. It is the
first central bank in the world to adopt a "Green Banking Policy". The previous
strategy plan for the period 2015-19 was produced, which includes 14 strategic
objectives. The Strategic Plan 2020-24 consists of 11 high-level goals that will be
achieved by a total of 59 objectives. It will primarily be accomplished through the
methodical execution of 204 action plans. Banks' operations are generally carried
out in divisional arrangements. Deposit Schemes focus on General Loan Scheme,
Lease financing, House / building and apartment loan scheme, Small and medium
Enterprise, Consumer credit scheme. Hire purchase, Advance against share.
International Division handles things like agency agreements and credit lines with
correspondent banks. Bangladesh Bank's Credit and Loan Administration Division
has been established. The division is responsible for loan administration and
disbursement. The Human Resource Division is in charge of administrative and
personnel matters. The Treasury Division manages the bank's cash flow and
optimizes the investment of its surplus liquidity.
To understand industry competitiveness, opportunities, and threats we conducted
microenvironment and macroenvironment analysis of banking industry. We use
Porter’s Five force’s model to analyze microenvironment factors. We found threat
for new entrants favorable. We call it favorable because though entry barriers are
high almost every year new banks are entering to the industry. However existing
well-known banks are getting advantages because of their brand loyalty. To speak
about competitiveness among existing companies, it is higher. Customer demands
are expanding. To fulfill customer, demand many banks are offering different
services. So, it is becoming challenging to hold customers. A huge number of
people relate to banking services. Several banks are also there. So, customers have
option to switch another bank if they find it advantageous. Also, customers have
opportunity to do transaction through mobile baking. As it is digitalized, people are
diverting to MFS. Thus, threat for substitute product is also higher. If we think
individually, there are lots of suppliers who save their funds in the bank, in that
case bargaining power of suppliers are low. On the other hand, corporations or big
multinational companies can give greater threat to banking industry. Macro-
economic factors are such variables that affect mostly the external environment of
a business. Bangladesh is expected to grow its real GDP by 6.1% by preliminary
analysis because of rapid development in agricultural and industrial sectors. Lower
bracket people still have weak economic status as they find internet and mobile
banking more reliable. Digital baking transaction reached a staggering Tk 6,588
crore in 2020. Bangladesh Bank suggests internet banking users increased by
31.08% than last year. Banking orientation toward climate responsibility has
forced banks to shift toward alternate solutions. Govt spent Tk 1.35 trillion over 28
stimulus packages to minimize impact of covid 19 pandemic.

The country’s banking sector should adopt new initiatives in view of keeping pace
with the change in the global scenario. Also, the worst victim of climate changes,
Bangladesh Bank should implement responsible banking through the country.
4. Classification of the Bank in Bangladesh
Bangladesh's banking industry is one of the country's most important industries,
contributing considerably to the country's economy. The Banking sector of
Bangladesh has a several banks in different categories. By consider ownership the
industry may be classified into 4 main categories such as: Specialized Banks
(SPBs), Private Commercial Banks (PCBs), and Trans-National Banks (TNBs),
Nationalized Commercial Banks (NCBs).
Bangladesh Bank is the Central Bank of Bangladesh and it is the principal
controller of the bank sector. In our database, there are a total bank number is
about 61. There are six State Owned Commercial Banks (SOCBs) which are
completely or mainly owned by the Government of Bangladesh. There are
presently three specialized banks in operation, each with a distinct goal in mind,
such as agricultural or industrial growth. These banks are also completely or
mainly nationalized bank of Bangladesh. There are 43 private commercial banks in
the Commercial category, most of which are owned by individuals or private
organizations. PCBs are divided into two types: conventional PCBs and pointerest-
based operations and Islami Shariah based PCBs. There are 33 conventional PCBs
are now operating in the industry. They carry out traditional banking activities,
such as interest-based operations, as well as Islami Shariah-based PCBs: In
Bangladesh, there are ten Islami Shariah-based PCBs that carry out banking
activities in accordance with Islamic Shariah principles, such as the Profit-Loss
Sharing (PLS) method. 9 Foreign Commercial Banks are functioning in
Bangladesh as branches of banks incorporated in other countries.
We can primarily classify our banking sector in two types, such as:
Scheduled Bank & Non-Scheduled Bank
4.1 Scheduled Bank
Banks that have been given a license to operate under the Bank Company Act of
1991 are referred to as scheduled banks. Government-owned commercial banks,
Islamic commercial banks, private commercial banks, a number of specialist banks,
and foreign commercial banks are among the scheduled banks. The main function
of schedule bank is to collect savings of individuals and firms. Account holder can
borrow money without paying any interest in current account. People can keep
their money for a certain time and after that time they can borrow the money with
high interest rate. Scheduled banks provide loans to the account holder.
4.2 Non-Scheduled Bank
Non-Scheduled Banks are those that are created for a specific and well-defined
purpose and operate under legislation designed to achieve those goals. These banks
are unable to execute all of the activities that scheduled banks can. The Non-
Scheduled Banks include Probashi Kallyan Bank, Grameen Bank, Answer VDP
Unnayan Bank, Karmasangsthan Bank and Progoti Bank.

