Chapter # 6

Financial Institutions
 Financial Institution
A financial institution (FI) is a company engaged in
the business of dealing with financial and monetary
transactions such as deposits, loans, investments,
and currency exchange.
Financial institutions encompass a broad range of
business operations within the financial services
sector including banks, trust companies, insurance
companies, brokerage firms, and investment dealers.
A financial institution is an intermediary between
consumers and the capital or the debt markets
providing banking and investment services.
Different Types of Financial Institution
The major categories of financial institutions include central
banks, retail and commercial banks, internet banks, credit
unions, savings, and loans associations, investment banks,
investment companies, brokerage firms, insurance
companies, and mortgage companies.
1. Central Banks: Central banks are the financial
institutions responsible for the oversight and management of
all other banks. In the Bangladesh is Bangladesh Bank and
the central bank of USA is the Federal Reserve Bank, which
are responsible for conducting monetary policy and
supervision and regulation of financial institutions.
2. Retail and Commercial Banks: Traditionally, retail
banks offered products to individual consumers while
commercial banks worked directly with businesses.
Currently, the majority of large banks offer deposit accounts,
lending and limited financial advice to both demographics.
Products offered at retail and commercial banks include
checking and savings accounts, personal and mortgage
loans, credit cards, and business banking accounts.
3. Internet Banks: A newer entrant to the financial
institution market are internet banks, which work similarly
to retail banks. Internet banks offer the same products and
services as conventional banks, but they do so through
online platforms instead of brick and mortar locations.
4. Credit Unions: Credit unions serve a specific
demographic per their field of membership, such as teachers
or members of the military. While products offered resemble
retail bank offerings, credit unions are owned by their
members and operate for their benefit.
5. Savings and Loan Associations: Financial institutions
that are mutually held and provide no more than 20% of
total lending to businesses fall under the category of savings
and loan associations. Individual consumers use savings and
loan associations for deposit accounts, personal loans, and
mortgage lending.
6. Investment Banks and Companies: Investment banks do not
take deposits; instead, they help individuals, businesses and
governments raise capital through the issuance of securities.
Investment companies, more commonly known as mutual fund
companies, pool funds from individual and institutional investors
to provide them access to the broader securities market.
7. Brokerage Firms: Brokerage firms assist individuals and
institutions in buying and selling securities among available
investors. Customers of brokerage firms can place trades of
stocks, bonds, mutual funds, and some alternative investments.
8. Insurance Companies: Financial institutions that help
individuals transfer risk of loss are known as insurance
companies. Individuals and businesses use insurance companies
to protect against financial loss due to death, disability, accidents,
property damage, and other misfortunes.
9. Mortgage Companies: Financial institutions that originate or
fund mortgage loans are mortgage companies. While most
mortgage companies serve the individual consumer market, some
specialize in lending options for commercial real estate only.
On the other hand, there are insurance companies that
provide coverage for a variety of risk factors and they also
provide several investment options. Insurance companies
provide loans for a number of purposes and create
investment products.
The functions of financial institutions, such as stock
exchanges, commodity markets, futures, currency, and
options exchanges are very important for the economy.
These institutions are involved in creating and providing
ownership for financial claims. These institutions are also
responsible for maintaining liquidity in the market and
managing price change risks. As part of their various
services, these institutions provide investment opportunities
and help businesses to generate funds for various
purposes.
The functions of financial institutions like investment banks
are also vital and related to the investment sector. These
companies are involved in a number of financial activities,
such as underwriting securities, selling securities to
investors, providing brokerage services, and fund raising
advice.
 Financial Institutions in Bangladesh
1. Aims of Bangladesh Limited
2. Bahrain Bangladesh Finance & Investment Co. Ltd.
3. Bangladesh House Building Finance Corporation
4. Bangladesh Industrial Credit & Project Consultant Ltd.
5. Bangladesh Industrial Finance Co. Ltd.
6. Bangladesh Mutual Securities Ltd.
7. Bangladesh Shilpa Rin Sangstha
8. Bay Leasing & Investment Ltd.
9. Chartered Cradit Co-operative Ltd. (Branch office)
10. Chartered Cradit Co-operative Ltd. (Head office)
11. Chartered Credit Co-operative Ltd.
12. Chetona Bahumukhi Samabay Samity Ltd.
13. Chetona Bhumukhi Samaby Samity Ltd.
14. Co-Operative Society Ltd.
15. DBH
16. Delta Brac Housing Finance Corporation Ltd.
17. Dhaka Multipurpose Co-operative Society Ltd.
18. Fareast Finance & Investment Ltd.
19. Fida Enterprise
20. G.E.C Bangladesh Ltd.
21. Global Investment Co-operative Society Ltd.
22. GSP Finance Company (BD) Ltd.
23. GSP Finance Co. (Bangladesh) Ltd.
24. IDLC
25. Industrial & Infrastructure Development Finance Co. Ltd.
26. Industrial & Infrastructure Development Finance Co. Ltd.
27. Industrial Development Leasing Co. of Bangladesh Ltd.
(IDLC)
