Bangladesh Bank

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Bangladesh Bank
বাংলাদেশ ব্যাংক
Bangladesh Bank Monogram
Bangladesh Bank Monogram
Headquarters Dhaka, Bangladesh
Established December 16, 1971 (43 years ago) (1971-12-16)
Governor as Atiur Rahman
Central bank of Bangladesh
Currency Taka
JBJ (ISO 4217)
Website http://www.bb.org.bd
reserves data up to month of January 2013.
source: Dhaka's foreign exchange reserve cross $10 bn

Bangladesh Bank (Bengali: বাংলাদেশ ব্যাংক) is the Central bank of Bangladesh and is a member of the Asian Clearing Union.

The bank is active in developing green banking [1] and financial inclusion policy and is an important member of the Alliance for Financial Inclusion.[2] Bangladesh Financial Intelligence Unit (BFIU), a department of Bangladesh Bank, has got the membership of Egmont Group.

Bangladesh Bank is the first central bank in the world to introduce a dedicated hotline (16236) for the general populace to complain any banking related problem. Moreover, the organization is the first central bank in the world to issue a "Green Banking Policy". To acknowledge this contribution, current-Governor Dr. Atiur Rahman was given the title ‘Green Governor’ at the 2012 United Nations Climate Change Conference, held at the Qatar National Convention Centre in Doha .

History[edit]

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, naming it Bangladesh Bank. This reorganization was done pursuant to Bangladesh Bank Order, 1972, and the Bangladesh Bank came into existence retroactively from 16 December 1971.

The 1971 Mujib regime pursued 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 industry and agriculture.[3] However, government control of 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; banks had poor capital lease, provided poor customer service and lacked all market-based monetary instruments. Because loans were given out without commercial considerations, and because they took a long time to call a loan non-performing, and once they did, recovery under the erstwhile judicial system was so expensive, loan recovery was abysmally poor.[3][4] While the government made a point of intervening everywhere, it didn’t set up a proper regulatory system to diagnose such problems and correct them. Hence, banking concepts like profitability and liquidity were alien to bank managers, and capital adequacy took a backseat.[4]

In 1982, the first reform program was initiated, wherein the government denationalized two of the six nationalized commercial banks and permitted private local banks to compete in the banking sector. In 1986, a National Commission on Money, Banking and Credit was appointed[4] to deal with 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 sector could not be improved.[3]

The Financial Sector Adjustment Credit (FSAC) and Financial Sector Reform Programme (FSRP) were formed in 1990, upon contracts with the World Bank. These programs sought to remove government distortions and lessen the financial repression.[4] Policies made use of the McKinnon-Shaw hypothesis, which stated that removing distortions augments efficiency in the credit market and increases competition.[3] The policies therefore involved banks providing loans on a commercial basis, enhancing bank efficiency and limiting government control to monetary policy only. FSRP forced banks to have a minimum capital adequacy, to systematically classify loans and to implement modern computerized systems, including those that handle accounting. It forced the central bank to free up interest rates, revise financial laws and increase supervision in the credit market. The government also developed the capital market, which was also performing poorly.

FSRP expired in 1996. Afterwards, the Government of Bangladesh formed a Bank Reform Committee (BRC), whose recommendations were largely unaddressed by the then-government.

Functions[edit]

The Bangladesh Bank performs all the functions that a central bank in any country is expected to perform. Such functions include maintaining price stability through economic and monetary policy measures, managing the country’s foreign exchange and gold reserve, and regulating the banking sector of the country. Like all other central banks, Bangladesh Bank is both the government’s banker and the banker’s bank, a “Lender of Last Resort”. Bangladesh Bank, like most other central banks, exercises a monopoly over the issue of currency and banknotes. Except for the one- and two-taka notes, it issues all other denominations of Bangladeshi Taka.

Other functions include credit control, acting as a clearing house, job creation, agricultural development, SME development, industrial development, and development of natural resources.

Organisation[edit]

Bangladesh Bank headquarters in Motijheel.

The bank's highest official is the governor (currently Dr. Atiur Rahman). His seat is in Motijheel, Dhaka. The governor chairs the board of directors. The executive staff, also headed by the governor, is responsible for the bank's day-to-day affairs.

Bangladesh Bank also has a number of departments under it, namely Debt Management, Law, and so on, each headed by one or more general managers.[5] The Bank has 10 physical branches: Bangladesh, Mymensingh, Motijheel, Sadarghat, Barisal, Khulna, Sylhet, Bogra, Rajshahi, Rangpur and Chittagong; each is headed by a general manager. Headquarters are located in the Bangladesh Bank Building in Motijheel, which has two general managers.

Hierarchy[edit]

The executive staff is responsible for daily affairs, and includes the governor and four deputy governors. Under the governors, there are executive directors and an economic analyst.[6]

The general managers of the departments come under the directors, and are not part of the executive staff.[6]

The four deputy governors are:

Md. Abul Quasem Abu Hena Mohd. Razee Hassan Shitangshu Kumar Sur Chowdhury Nazneen Sultana [7]

Board of Directors[edit]

The board of directors consist of the governor of the bank and eight other members. They are responsible for the policies undertaken by the Bank. The list of current members can be found here.

Former Governors[edit]

Since its conception, the Bangladesh Bank has had 10 governors:[8]

  • A.N.M. Hamidullah (January 18, 1972 - November 18, 1974)
  • A.K. Naziruddin Ahmed (November 19, 1974 - July 13, 1976)
  • M. Nurul Islam (July 13, 1976 - April 12, 1987)
  • Shegufta Bakht Chaudhuri (April 12, 1987 - December 19, 1992)
  • Khorshed Alam (December 20, 1992 - November 21, 1996)
  • Lutfar Rahman Sarkar (November 21, 1996 - November 21, 1998)
  • Mohammed Farashuddin (November 24, 1998 - November 22, 2001)
  • Fakhruddin Ahmed (November 29, 2001 - April 30, 2005)
  • Salehuddin Ahmed (May 1, 2005 - April 30, 2009)
  • Atiur Rahman (May 1, 2009 – Present)

See also[edit]

References[edit]

  1. ^ Bangladesh Bank, “Green Banking in Bangladesh”, November 2012. http://www.bangladesh-bank.org/pub/special/greenbankingbd.pdf
  2. ^ http://www.afi-global.org/about-afi/members
  3. ^ a b c d Bahar, Habibullah (9 December 2009). "Financial Liberalization and Reforms in Bangladesh". Thimphu, Bhutan: UNESCAP/UNDP/Royal Monetary Authority of Bhutan. 
  4. ^ a b c d Bhattacharya, Debopriyo; Toufic A Chowdhury (April 2003). "Financial Sector Reforms in Bangladesh: The Next Round". CPD Occasional Paper Series. Paper 22 (Dhaka, Bangladesh: Centre for Policy Dialogue). Paper 22. 
  5. ^ "General Managers". Bangladesh Bank. Retrieved 15 August 2011. 
  6. ^ a b "BB Hierarchy". Bangladesh Bank. Retrieved 15 August 2011. 
  7. ^ "Deputy Governors". Bangladesh Bank. Retrieved 15 August 2011. 
  8. ^ "Governors of BB". bangladesh-bank.org. Retrieved 7 June 2012. 

External links[edit]