Bangladesh Bank

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Bangladesh Bank
বাংলাদেশ ব্যাংক
Bangladesh Bank Monogram
Bangladesh Bank Monogram
Headquarters Dhaka, Bangladesh
Established December 16, 1971 (42 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.

This is the first central bank in the world to introduce a dedicated hotline (16236) for the general people to complain any banking related problem. Moreover this organization is the first central bank in the world to issue a "Green Banking Policy". To acknowledge this contribution, current Governor of this organization, Dr. Atiur Rahman was given the ‘Green Governor’ title in 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, 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.[3] 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.[3][4] 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.[4]

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[4] 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.[3]

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.[4] The policies made use of the McKinnon-Shaw hypothesis which stated that removing distortions will augment efficiency in the credit market and increase competition.[3] 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.

Functions[edit]

Bank performs as Balait wishes 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, SME development, Industrial development,and Natural resources development are also the functions of Bangladesh Bank.

Organisation[edit]

Bangladesh Bank headquarter in Motijheel

The highest official in the bank is the Governor (currently Dr. Atiur Rahman). His seat is in Motijheel, Dhaka. The Governor chairs the Board of Director. The Executive Staff, also headed by the Governor, are responsible for the day-to-day affairs.

The Bank also has a number of departments under it, namely Debt Management Dept, Law Dept, and so on, each headed by one or more General Managers.[5] The Bank has ten physical branches in Bangladesh, in Mymensingh, Motijheel, Sadarghat, Barisal, Khulna, Sylhet, Bogra, Rajshahi, Rangpur and Chittagong, each headed by a General Manager. The headquarters are housed in Bangladesh Bank Building in Motijheel, which has two general managers.

Hierarchy[edit]

The executive staff are responsible for daily affairs, and involves the governor, and the four deputy governors under him. Under the governors, there are the executive directors and the 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 had ten 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]