28. Industrial Promotion & Development Co. Bangladesh Ltd.
29. Infrastructure Development Co. Ltd.
30. Infrastructure Development Co. Ltd.
31. International Leasing & Financial Services Ltd.
32. Investment Credit
33. Islami Finance and Investment Ltd.
34. Islamic Finance and Invest. Ltd.
35. Islamic Finance and Investment Ltd.
36. Lanka Bangladesh Finance Ltd.
37. Midas Financing Ltd. (MFL)
38. National Housing Finance & Investments Ltd. (Brance office)
39. National Housing Finance & Investments Ltd. (Head office)
40. North South Leasing Services
41. Oman Bangladesh Leasing & Finance Ltd.
42. Oman Bangladesh Leasing & Finance Ltd. (Chittagong Office)
43. People Leasing & Financial Services Ltd.
44. Phoenix Leasing Company Ltd.
45. Premier Leasing International Ltd.
46. Prime Finance & Investment Ltd.
47. Saudia Bangladesh India & Agri. Investment Ltd.
48. Soyeb Enterprises
49. The Financial Mirror
50. The UAE (BD) Investment Co. Ltd.
51. Uttara Finance & Investments Ltd.
52. Vanik Bangladesh Ltd.
53. Vanik Bangladesh Securities Ltd.
54. Vanik Bangladesh Securities Ltd. (Chittagong office)
55. Vanik Bangladesh Securities Ltd. (Head office)
 Non-banking Financial Institutions
1. Uttara Finance and Investments Limited
2. United Leasing Company Limited (ULCL)
3. Union Capital Limited
4. The UAE-Bangladesh Investment Co. Ltd
5. Saudi-Bangladesh Industrial & Agricultural
Investment Company Limited (SABINCO)
6. Reliance Finance Limited
7. Prime Finance & Investment Ltd
8. Premier Leasing & Finance Limited
9. Phoenix Finance and Investments Limited
10. People's Leasing and Financial Services Ltd
11. National Housing Finance and Investments Limited
12. National Finance Ltd
13. MIDAS Financing Ltd. (MFL)
14. Lanka-Bangla Finance Ltd.
15. Islamic Finance and Investment Limited
16. International Leasing and Financial Services
Limited
17. Infrastructure Development Company Limited
(IDCOL)¿
18. Industrial Promotion and Development Company of
Bangladesh Limited(IPDC)
19. Industrial and Infrastructure Development Finance
Company (IIDFC) Limited
20. IDLC Finance Limited
21. Hajj Finance Company Limited
22. GSP Finance Company (Bangladesh) Limited
(GSPB)
23. First Lease Finance & Investment Ltd.
24. FAS Finance & Investment Limited
25. Fareast Finance & Investment Limited
26. Delta Brac Housing Finance Corporation
Ltd. (DBH)
27. Bay Leasing & Investment Limited
28. Bangladesh Industrial Finance Company
Limited (BIFC)
29. Bangladesh Finance & Investment Co. Ltd.
30. Agrani SME Finance Co. Ltd.
31. Investment Corporation of Bangladesh
(ICB)
32. CAPM Venture Capital and Finance Limited
33. Meridian Finance and Investment Limited
34. Realistic Finance Bank Limited
 State Owned Banks in Bangladesh
1. Agrani Bank Limited
2. Janata Bank Ltd.
3. Sonali Bank Ltd.
4. Rupali Bank Ltd.
5. Bangladesh Development Bank Limited
6. BASIC Bank Limited
 Private Commercial Banks
Private banks are the highest growth sector due to the
dismal performances of government banks (above).
They tend to offer better service and products. Here is
the list:
1. AB Bank Limited
2. Bangladesh Commerce Bank Limited
3. Bank Asia Limited
4. BRAC Bank Limited
5. Dhaka Bank Limited
6. Dutch Bangla Bank Limited
7. Eastern Bank Limited
8. IFIC Bank Limited
9. Jamuna Bank Limited
10. Meghna Bank Limited
11. Mercantile Bank Limited
12. Midland Bank Limited
13. Modhumoti Bank Limited
14. Mutual Trust Bank Limited
15. National Bank Limited
16. NCC Bank Limited
17. NRB Bank Limited
18. NRB Commercial Bank Limited
19. NRB Global Bank Limited
20. One Bank Limited
21. Prime Bank Limited
22. Pubali Bank Limited
23. Simanto Bank Limited (proposed)
24. South Bangla Agriculture and Commerce Bank
Limited (www.sbacbank.com)
25. Southeast Bank Limited
26. Standard Bank Limited
27. The City Bank Limited
28. The Farmers Bank Limited
29. The Premier Bank Limited
30. Trust Bank Limited
31. United Commercial Bank Limited
32. Uttara Bank Limited
 Private Islamic Commercial Banks
There are eight private Islamic Commercial Banks in
Bangladesh:
1. Al-Arafah Islami Bank Limited
2. EXIM Bank Limited
3. First Security Islami Bank Limited
4. ICB Islamic Bank Limited
5. Islami Bank Bangladesh Limited
6. Shahjalal Islami Bank Limited
7. Social Islami Bank Limited
8. Union Bank Limited
9. Standard Bank Limited
10.NRB Global Bank Limited
11.Jamuna Bank Limited
 Foreign Commercial Banks
There are nine foreign commercial banks currently
operating in Bangladesh. These are:
1. Bank Al-Falah
2. Citibank NA
3. Commercial Bank of Ceylon
4. Habib Bank Limited
5. HSBC (The Hong Kong and Shanghai Banking
Corporation Ltd.)
6. National Bank of Pakistan
7. Standard Chartered Bank
8. State Bank of India
9. Woori Bank
 Specialized Banks
Specialized banks were established for
specific objectives like agricultural or
industrial development. These banks are
also fully or majorly owned by the
Government of Bangladesh.
1. Bangladesh Krishi Bank
2. Rajshahi Krishi Unnayan Bank
3. Probashi Kallyan Bank
 Non-scheduled Banks (05)
Non-scheduled banks are licensed only for
specific functions and objectives, and do not
offer the same range of services as scheduled
banks. There are now 5 non-scheduled banks
in Bangladesh.[1]
1. Ansar VDP Unnayan Bank
2. Karmashangosthan Bank
3. Grameen Bank
4. Jubilee Bank
5. Bangladesh Samabaya Bank Limited
 National Payment Switch
Bangladesh (NPSB)
The Bangladesh Bank has introduced National
Payment Switch Bangladesh (NPSB) in order to
facilitate interbank electronic payments originating
from different channels like Automated Teller Machines
(ATM), Point of Sales (POS), Internet, Mobile Devices
etc. The main objective of NPSB is to create a
common electronic platform for the switches in
Bangladesh. NPSB is a mother switch of all other
switches in the country. NPSB will facilitate the
expansion of the card based payment networks
substantially and promote e-commerce throughout the
country.
Online payment of Government dues, using cards and account
number information through Internet will greatly be enhanced
using NPSB. Payment Systems Department (PSD) is
concerned to operate and settle the transactions regularly.