4.3 Classification of Bank

We can classify Banks into five categories such as,
1. Central Bank
2. State- owned Commercial Banks
3. Private Commercial Banks
4. Foreign Commercial Banks
5. Specialized Development Banks

1. Central Bank
A central bank is a bank whose principal job is to maintain monetary stability.
Bangladesh Bank is the central bank of Bangladesh. Bangladesh Bank is also
member of the Asian Clearing Union.
2. State-owned Commercial Banks
There are 6 State-owned Commercial Banks as these are completely or mainly
owned by the Government of Bangladesh. State-owned commercial banks are
those in which the government owns at least 51 percent of the stock in order to
exercise influence. There are six state-owned commercial banks: Sonali Bank
Limited, Rupali Bank Limited, Agroni Bank Limited, Janota Bank Limited,
Bangladesh Development Bank, BASIC Bank Limited.
3. Private Commercial Banks
There are 43 private commercial banks, the majority of which are owned by
individuals or private groups. These are banks in which the government does not
own a majority stake and where the government has no authority to intervene in
decision-making. Some of these are AB Bank Limited, Bank Asia Limited, BRAC
Bank Limited, City Bank Limited, Community Bank Bangladesh Limited, Dhaka
Bank Limited, Dutch-Bangla Bank Limited. The ten Islamic PCBs in Bangladesh
operate in the Profit-Loss Sharing (PLS) mode, in accordance with Islamic Shariah
principles. First Security Islami Bank Limited, ICB Islamic Bank Limited,
Shahjalal Islamic Bank Limited, Social Islamic Bank Limited, Union Bank Ltd,
Standard Bank Limited, Global Islamic Bank Limited are some of the other banks
(former NRB Global Bank)
4. Foreign Commercial Banks
These banks whose Head office situated at another country but operate in this
country. Like Standard Chartered Bank, HSBC, State Bank of India Habib Bank
Limited, National Bank of Pakistan, Woori Bank, Bank Alfalah, CICI Bank.
5. Specialized Development Banks
These banks who operate Special task and don`t provide all functions like
commercial bank. Like Bangladeshi Krishi Bank, Grameen Bank, The Dhaka
Mercantile Co-operative Bank Limited (DMCBL), Bangladesh Development Bank
Limited. Like Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Probashi
Kallyan Bank.
5. Central Bank of Bangladesh
A central bank, reserve bank, or monetary authority is a banking organization and
the only ability to lend the money to a government. Lenders of last resort such as
the nation's central bank charge interest on loans made to them and other
borrowers, including the government of the country for which the bank is
responsible. While a commercial bank can create a country's currency and lend it
to the government in the form of legal currency, only the central bank has this
authority. It is a bank that can lend money to other banks in times of need. Its
primary duty is to maintain a steady flow of currency into the economy, but it also
has other duties. A bank is able to lend money to other banks in times of need.
Aside from supplying the nation's money supply, it is also responsible for
regulating interest rates on government-subsidized loans and lending money to the
banking sector in times of crisis (private banks often being integral to the national
financial system). Additionally, it may have the power to ensure that banks and
other financial institutions do not engage in risky or fraudulent practices.
5.1 History
After World War II, when the gold standard collapsed, central banks became
considerably more common. There were only two State Bank of Pakistan branches
when we gained our independence, one in Bangladesh (then East Pakistan) and the
other in Western Pakistan (present Pakistan). It was on April 7 of that year that
Bangladesh's government passed the Bangladesh Bank Order, 1972 (P.O. No. 127
of 72), which established Bangladesh Bank as Bangladesh's central bank and apex
regulatory body for the country's monetary and financial system following the
country's independence from Pakistan in 1971.
5.2 Function of Central bank
The Bangladesh Bank conducts all of the tasks that a central bank is supposed to
do in any nation. Maintaining price stability through economic and monetary
policy measures, managing the country's foreign currency and gold reserves, and
regulating the banking sector are just a few of the responsibilities. Bangladesh
Bank, like all other central banks, serves as both the government's and the banker's
bank, a "lender of last resort." The Bangladesh Bank, like most other central banks,
has a monopoly on currency and banknote production. Except for the one-, two-,
and five-taka notes and coins, which are under the control of the Bangladeshi
government's Ministry of Finance.
The Bangladesh Bank is the first central bank in the world to adopt a "Green
Banking Policy." It is the banking sector's primary regulator.
Some Key functions of Bangladesh bank are:
1. Formulation and implementation of monetary and credit policies.
2. Regulation and supervision of banks and non-bank financial institutions,
promotion and development of domestic financial markets.
3. Management of the country's international reserves.
4. Issuance of currency notes.
5. Regulation and supervision of the payment system.
6. Acting as banker and advisor to the government.
7. Money laundering prevention.
8. Collection and furnishing of credit information.
9. Implementation of the Foreign Exchange Regulation Act.
10. Managing a deposit insurance scheme.
11. Secondary trading
12. Open Market Operation (treasury bills/bonds, reverse reproductions)