NPSB was launched as "go-live" on December 27, 2012 to
route ATM transactions. At present, transactions among 42
banks are being routed through NPSB. A view of historic
transactions through NPSB is given below:
• National Payment Switch Bangladesh (NPSB) comparative
summary statement:
• National Payment Switch Bangladesh (NPSB) comparative
summary statement of March, 2015 and April, 2015
Sl. Amount (in Amount (in % Change (March,
Description
No. March, 2015) April, 2015) 2015 to April, 2015)

1 No. of Banks connected with NPSB 40 41 2.5%

2 No. of total transaction 3,66,410 4,55,518 24.32%

3 Total transaction amount in taka 203,95,05,110 267,35,60,600 31.09%

4 No. of daily average transaction 11820 15,184 28.46%

5 Average daily transaction amount 6,57,90,487 8,91,18,686 35.46%

 NPSB Member Banks
1. AB Bank Limited
2. Al-Arafah Islami Bank Limited
3. Bangladesh Krishibank Limited
4. Bank Asia Limited
5. Basic Bank Limited
6. BRAC Bank Limited
7. Dutch-Bangla Bank Limited
8. Eastern Bank Limited
9. EXIM Bank Limited
10. First Security Islami Bank Limited
11. ICB Islamic Bank Limited
12. IFIC Bank Limited
13. Islami Bank Bangladesh Limited
14. Jamuna Bank Limited
15. Meghna Bank Llimited
16. Mercantile Bank Limited
17. Midland Bank Limited
18. Modhumoti Bank Limited
19. Mutual Trust Bank Limited
20. National Bank Limited
21. NRB Bank Limited
22. NRB Commercial Bank Ltd
23. NRB Global Bank Limited
24. One Bank Limited
25. Prime Bank Limited
26. Pubali Bank Limited
27. SBAC Bank Limited
28. Shahjalal Islami Bank Limited
29. Social Islami Bank Limited
30. Sonali Bank Limited
31.. Southeast Bank Limited
32. Standard Bank Limited
33. Standard Chartered Bank Limited
34. The City Bank Limited
35. Trust Bank Limited
36. Union Bank Limited
37. United Commercial Bank Limited
38. Uttara Bank Limited
39. Agrani Bank Limited
40. Habib Bank Limited
41. Bay Leasing & Investment Limited
42. Bangladesh Bank
 Central Bank
Bangladesh Bank acts as the Central Bank of Bangladesh
which was established on December 16, 1971 through the
enactment of Bangladesh Bank Order 1972- President’s
Order No. 127 of 1972 (Amended in 2003). The general
superintendence and direction of the affairs and business of
BB have been entrusted to a 9 members’ Board of Directors
which is headed by the Governor who is the Chief Executive
Officer of this institution as well. BB has 40 departments
and 9 branch offices. In Strategic Plan (2010-2014), the
vision of BB has been stated as, “To develop continually as
a forward looking central bank with competent and
committed professionals of high ethical standards,
conducting monetary management and financial sector
supervision to maintain price stability and financial system
robustness, supporting rapid broad based inclusive economic
growth, employment generation and poverty eradication in
Bangladesh”.
 Functions of BB
The main functions of BB are (Section 7A of BB Order,
1972):
i) to formulate and implement monetary policy;
ii) to formulate and implement intervention policies in the
foreign exchange market;
iii) to give advice to the Government on the interaction of
monetary policy with fiscal and exchange rate policy, on the
impact of various policy measures on the economy and to
propose legislative measures it considers necessary or
appropriate to attain its objectives and perform its functions;
iv) to hold and manage the official foreign reserves of
Bangladesh;
v) to promote, regulate and ensure a secure and efficient
payment system, including the issue of bank notes;
vi) to regulate and supervise banking companies and
financial institutions.
 BSEC
The Bangladesh Securities and Exchange
Commission (BSEC) is the regulator of the capital market
of Bangladesh, comprising Dhaka Stock Exchange (DSE)
and Chittagong Stock Exchange (CSE). The Commission is
a statutory body and attached to the Ministry of Finance.
BSEC was established on 8 June 1993 under the Securities
and Exchange Commission Act, 1993. The Chairman and
Members of the Commission are appointed by the
government and have overall responsibility to administer
securities legislation.
The Commission consists of a Chairman and four
Commissioners who are appointed for fulltime by the
government. The Chairman acts as the Chief Executive
Officer (CEO) of the Commission. The Commission has
overall responsibility to formulate securities legislation and
to administer as well. The Commission is a statutory body
and attached to the Ministry of Finance.
Initially named simply as the Securities and Exchange
Commission, on 10 December 2012, its name was
officially changed to the Bangladesh Securities and
Exchange Commission.
During the 2011 Bangladesh share market scam the
BSEC withdrawing various directives given earlier to
help stabilize trading at the Dhaka Stock Exchange and
was criticized by some commentators for its actions
during the subsequent crash.
• Undertaking investigation and inspection, inquiries
and audit of any issuer or dealer of securities, the
Stock Exchanges and intermediaries and any self-
regulatory organization in the securities market.
• Conducting research and publishing information.
 Functions of BSEC
The main functions of BSEC are:
1. Regulating the business of the Stock Exchanges or
any other securities market.
2. Registering and regulating the business of stock-
brokers, sub-brokers, share transfer agents, merchant
bankers and managers of issues, trustee of trust
deeds, registrar of an issue, underwriters, portfolio
managers, investment advisers and other
intermediaries in the securities market.
3. Registering, monitoring and regulating of collective
investment scheme including all forms of mutual
funds.
4. Monitoring and regulating all authorized self
regulatory organizations in the securities market.
5. Prohibiting fraudulent and unfair trade practices in
any securities market.
6. Promoting investors’ education and providing
training for intermediaries of the securities
market.
7. Prohibiting insider trading in securities.
8. Regulating the substantial acquisition of shares
and take-over of companies.
9. Undertaking investigation and inspection,
inquiries and audit of any issuer or dealer of
securities, the Stock Exchanges
and intermediaries and any self regulatory
organization in the securities market.