5.3 Organization
Governor is the highest officer of Bangladesh bank (now Fazle Kabir). His seat is
at Motijheel branch, Dhaka. The governor heads the board of directors. The
executive staff, likewise led by the governor, is responsible for the bank's day-to-
day business.
Bangladesh Bank also has a number of departments under it, such Debt
Management, Law, and so on, each led by one or more general managers. The
Bank has 10 physical branches: Mymensingh, Motijheel, Sadarghat, Barisal,
Khulna, Sylhet, Bogra, Rajshahi, Rangpur and Chittagong; each is managed by an
executive director. Headquarters are located in the Bangladesh Bank Building in
Motijheel, which has two general managers.
6. Strategic Planning (2020-2024)
In 2010, Bangladesh Bank issued its first Strategic Plan to support the country's
long-term economic development by bolstering a dynamic, efficient, and resilient
financial sector and implementing large-scale process digitalization. The first
strategy plan, which Bangladesh Bank followed from 2010 to 2014, had a total of
17 concepts.

Through inclusive methods from several BB departments, the second strategy plan
for the period 2015-19 was produced, which includes 14 strategic objectives. The
Strategic Plan 2015-19 prioritized six strategic important areas: balanced monetary
policy, bank supervision to ensure financial stability, human capital optimization,
more liberalized foreign exchange regime, sustainable finance and inclusive
development, and enterprise resource management. The following part provides a
quick assessment of the Strategic Plan's performance from 2015 through 2019.

The results of the past five years were evaluated, and prior plans were revisited and
revised in order to construct the third Strategic Plan for the period 2020-24. This
strategy plan was produced with extensive involvement from all BB divisions and
supplemented with sensible input from top bank executives once again. All
departments established the groundwork for the plan in the form of Departmental
Action Plans (DAPs).

The following topics were taken into account during the finalization of the
Strategic Plan 2020-24. The government's goal of inclusive, ecologically
sustainable development and poverty reduction necessitates BB's effective
participation in accommodative monetary management. To maintain financial
stability, new regulatory for maximum public trust in the banking industry,
adequate dissemination of the central bank's policy actions and instructions to
stakeholders is also essential.

The Strategic Plan 2020-24 consists of 11 high-level goals that will be achieved by
a total of 59 objectives, which will primarily be accomplished through the
methodical execution of 204 action plans. The effectiveness of these action plans
will be measured by a total of 253 quantitative performance indicators.
7. Products and services of the Bank
Consumer Credit Scheme refers to the provision of financial support to low-
income individuals in order to improve their quality of life by purchasing
household durables such as refrigerators, televisions, washing machines, furniture,
computers, automobiles, and so on. Household Durable Loans, Doctors Loans,
Any Purpose Loans, Travel Loans, Car Loans, Advance Against Salary, Education
Loans, Marriage Loans, and so on are examples of consumer credit products.
Contributory Savings Schemes, Education Savings Schemes, Short Term Deposits,
Double Benefit Deposit Schemes, Resident Foreign Currency Deposit Accounts,
Non-resident Taka Accounts, House Building Deposit Schemes, Monthly Benefit
Deposit Schemes, Fixed Deposit Schemes, Lakhopati Deposit Schemes, Foreign
Currency Accounts, and other Deposit Schemes are some of the most popular.