10. Conducting research and publishing information.
 Dhaka Stock Exchange
Dhaka Stock Exchange (Generally known as DSE) is the main stock
exchange of Bangladesh. It is located in Motijheel at the heart of the
Dhaka city. It was incorporated in 1954. Dhaka stock exchange is the
first stock exchange of the country. As of 18 August 2010, the Dhaka
Stock Exchange had over 750 listed companies with a combined
market capitalization of $50.28 billion.
History
DSE firstly incorporated as East Pakistan Stock Exchange Association
Ltd. in 28 April 1954 and started formal trading in 1956. It was
renamed as East Pakistan Stock Exchange Ltd. in 23 June 1962. Again
renamed as Dacca Stock Exchange Ltd. in 13 May 1964. After the
liberation war in 1971 the trading was discontinued for five years. In
1976 trading restarted in Bangladesh, on 16 September 1986 DSE was
started. The formula for calculating DSE all share price index was
changed according to IFC on 1 November 1993. The automated
trading was initiated in 10 August 1998 and started on 1 January 2001.
Central Depository System was initiated in 24 January 2004. As
of November 16, 2009, the benchmark index of the Dhaka Stock
Exchange (DSE) crossed 4000 points for the first time, setting
another new high at 4148 points. In 2010, the index crossed 8500
points and finally crashed in the first quarter of 2011.
Formation
Dhaka Stock Exchange (DSE) is a public limited company. It is
formed and managed under Company Act 1994, Security and
Exchange Commission Act 1993, Security and Exchange
Commission Regulation 1994, and Security Exchange (Inside
Trading) regulation 1994. The issued capital of this company is
Tk. 500,000 which is divided up to 250 shares each pricing Tk.
2000. No individual or firm can buy more than one share.
According to stock market rule only members can participate in
the floor and can buy shares for himself or his clients. At present
it has 238 members. Market capitalization of the Dhaka Stock
Exchange reached nearly $9 billion in September 2007 and $27.4
billion on Dec 9, 2009.
Management
The management and operation of Dhaka Stock Exchange is
entrusted on a 25 members Board of Director. Among them
12 are elected from DSE members, another 12 are selected
from different trade bodies and relevant organizations. The
CEO is the 25th ex-officio member of the board. The
following organizations are currently holding positions in
DSE Board:
i) Bangladesh Bank
ii) ICB
iii) President of Institute of Chartered Accountants of
Bangladesh
iv) President of Federation of Bangladesh Chambers of
Commerce and Industries
v) President of Metropolitan Chambers of Commerce and
Industries
vi) Professor of Finance Department of Dhaka University
vii) President of DCCI (Dhaka Chamber of Commerce and
Industry)
Trading
The Dhaka Stock Exchange is open for trading Sunday
through Thursday between 10:30 am – 2:30 pm BST,
with the exception of holidays declared by the
Exchange in advance. In the month of Ramadan, the
exchange is open for trading between 10:30 am - 1:30
pm BST.
2010-11 crash
The bullish market turned bearish during 2010, with
the exchange losing 1,800 points between December
2010 and January 2011. Millions of investors have
been rendered bankrupt as a result of the market crash.
The crash is believed to be caused artificially to benefit
a handful of players at the expense of the big players.
 CSE
The Chittagong Stock Exchange (Bengali: চট্টগ্রাম স্টক
এক্সচচঞ্জ) is a stock exchange based in the port
city Chittagong, Bangladesh. It is one of the twin financial
hubs of the country, alongside the Dhaka Stock Exchange.
Established in 1995, the exchange is located in
the Agrabad business district in downtown Chittagong. It
has a combined market capitalization of US$30 billion as of
2013.
Timeline
i) 1 April 1995 CSE incorporated as a company.
ii) 10 October Floor trading started in cry out system.
iii) 4 November 1995 formally opened by then former Prime
Minister Begum Khaleda Zia.
iv) 30 May 2004 Internet based Trading system opened.
v) 8 July 2015 CSE launched new brand logo.
Trading hours
➢ Market opens at 10:30 am local time.
➢ Market closes at 02:30 pm local time.
2010-11 crash
The bullish market turned bearish during 2010, with
the exchange losing 1,800 points between December
2010 and January 2011. Millions of investors have
been rendered bankrupt as a result of the market
crash. The crash is believed to be caused artificially
to benefit a handful of players at the expense of the
big players.
 TYPES OF FUND MANAGEMENT
The types of Fund Management can be classified by the Investment
type, Client type or the method used for management. The various
types of investments managed by fund management professionals
include:
1. Mutual Funds
2. Trust Funds
3. Pension Funds
4. Hedge Fund
5. Equity fund management
When classifying management of a fund by client, fund managers are
generally personal fund managers, business fund managers or
corporate fund managers.
A personal fund manager typically deals with a small quantum of
investment funds and an individual manager can handle multiple lone
funds. Offering Investment management services includes extensive
knowledge of:
1. Financial Statement Analysis
2. Creation and Maintenance of Portfolio
3. Asset Allocation and Continuous Management
 Fund Mgt and Fund Mgr
Funds management is the overseeing and handling of a
financial institution's cash flow. The fund manager ensures
that the maturity schedules of the assets coincide with the
demand. To do this, the manager looks at both the stocks
and bonds that influence the capital market's ability.
A fund manager is essential for the management of the entire
fund under all circumstances. This manager is completely
responsible for strategy implementation of the decided fund
and its portfolio trading activities. Finding a good fund
management professional usually requires Trial and Error
combined with certain aid from investors in a similar
position.
Generally, the investor will permit a fund manager to handle
a limited fund for a specified period of time to assess and
measure the success in proportion to the growth of the
investment property.
 Responsibilities of the Fund Manager
The fund manager is the heart of the entire investment management
industry responsible for investing and divesting of the investments of
the client. The responsibilities of the fund manager are as below:
1. Asset Allocation: Any successful investment relies on the asset
allocations and individual holdings for outperforming certain
benchmarks such as bond and stock indices.
2. Long-term Returns: It is important to study the proofs of the long-
term returns against a variety of assets and against the holding period
returns. For example, investments spread across a very long maturity
time period (more than 10 years) have observed equities generating
higher returns than bonds and bonds generating greater returns than
cash. This is due to equities being more risky and volatile than bonds
which are in turn riskier than cash.
3. Diversification: Going hand in hand with the aspect of asset
allocation, the fund manager has to consider the degree of
diversification which is applicable to a client in accordance with their
risk appetite. Effective diversification requires the management of the
correlation between the asset and liability return, internal issues
pertaining to the portfolio and cross-correlation between the returns.
 Fund Management Styles
There are various fund management styles and approaches:
1. Growth Style: The managers using this style have a lot of emphasis
on the current and future Corporate Earnings and are even prepared to
pay a premium on securities having strong growth potential.
The growth stocks are generally the cash-cows and are expected to be
sold at prices in the northern direction.
2. Growth at Reasonable Price: The Growth at Reasonable Price
style will use a blend of Growth and Value investing for constructing
the portfolio. This portfolio will usually include a restricted number of
securities that are showing consistent performance. The sector
constituents of such portfolios could be slightly different from that of
the benchmark index in order to take advantage of growth prospects
from these selected sectors since their ability can be maximized under
specific conditions.
3. Value Style: The managers generally purchase the equities at low
prices and tend to hold them till they reach their peak depending on
the time frame expected and hence the portfolio mix will also stay
stable. The value system performs at its peak during the bearish
situation, although managers do take the benefits in situations of a
bullish market. The objective is to extract the maximum benefit before
it reaches its peak.
4. Fundamental Style: This is the basic and one of the most
defensive styles which aim to match the returns of the benchmark
index by replicating its sector breakdown and capitalization. The
managers will strive to add value to the existing portfolio. Such
styles are generally adopted by mutual funds to maintain a
cautious approach since many retail investors with limited
investments expect a basic return on their overall investment.
5. Quantitative Style: The managers using such a style rely on
computer-based models that track the trends of price and
profitability for identification of securities offering higher than
market returns. Only basic data and objective criteria of securities
are taken into consideration and no quantitative analysis of the
issuer companies or its sectors are carried out.
6. Risk Factor Control: This style is generally adopted for
managing fixed-income securities which take into account all
elements of risk such as:
➢ Duration of the portfolio compared with the benchmark index
➢ Overall interest rate structure
➢ Breakdown of the securities by the category of the issuer and
so on
7. Bottoms-Up Style: The selection of the securities is based on the
analysis of individual stocks with less emphasis on the significance of
economic and market cycles. The investor will concentrate their
efforts on a specific company instead of the overall industry or the
economy. The approach is the company exceeding expectations
despite industry or the economy not doing well. The managers usually
employ long-term strategies with a buy and hold approach.
8. Top-Down Investing: This approach of investment involves
considering the overall condition of the economy and then further
breaking down various components into minute details. Subsequently,
analysts examine various industrial sectors for the selection of those
scripts which are expected to outperform the market.
Investors will look at the macroeconomic variables such as:
• GDP (Gross Domestic Product)
• Trade Balances
•Current Account Deficit
•Inflation and Interest Rate
 List of Fund Manages
Name of the
SL. Address Contact Date
Company

Bitul View Tower (8th floor),

CAML Private
1 56/1, Purana Paltan, Dhaka- 05 Sep, 2019
Equity Limited
1000
Genetic Baro Bhuiyan, 12th
Constellation Asset
Floor, House CWN(A)3A
2 Management 31 Mar, 2019
Road-49, Kemal Ataturk,
Company Limited
Gulshan-2, Dhaka-1212
Daffodil Business Incubator
Bangladesh Venture Building, Level-4, 105
3 04 Dec, 2018
Capital Limited Sukrabad, Mirpur Road, Dhaka-
1207
Meghna Fund WW Tower (Level-15, South
4 Management Side) 68, Motijheel C/A. 20 Nov, 2018
Limited Dhaka-1000
 South Aveneue Tower (5th
IDLC Asset
floor),Unit No. 502, House
5 Management 16 Jul, 2018
No.5o, Road No. 3, 7 Gulshan
Limited
Avenue, Dhaka-1212.
Sima Blossom (10th Floor),
Alliance Capital
Plot# 390(Old)/03 (New),
6 Asset Management 27 May, 2018
Road# 27 (Old)/16(New),
Limited
Dhanmondi C/A, Dhaka-1209
House- 34, Road- 12, Block- K,
7 X Angel Limited Baridhara Diplomatic Zone, 22 Jan, 2018
Dhaka-1212
Rupayan Shelford (14th floor),
Alternative IM of
8 13/6 Mirpur Road, Shyamoli. 12 Oct, 2017
Steps Limited
Dhaka-1207
Evergreen Plaza, 260/B(1st
Impress Capital
9 Floor), Tejgaon Industrial Area, 03 Aug, 2017
Limited
Dhaka-1208
UFS Equity House:- 87/A, Road-26,
10 01 Aug, 2017
Partners Limited gulshan-1, Dhaka-1212
 Bangladesh Race Al-Razi Complex (3rd Floor), 166-167
11 Management Private Shaheed Syed Nazrul Islam Sarani, Purana 27 Mar, 2017
Co. Limited. Paltan, Dhaka-1000.
LankaBangla Asset
Safura Tower (Level-11), 20, Kemal
12 Management 20 Dec, 2016
Attaturk Avenue, Banani C/A, Dhaka-1213.
Company Limited
Maslin Capital Sima Blossom, 4th Floor, Plot-3, Road- 16
13 08 Sep, 2016
Limited (27 Old), Dhanmondi C/A, Dhaka-1209.
114, Rupayan Trade Centre, Level-3, Kazi
Athena Venture And
14 Nazrul Islam Avenue, Bangla Motor, 27 Mar, 2016
Equities Ltd.
Dhaka
House:- 42 (2nd Floor), Road:- 12, Block:-
15 BD Venture Limited 01 Feb, 2016
E, Banani, Dhaka-1212.
VIPB Asset 41, Shamsuddin mansion (4th Floor),
16 Management Gulshan North C/A, Gulshan-2, Dhaka- 28 Jan, 2016
Company Ltd. 1212.
Strategic Equity
Park View Mansion, 70, Park Road,
17 Management 28 Sep, 2015
Baridhara R/A, Dhaka-1212.