Savings plans geared toward customers, such as the Pension Savings Plan,
Education Savings Plan, Marriage Savings Plan, and the Savers Benefit Deposit
Plan, are examples of customer-friendly deposit plans. Borrowers can choose from
a number of different types of loan: general, leasehold, home/apartment, small and
medium business, and consumer credit. A loan against the equity of the borrower.
8. Functions of Banks

Functions of Banks
Primary or Traditional Functions Agency Functions General Utility Functions
1. Payment of
Accepting Advancing of 1. Security of Wealth and
cheques,
Deposits Loans Assets
bills and letters of credit.
1. Fixed Deposits 2. Receiving Payment 2. Arrangement of Travelers
1. Cash Credit
Account for customers cheques and letter of credit
2. Loans and 3. Payment on behalf 3. Information relating to
2. Current Account
Advances of customers Economic Position
3. Saving Account 3. Overdraft 4. Transfer of money 4. Financial Adviser
4. Home Safe 4. Discounting 5.Purchase and sale of
5. Publication of Information
Account of Bills shares of securities
5. Indefinite 6. Function of manager,
6. Accepting of Bills
Period Trustee and Executor
6. Deposits 7.Underwriting
7. Security of loans
Account Functions
7. Other Deposits
8. Other Functions 8. Personal credit
A/C
9. Management of Public
Debt

10. Share market function

11. Management of Foreign
Exchange

Banks' operations are generally carried out in divisional arrangements. The

Financial Management and Accounts Division (FCAD) is responsible for financial
planning, budget preparation and monitoring, salary payment, inter-branch
transaction control, bill distribution, and annual report production, among other
things.

The International Division (ID) handles things like agency agreements and credit
lines with correspondent banks, compiling and distributing foreign currency
circulars to the branches, overseas remittance, and regulating test keys and
permitted signatures, among other things.
Bangladesh Bank's Credit and Loan Administration Division has been established
to oversee the processing and approval of branch credit proposals, documentation,
and arranging various credit facilities. The division is responsible for loan
administration and disbursement, project evaluation, processing and granting of
bank loans.

The Human Resource Division (HRD) is in charge of administrative and personnel

matters. Recruiting, training and development, compensation, employee benefit,
leaves and service rules program and up gradation are HRD functions. Information
Technology (IT) Department deals with data input and processing, hardware
procurement, and maintenance.

Branches Control & Inspection Division is responsible for responsibilities such as

branch control and growth, performing internal audits and inspections on a regular
and ad hoc basis, guaranteeing Bangladesh Bank (BB) compliance, and monitoring
BB's inspection and external audit reports.

New product creation and marketing analysis in financial services, mass media,
event management and protocol, liability marketing, policy and strategy
enhancement, and management information system are among the operations of
the Outreach Division.

The Marketing Division keeps in touch with business clients.

The Treasury Division manages the bank's cash flow and optimizes the investment
of its surplus liquidity. It delivers high-quality services and products to fulfill client
demand while also contributing significantly to revenue growth.

Committees and Group Divisions analyze the principles, policies, and regulations,
and make decisions. They also execute the authority assigned by the Board from
time to time, such as deposit and lending standards.
9. Microenvironment Analysis of Banking Sector in Bangladesh
To understand industry competitiveness, opportunity and threats its’ external
environment analysis is significant. Microenvironment and Macroenvironment
are the two types of external environment.
An industry performance and its strategy-making freedom are directly affected by
its microenvironment factors. These factors include customers, suppliers,
competitors, marketing intermediaries and company itself. By analyzing these
factors, a business can understand its ability to serve its customer. Thus, it is
critical to all business to analyze these elements. There are number of ways to
analyze these factors. Most widely used method is Porter’s Five Forces Model.
Here a brief discussion of application of this method is given bellow:

9.1 Threat for New Entrants

Bangladesh banking industry is highly regulated one by the rules and regulations
of Bangladesh bank. It requires a large amount of capital (minimum 400 crore) to
take entry in this industry. Also, existing banks have their brand loyalty. Thus, it is
difficult to grab customer immediately. Again, long procedures and heavy
regulations by government also considered as barriers for new entrants. Though
barriers for taking entry into banking industry has been increased, it has not
stopped bank entering industry. Since 1972-2021, the numbers of players in
banking industry are 61 with numbers of branches. Even in 2019, three new banks
started their journey in banking industry. The banks are Bengal Commercial Bank,
Citizen Bank and People’s Bank. As we see average several new banks are
entering, threat for new entrants is high. However, existed banks get advantages
of having brand loyalty. People trust well-known banks and are more willing to
keep their money in these banks. New banks find difficulties to start up. Due to
mergers and other failures many banks compelled to shut down. However, there
are risk for advection and growth of Mobile Financial Banking.
9.2 Rivalry Among Existing Companies
There are 61 banks in Bangladesh with 10000+ branches, currently competing in
banking sector. Competitiveness among companies is the function of 3 factors
such as competitive structure, demand condition and height of exit barriers. Total
number of deposit accounts were 13.24 crore as of June 2020. If we look back, we
will see it is increasing gradually. Large number of customers may represent lower
competitiveness. But the reality is competition is higher. Different banks are
offering different service to fulfill customer demand. Banks are offering different
offers, scheme and taking policies to compete with other banks to hold
customers. As customers are diverting to digital mobile banking it has become
challenging for banking companies to compete with lower range of customers.
Banks invest a lot of capital on computer, software, secured vaults and other
security systems. Thus, exit barrier is higher for any company in banking industry.
After considering all these factors it can be concluded that rivalry among existing
company is higher in banking sector.

9.3 Bargaining Power of Buyers

Although banking sector deals with many customers, it severely depends on
customers bargaining powers. Study shows that almost all banks give similar
service, and their rate of interest is mostly alike. Switching cost to open new
account to another bank is relatively lower. It shows that customers of banking
industry have many alternate options. Huge number and non-differentiated
services make higher the bargaining power of customer. Corporate clients and
HNWI has greater bargaining power as losing them will affect banks profitability
more substantially.