Limited.
 Banking System
In financial concept, banking means safe custody of
money and at the same time an institution for money
transaction.
Bank is a financial institution and intermediary,
which collect deposits through its different deposit
mechanism and provide loans and advances among
the loan clients with the view to earn profit.
In our country, any institution, which accepts, for the
purpose of lending or investment deposits of money
from public, repayable on demand or otherwise, and
with transferable by checks, draft, pay-order and
otherwise can be termed as a bank.
 Banking in Bangladesh
The Banking Industry is Bangladesh is one
characterized by strict regulations and monitoring
from the central governing body, the Bangladesh
Bank. The chief concern is that currently there are
far too many banks for the market to sustain. As a
result, the market will only accommodate only those
banks that can transpire as the most competitive and
profitable ones in the future.
Currently, the major financial institutions under the
banking system include:
• Bangladesh Bank
• Commercial Banks
• Islamic Banks
• Leasing Companies
• Finance Companies
Some Banks render special services to attract the customers as under:
i) Internet Banking: Customers need an Internet access service. As
an Internet Banking customer, he will be given a specific user ID and a
confident password. The customer can then view his account balances
online. It is the industry-standard method used to protect
communications over the Internet. To ensure that customers’ personal
data cannot be accessed by anyone but them, all reporting information
has been secured using Version and Secure Sockets Layer (SSL).
ii) Home Banking: Home banking frees customers of visiting
branches and most transactions will be automated to enable them to
check their account activities transfer fund and to open L/C sitting in
their own desk with the help of a PC and a telephone.
iii) Electronic Banking Services for Windows (EBSW): Electronic
Banking Service for Windows (EBSW) provides a full range of
reporting capabilities, and a comprehensive range of transaction
initiation options. The customers will be able to process all payments
as well as initiate L/Cs and amendments, through EBSW. They will be
able to view the balances of all accounts, whether with Standard
Chartered or with any other banks using SWIFT. Additionally,
transactions may be approved by remote authorization even if the
approver is out of station.
iv) Automated Teller Machine (ATM): Automated Teller Machine
(ATM), a new concept in modern banking, has already been
introduced to facilitate subscribers 24 hour cash access through a
plastic card. The network of ATM installations will be adequately
extended to enable customers to non-branch banking beyond banking.
v) Tele Banking: Tele Banking allows customers to get access into
their respective banking information 24 hours a day. Subscribers can
update themselves by making a phone call. They can transfer any
amount of deposit to other accounts irrespective of location either
from home or office.
vi) SWIFT: Society for Worldwide Interbank Financial
Telecommunication (SWIFT) is a highly secured messaging network
enables banks to send and receive Fund Transfer, L/C related and other
free format messages to and from any banks active in the network. It
will be of great help for our clients dealing with Imports, Exports and
Remittances etc.
It is a non-profit co-operative bank based on Belgium. It ensures
secure messaging having a global reach of 6,495 Banks and Financial
Institutions in 178 countries, 24 hours a day. SWIFT global network
carries an average 4 million message daily and estimated average
value of payment messages is USD 2 trillion.
These functions of banks are explained in following
paragraphs of this article.
A. Primary Functions of Banks
The primary functions of a bank are also known as banking
functions. They are the main functions of a bank.
These primary functions of banks are explained below.
1. Accepting Deposits
The bank collects deposits from the public. These deposits
can be of different types, such as:
a) Saving Deposits
b) Fixed Deposits
c) Current Deposits
d) Recurring Deposits
a. Saving Deposits: This type of deposits encourages saving
habit among the public. The rate of interest is low. At
present it is about 4% p.a. Withdrawals of deposits are
allowed subject to certain restrictions. This account is
suitable to salary and wage earners. This account can be
opened in single name or in joint names.
b. Fixed Deposits: Lump sum amount is deposited at one time for a
specific period. Higher rate of interest is paid, which varies with the
period of deposit. Withdrawals are not allowed before the expiry of the
period. Those who have surplus funds go for fixed deposit.
c. Current Deposits: This type of account is operated by businessmen.
Withdrawals are freely allowed. No interest is paid. In fact, there are
service charges. The account holders can get the benefit of overdraft
facility.
d. Recurring Deposits: This type of account is operated by salaried
persons and petty traders. A certain sum of money is periodically
deposited into the bank. Withdrawals are permitted only after the
expiry of certain period. A higher rate of interest is paid.
2. Granting of Loans and Advances: The bank advances loans to the
business community and other members of the public. The rate charged
is higher than what it pays on deposits. The difference in the interest
rates (lending rate and the deposit rate) is its profit.
The types of bank loans and advances are:
a) Overdraft
b) Cash Credits
c) Loans
d) Discounting of Bill of Exchange
a. Overdraft: This type of advances are given to current account
holders. No separate account is maintained. All entries are made in the
current account. A certain amount is sanctioned as overdraft which can
be withdrawn within a certain period of time say three months or so.
Interest is charged on actual amount withdrawn. An overdraft facility
is granted against a collateral security. It is sanctioned to businessman
and firms.
b. Cash Credits: The client is allowed cash credit upto a specific limit
fixed in advance. It can be given to current account holders as well as
to others who do not have an account with bank. Separate cash credit
account is maintained. Interest is charged on the amount withdrawn in
excess of limit. The cash credit is given against the security of tangible
assets and / or guarantees. The advance is given for a longer period
and a larger amount of loan is sanctioned than that of overdraft.
c. Loans: It is normally for short term say a period of one year or
medium term say a period of five years. Now-a-days, banks do lend
money for long term. Repayment of money can be in the form of
installments spread over a period of time or in a lumpsum amount.
Interest is charged on the actual amount sanctioned, whether
withdrawn or not. The rate of interest may be slightly lower than what
is charged on overdrafts and cash credits. Loans are normally secured
against tangible assets of the company.
d. Discounting of Bill of Exchange: The bank can advance money by
discounting or by purchasing bills of exchange both domestic and
foreign bills. The bank pays the bill amount to the drawer or the
beneficiary of the bill by deducting usual discount charges. On
maturity, the bill is presented to the drawee or acceptor of the bill and
the amount is collected.