9.4 Bargaining Power of Suppliers

For banking industry, depositors and employees are two main suppliers. Bank do
business with depositors’ funds. Banks sometimes collect fund from the directors.
Number of suppliers affect the bargaining power of suppliers. If we think
individually, there are lots of suppliers who save their funds in the bank, in that
case bargaining power of suppliers are low. On the other hand, corporations or
big multinational companies can give greater threat to banking industry. As they
do bigger transactions, losing them would be a great loss for a bank. Employee’s
efforts also matter for wellbeing of a banking company. Threat is not bigger from
employees unless they aren’t the executives.
9.5 Threat of Substitutes products
Besides 10000+ bank branches, there are 26000 NGO’s, 9886 post offices and
other cooperative organizations to give services to 56.6 million active populations.
Banks mainly do deposit collection and lending services. Now-a-days mobile
financial services are doing deposit collection activities. Bkash, rocket and other
internet banking are creating pressure in card businesses and money transferring
approaches. At the end of June 2021, the number of registered customers of MFS
companies stood at 9.97 crore. Coronavirus has pushed people's reliance on MFS
providers such as bKash, Rocket and Nagad. As a result, the number of customers
in mobile banking is increasing in the pandemic period. At the same time, the
number of transactions is also increasing. Mobile banking is now an easy and
popular service in the country due to the convenience of instant transactions.
MFS is bringing great threat as substitute for banking industry. According to
Bangladesh Bank data, total mobile banking transactions in October 21 was
Tk67,582.24 crore. Almost 50% of mobile banking has been digitalized It is easy to
make transaction through digital mobile banking, so people are diverting there,
that is a big threat from substitute. NBFIs are pressurizing lending services. At
present 34 FIs are operating in Bangladesh. NBFIs give not only corporate loans
but also house loan, car loan, leasing service and other almost at same rate as
commercial banks. They also offer insurance service with various plans. So, it can
be said that threat of substitute products is higher in banking sector.
10. Macroenvironmental Factors and its Effect
Macro-economic factors are such variables that effects mostly the external
environment of a business. Business is posed with many opportunities and threats
that vary on policies adopted by different parties outside the business. Those can
be categorized based on what sources they arise from and the type of effect they
make in a business.
To make a successful analysis on macroeconomic factors of doing business in
banking sector in Bangladesh, PESTLE has been followed in conjunction with
banking policies and national circumstances.
Political
Bangladesh is a politically stable country considering no upcoming elections and
proper law enforcement. The current government is also maintained a amicable
environment creating swift economic endorsement. It is also maintaining a robust
growth in public infrastructures and development projects and successfully
advancing in current projects both small and big. These projects invite public and
private investments which will be beneficiary to mobilize resources. Though they
may also invite black money or money being laundered, strict govt and regulatory
bodies keeps the capability to track them specially banking bodies.
Economic
Bangladesh is expected to grow its real GDP by 6.1% by preliminary analysis
because of rapid development in agricultural and industrial sectors as Bangladesh
Bank and government has supported with its latest policies. Along with it,
monetary policy such as lower interest rate at less than 9%, CRR reduction in
FY21 allowed liquid cash to enter market. This liquidity flow was allowed to
flourish and re-engage businesses after they got hit by covid-19. Moreover,
Bangladesh govt has announced 28 stimulus packages amounting to Tk 1.35
trillion to ensure recovery and resistance of total covid—19 situation existent in
Bangladesh of which 57.2% has been implemented by Bangladesh Bank by June
2021.
Social
Remittance inflow was noticeable as it increased to 36.1% in FY21 as Bangladesh
Bank discouraged informal transfer and announced incentive to beneficiaries and
established reliable process. On the other hand, consumer credit was seen to have a
growth to 21.9% at the same year. General public has accumulated a considerable
amount of liquid cash deposited in bank through remittances and direct deposits.
Although Bangladesh GDP and overall economic condition has improved, lower
bracket people still have weak economic status. As they cannot relate themselves
to banking services such as account management and bank transaction, they find
internet or mobile banking more reliable and more up to date for them. They
conduct small transaction over mobile rather than going to bank themselves.
Technological
Recent technological implementation In banking sector has successfully connected
more users than even to banking idea. Moreover, users can now function more
swiftly and effortlessly as internet networks has strengthened. Mobile banking
services, web banking, ATM, ‘Anytime’ and ‘Anywhere’ banking has become a
priority in every banking business. Automation in branches has been turned to a
common practice in some banks reaching 100% automation of all branches. Due to
covid pandemic and other factors, digital baking transaction reached a staggering
Tk 6,588 crore in 2020. Moreover, Bangladesh Bank suggests internet banking
users increased by 31.08% than last year. Ultimately, banking services are getting
more accepted which can make banking procedure more efficient and profitable
but also posing a significant challenge if not innovated at par.
Legal
Bangladesh Bank tweaked several laws regarding extra government security
purchase, lower cost refinance, and allowing more time for realizing export and
import obligations, introducing newer credit guarantee process so that CMSMEs
can have easy access to credit at lower cost. In a broader sense, Legal environment
of Bangladesh of banking companies is not too dynamic, holding its own laws and
regulations under Bank companies Act, 1991 as amended in 2013 enlisting
licensing, registration, legislation, export and import concerns, Tax etc. Govt and
regulatory bodies are enforcing these laws and regulations so that banking laws are
maintained properly and
Environmental
Due to the rigid impact of covid-19 pandemic, Bangladesh faced a disastrous time
for more than a year. Bangladesh govt proposed many safeguards and invested
huge resources to minimize the effect of pandemic. Govt spent Tk 1.35 trillion
over 28 stimulus packages to implement their plan. This package will primarily re
engage and mobilize business that were affected by the covid 19 pandemic. Covid
19 has forced banking processes to be more technology based and reducing human
touch. Banking orientation toward climate responsibility has forced banks to shift
toward alternate solutions, make investment sustainably and responsibly so that
projects being invested on are climate friendly. Banks themselves have started to
slowly shift towards this idea, as they are more prone to function based on online
to reduce carbon emissions and resource conservation.
11 Demographic Data of Banking Sector

Bangladesh has 61 scheduled banks as of February 2021. Six state-owned

commercial banks, three specialized banks, 43 private commercial banks, and
nine foreign commercial banks are among the 61 scheduled banks. In addition, 5
other non-scheduled banks are in operation. These banks are Ansar VDP Unnayan
Bank, Karmasangsthan Bank, Grameen Bank, Jubilee Bank, and Palli Shanchay
Bank. Following table shows the structure of the scheduled bank system by type
of bank as of February 2021, as well as their share of total deposits and assets as
of December 2020.