B. Secondary Functions of Banks: The bank performs a number of
secondary functions, also called as non-banking functions.
These important secondary functions of banks are explained below:
1. Agency Functions: The bank acts as an agent of its customers. The
bank performs a number of agency functions which includes:
a) Transfer of Funds
b) Collection of Cheques
c) Periodic Payments
d) Portfolio Management
e) Periodic Collections
f) Other Agency Functions
a. Transfer of Funds: The bank transfer funds from one branch to
another or from one place to another.
b. Collection of Cheques: The bank collects the money of the
cheques through clearing section of its customers. The bank also
collects money of the bills of exchange.
c. Periodic Payments: On standing instructions of the client, the bank
makes periodic payments in respect of electricity bills, rent, etc.
d. Portfolio Management: The banks also undertakes to purchase and
sell the shares and debentures on behalf of the clients and accordingly
debits or credits the account. This facility is called portfolio
management.
e. Periodic Collections: The bank collects salary, pension, dividend
and such other periodic collections on behalf of the client.
f. Other Agency Functions: They act as trustees, executors, advisers
and administrators on behalf of its clients. They act as representatives
of clients to deal with other banks and institutions.
2. General Utility Functions: The bank also performs general utility
functions, such as:
a) Issue of Drafts, Letter of Credits, etc.; b) Locker Facility;
c) Underwriting of Shares; d) Dealing in Foreign Exchange;
e) Project Reports; f) Social Welfare Programs; and
g) Other Utility Functions
a. Issue of Drafts and Letter of Credits: Banks issue drafts for
transferring money from one place to another. It also issues letter of
credit, especially in case of, import trade. It also issues travellers'
cheques.
•
b. Locker Facility: The bank provides a locker facility for
the safe custody of valuable documents, gold ornaments and
other valuables.
c. Underwriting of Shares: The bank underwrites shares
and debentures through its merchant banking division.
d. Dealing in Foreign Exchange: The commercial banks
are allowed by RBI to deal in foreign exchange.
e. Project Reports: The bank may also undertake to prepare
project reports on behalf of its clients.
f. Social Welfare Programs: It undertakes social welfare
programmes, such as adult literacy programmes, public
welfare campaigns, etc.
g. Other Utility Functions: It acts as a referee to financial
standing of customers. It collects creditworthiness
information about clients of its customers. It provides
market information to its customers, etc. It provides
travelers' cheque facility.
 BDBL
Bangladesh Development Bank Limited (BDBL) is fully state owned
Bank of Bangladesh which came to effective at 3rd January 2010.
Bangladesh Shilpa Bank (BSB) and Bangladesh shilpa Rin Songstha
(BSRS) were merge into Bangladesh Development Bank ltd (BDBL) at
16th November 2009 and come to effective at 3rd January 2010. In
addition commercial Banking, BDBL provides financial and technical
assistance to broaden the private as well as public sector industrial base
of the country. It prioritizes, especially, export oriented/export linkage
industrial units, efficient import substitution, joint ventures,
commercialization of local technology and promotion of agro-based
industry. Bangladesh Shilpa Bank (BSB) and Bangladesh shilpa Rin
Songstha (BSRS), with almost similar functions, were established on
31st December, 1972 under the presidential order No. 129 to provide
loans and facilities to industrial institutions, help failed to meet
expectations. In 1992, the government moved to privatize BSRS, which
remained unaccomplished due to some complexities, the company’s
board sat on December 8 to fix a vendor agreement schedule with the
government, the BDBL organ gram, employee pay structure and select
office space for the banks headquarter. As per merger plans, the
accounts of the two organization’s consolidated by December 2009.
The paid up capital of the merged company will amount to
400 cores. Before merged the paid up capital of BSB was tk.
200 core was tk.70 core for BSRS. Making adjustment to the
reserve to the reserve funds of the two companies will raise
the capital. In the meaning, BSRS raised its funds to taka.
200 core. As per BDBL operational plans, the bank will
operate across the country by setting up branches at district
levels.
Vision of BDBL
To emerge as the country’s prime financial institution for
supporting private sector industrial and other projects of great
significance to the countries economic development. Also be
active participant in commercial banking by introducing new
lines of product and providing excellent service to the
customer.
Mission of BDBL
1. To be competitive with other Banks and Financial
Institution in rendering services ;
2. To contribute to the country’s socio-economic development
by identifying new and profitable areas for investment ;
3. To mobilize deposit for productive investment ;
4. To expand branch network in commercially and
geographically important places ;
5. To employ quality human resources and enhance their
capability through motivation and right-type of training at
home and abroad;
6. To delegate maximum authority ensuring proper
accountability ;
7. To maintain continuous improvement and up gradation in
business policies and procedures ;
8. To adopt and adapt to new technology ;
9. To maximize profit by strong, efficient and prudent
financial performance; and
10. To introduce new product lines according to market needs.
Objectives of BDBL
1. Invest in Eco-friendly industries that help mitigate
environmental degradation by lending more for renewable
energy, and effluent treatment plants and other projects that
employ energy efficient low-emission technologies including
agro-based industries, small power projects, ICT, transport and
infrastructure projects.
2. Select and invest industrial projects where location advantages
like local availability of raw materials, good infrastructural
facilities (road communication, transport facilities, etc.) and
utilities (power, gas, water, etc.) shall be available.
3. Limit project loan to tk. 15 core maximum and tk. 2 core
minimum (for large projects). Arrange and participate in
syndicated loan for projects above tk. 15 core.
4. Identify prospective and potential entrepreneurs and
investors/clients and motivate, guide and help them select
profitable industrial venture for investment.
5. Regularly publish financial disclosures.
6. Undertake from time to time SWOT analysis for reviewing
bank’s market position.