Table: Structure of the Banking System in Bangladesh (End February 2021)

No. of Branches

Type of No. Urban Rura Total Percentage Percentage

Banks of l of Total of Total
Banks Assets* Deposit*

State-owned 6 1761 2038 3799 25.08 25.53

Commercial
Banks
(SOCBs)

State-owned 3 285 1214 1499 2.18 2.44

Specialized
Banks (SBs)

Private 43 3424 1973 5397 67.25 67.59

Commercial
Banks (PCBs)

Foreign 9 67 0 67 5.49 4.44

Commercial
Banks

Total 61 5537 5225 10762 100.00 100.00

Source: Bangladesh Bank, *=as per December, 2020

12 Globalization in Banking

Globalization can be defined as the process by which a country's economy

expands and becomes more integrated with the global market for products,
services, and capital in particular. Globalization is unavoidably having an effect on
Bangladesh's economy. We shall examine the influence of globalization on
Bangladesh's banking sector.

Globalization began in Bangladesh in the 1990s with the opening of the economy.
The World Bank's elimination of tariffs and subsidies, among other key initiatives,
enabled financial institutions and investors to establish a foothold in Bangladesh.

12.1 Current Situation of Banks in Bangladesh

Although private banks have operated in Bangladesh since 1983, competition

between the nationalized banking industry and private banks has not been
possible till recently.

Their enterprises are oligopolistic in character to a large extent. Foreign banks

operate in the country on a relatively limited basis. Up until December 2001,
there were 52 scheduled banks. Bangladesh's banking sector is dominated by the
nationalized sector, which accounts for approximately 55-60 percent of overall
banking operations. These banks lack any form of future planning. Among other
factors, the use of extremely outdated banking procedures, a lack of coordination
between proper manpower planning and bank schemes, a dearth of market
research for customer psychology analysis, a scarcity of financial derivatives,
inefficient banking services, and a lack of long-term planning all contribute to
bottlenecks that prevent local banks from meeting international standards.
12.2 Necessary Initiatives

To overcome global obstacles, to satisfy customer needs, and to contribute to the

national economy Local banks should pursue long-term goals. Bangladesh's
banking system must be modernized. To combat the threat of globalization, a
centralized banking process may be launched. It is important to upgrade the
telecommunications system. A standard and enhanced banking software system,
as well as an effective software maintenance system, are necessary. Local banks
should seize this opportunity to prepare for E-commerce.

The banking sector in the country should take new initiatives in order to keep up
with the changing global landscape. Banks should develop new products, consider
how to reach their customers, and expand their bank-marketing division, which
will conduct continuous research and development. New items can be developed
on the basis of research to suit client expectations. In the global commercial
trend, electronic commerce presents enormous opportunities.

13. Climate Responsible Banking

More than 270 banks have already joined the responsible banking movement,
accounting for more than 45 percent of global banking assets. When it comes to
financing businesses, it highlights the bank's concern for environmental welfare.
In Bangladesh, responsible or green banking is nothing new, and this unique
banking system has been in place since 2011. In essence, it is a paperless financial
system.
The central bank has a significant positive impact on green banking adoption.
Green banking policies have already been implemented in all commercial banks'
internal practices. As of June 2019, a total of 569 branches were using solar
panels to power their operations. A large number of booths, as well as a tiny
branch that runs on solar power. A total of 9251 branches, or 88.45%, of the
10,342 branches are providing services under the online facility till June 2019. As
a result, becoming paperless was critical.

The banks' buildings and infrastructure are being renovated in accordance with
the sustainable development strategy. The implementation of responsible
banking planning is progressing slowly. Operating a solar-powered branch, SME,
or ATM unit, for example.

Bangladesh Bank has the legal right to compel all banks to follow green banking
policies in order to minimize bank pollution in the country, as Bangladesh is one
of the most affected countries in the world by climate change.