Vendors’ Agreement Signed: December 31, 2009 between
the Government and Board of directors of BDBL nominated
by the Government Formal Inauguration: January 03,2010
• Registered Office: BDBL Bhaban, 8, Rajuk Avenue,
Dhaka-1000
• Authorized Capital: Tk. 10000 million
• Paid up Capital: Tk. 4000 million
• Reserve (as on 01.01.2010): Tk. 2270 million
• Total asset (As on 01.01.2010):Tk. 16747 million
• Total Human Resource:781
• Number of Zonal Office:3
• Number of Branches Office: 32 (In 23 Districts)
Ownership of BDBL
•At last 51% of the authorized capital of BDBL be
subscribed by Government and remaining 49 percent be
subscribed by Bangladeshi nationals or by local or foreign
Financial Institution. Presently, 100 percent ownership of
the Bank belongs to the Government.
Functions of BDBL
Bangladesh Development Bank Limited (BDBL) extends term loan
facilities in local and foreign currencies to industrial projects (both
new and BMRE) in the private and public sectors. Besides, the bank
also performs the following the following activities:
1. extends term loans by giving special priority to the small and
medium enterprises (SMEs) for achieving self- reliance a well as
enhancing production and employment including empowerment of
women
2. provides working capital loans to industrial projects,
3. provides equity support in the form of underwriting and bridge loan
to public limited companies.
4. issues guarantees on behalf of borrowers for repayment of loan,
5. extends commercials banking services along with deposit
mobilization,
6. purchases and sales shares/securities of enlisted companies for
BDBL and on behalf of its customers as member of Dhaka stock
Exchange (DSE) Ltd. And Chittagong Stock Exchange (CSE) Ltd.
For capital market development,
7. conduct projects promotional activities along with preparation of
various subject oral study reports
 Functions of Insurance Companies
Seven functions of insurance are:
1.Insurance provides certainty,
2.Insurance provides protection,
3.Risk-Sharing,
4.Prevention of loss,
5.It Provides Capital,
6.It Improves Efficiency,
7.It helps Economic Progress.
Primary Functions of Insurance
1. Insurance provides certainty: Insurance provides certainty of
payment at the uncertainty of loss. The uncertainty of loss can be
reduced by better planning and administration.
There is the uncertainty of happening of time and amount of loss.
Insurance removes all these uncertainties and the assured is given
certainty of payment of loss. The insurer charges the premium for
providing the said certainty.
2. Insurance provides protection: The main function of insurance is
to protect the probable chances of loss. The time and amount of loss
are uncertain and at the happening of risk, the person will suffer the
loss in the absence of insurance.
3. Risk-Sharing: The risk is uncertain, and therefore, the loss
arising from the risk is also uncertain. When risk takes place, the
loss is shared by all the persons who are exposed to the risk.
The risk-sharing in ancient times was done only at the time of
damage or death; but today, based on the probability of risk, (he
share is obtained from every insured in the shape of premium
without which protection is not guaranteed by the insurer.
Secondary Functions of Insurance
Besides the above primary functions, the insurance works for the
following functions:
4. Prevention of loss: The insurance assists financially to the
health organization, fire brigade, educational institutions and
other organizations which are engaged in preventing the losses of
the masses from death or damage.
5. It Provides Capital: The insurance provides capital to society.
The accumulated funds are invested in the productive channel.
The death of the capital of the society is minimized to a greater
extent with the help of investment in insurance. The industry, the
business, and the individual are benefited by the investment and
loans of the insurers.
6. It Improves Efficiency: Insurance eliminates
worries and miseries of losses at death and
destruction of property. The carefree person can
devote his body and soul together for better
achievement, it improves not only his efficiency
but the efficiencies of the masses are also
advanced.
7. It helps Economic Progress: The insurance by
protecting the society from huge losses of damage,
destruction, and death, provides an initiative to
work hard for the betterment of the masses. The
next factor of economic progress, the capital, is
also immensely provided by the masses. The
property, the valuable assets, the man, the machine
and the society cannot lose much at the disaster.
 Collective Investment Fund
A collective investment fund (CIF), also known as a collective
investment trust (CIT), is a group of pooled accounts held by a
bank or trust company. The financial institution groups assets
from individuals and organizations to develop a single larger,
diversified portfolio. There are two types of collective
investment funds:
a) A1 funds, grouped assets contributed for investment
or reinvestment
b) A2 funds, grouped assets contributed for retirement, profit
sharing, stock bonus, or other entities exempt from federal
income tax
CIFs are generally available to the individual only via
employer-sponsored retirement plans, pension plans, and
insurance companies. Other names for them include common
trust funds, common funds, collective trusts, and commingled
trusts.
CIF for BSEC is in a separate sheet
 Different Institutions of Financial Markets
Within the financial sector, the term "financial markets" is
often used to refer just to the markets that are used to raise
finance. For long term finance, the Capital markets; for
short term finance, the Money markets. Another common
use of the term is as a catchall for all the markets in the
financial sector, as per examples in the breakdown below.
1. Capital markets which consist of:
i) Stock markets, which provide financing through the
issuance of shares or common stock, and enable the
subsequent trading thereof.
ii) Bond markets, which provide financing through the
issuance of bonds, and enable the subsequent trading
thereof.
iii) Commodity markets, which facilitate the trading of
commodities.
iv) Money markets, which provide short term debt
financing and investment.
v) Derivatives markets, which provide instruments for the
management of financial risk. Futures markets, which provide
standardized forward contracts for trading products at some
future date; see also forward market and Spot market.
vi) Foreign exchange markets, which facilitate the trading
of foreign exchange.
vii) Cryptocurrency market which facilitate the trading of
digital assets and financial technologies.
viii) Interbank lending market
The capital markets may also be divided into primary
markets and
secondary markets. Newly formed (issued) securities are
bought or sold in primary markets, such as during initial
public offerings. Secondary markets allow investors to buy
and sell existing securities. The transactions in primary
markets exist between issuers and investors, while secondary
market transactions exist among investors.
Money market comprises of five types of
institution:
1. Central Bank
2. Commercial Banks
3. Acceptance Houses: An accepting
house was a primarily British institution which
specialized in the acceptance and guarantee of
bills of exchange thereby facilitating the
lending of money.
4. Non-bank Financial Institutions
5. Bill Brokers: Bill broker is a person or
organization whose business is the purchase
and sale of bills of exchange