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Introduction

The name bank derives from the Italian word banco “desk/bench”, used during the
Renaissance by Jewish Florentine bankers, who used to make their transactions above a
desk covered by a green tablecloth.
A bank is a financial institution that provides various financial services to individuals,
businesses, and governments. These services typically include accepting deposits, lending
money, facilitating payments, and offering investment and wealth management products.
Banks act as intermediaries between depositors who have excess funds and borrowers who
require capital for various purposes, thereby channeling funds from savers to borrowers to
support economic activities. Additionally, banks often offer other services such as currency
exchange, safekeeping of valuables, and advisory services related to financial planning and
investment. They play a crucial role in the economy by promoting savings, facilitating
investment, and maintaining the stability and efficiency of the financial system.

The banking industry of Bangladesh stands as a pivotal pillar of the nation's economic
infrastructure, fostering growth, stability, and financial inclusivity. With a history tracing
back to the early 20th century, Bangladesh's banking sector has undergone significant
transformations, adapting to global trends, technological advancements, and regulatory
reforms.

Bangladesh boasts a diverse banking landscape comprising a mix of public, private, and
foreign banks, each playing a distinct role in serving the financial needs of individuals,
businesses, and the government. The industry's evolution has been marked by milestones
such as nationalization, liberalization, and the emergence of innovative financial products
and services.

As one of the key drivers of economic development, the banking sector in Bangladesh
facilitates capital mobilization, allocation, and investment, thereby fueling
entrepreneurship, industrial growth, and infrastructure development. Moreover, it serves as
a conduit for international trade and remittances, facilitating cross-border transactions and
fostering economic integration.
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Despite facing challenges such as non-performing loans, regulatory compliance, and

technological adaptation, Bangladesh's banking industry continues to exhibit resilience and
potential for further expansion. Government initiatives, coupled with advancements in
financial technology (fintech), are reshaping the industry landscape, promoting financial
inclusion, and enhancing efficiency and transparency.

History

Although there is no formal evidence of the existence of banks in Bengal during the period
before 400 BC, traders of this period were known to have carried out activities to provide
financial assistance among themselves. The wealthy people of that period used to put their
surplus money and valuables under the soil in brass-made pitchers and maintained
accounts for them by writing on the body of dishes made of gold or silver. The Vedas
mentions the practice of informal banking in the form of borrowing and lending during the
Vedic period. Such activities, however, were centred in temples and other religious places.
Borrowing and lending gave way to banking during the period of Manu, who believed that
wise men should deposit money with a person bearing good moral character, having
respectable and rich relatives, and well conversant with law. Koutilya's Artha Shastra also
suggests the existence of banking and payment of interest on deposits in the Vedic period.

The inception of modern banking in Bengal dates back to the establishment of the Bank of
Hindustan in 1770 in Calcutta, founded as an offshoot of the trading company Messrs.
Alexander and Co. However, its operations ceased in 1832 due to the failure of the trading
company. Although it issued notes limited to Calcutta and its vicinity, it set the stage for
subsequent developments in the region's banking landscape.

Several banks emerged in Calcutta during the late 18th and early 19th centuries, albeit none
managed to endure beyond the mid-19th century. These included the General Bank of
Bengal and Bihar (1733–75), Bengal Bank (1784–91), General Bank (later General Bank of
India) (1786–91), The Commercial Bank (1819), The Calcutta Bank (1824), The Union Bank
(1828), The Government Savings Bank (1833), and The Bank of Mirzapore (1835).
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Among these, the Bank of Calcutta, established in 1806, stands as the oldest surviving
entity, albeit in different forms. It was renamed Bank of Bengal in 1809, merged into the
Imperial Bank of India in 1921, and eventually transformed into the State Bank of India in
1955.

Dhaka saw its first modern bank in 1846 with the establishment of The Dacca Bank, although
it operated on a small scale and did not issue banknotes. It was acquired by the Bank of
Bengal in 1862. By 1947, the Bank of Bengal had expanded its presence in East Bengal, with
branches in Dhaka, Chittagong, Chandpur, Mymensingh, Rangpur, and Narayanganj.

However, the partition in 1947 led to the relocation or closure of many bank branches in East
Bengal, leaving only 69 branches by 1951. In 1959, Eastern Mercantile Bank Limited was
established, followed by Eastern Banking Corporation in 1965, aiming to provide credit to
local entrepreneurs who had limited access to financial resources from institutions in West
Pakistan. These initiatives laid the groundwork for the subsequent development of the
banking sector in Bangladesh.

At the time of Bangladesh's independence in 1971, the banking system comprised two
branch offices of the former State Bank of Pakistan and seventeen major commercial banks,
with only two under Bangladeshi control and three under foreign control, excluding West
Pakistanis. Additionally, there were fourteen smaller commercial banks, predominantly
serving urban areas.

Immediately following independence, the Dhaka branch of the State Bank of Pakistan was
designated as the central bank and renamed Bangladesh Bank. It assumed responsibility for
regulating currency, controlling credit and monetary policy, and managing exchange control
and official foreign exchange reserves. The newly formed government nationalized the entire
domestic banking system, subsequently reorganizing and renaming the banks. Foreign-
owned banks were allowed to continue operations in Bangladesh.

Furthermore, the insurance sector was also nationalized, providing a potential source of
investment funds. Cooperative credit systems and postal savings offices catered to small
individual and rural accounts. Despite its nascent stage, the new banking system
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established reasonably efficient procedures for credit management and foreign exchange
operations.

During the 1970s, the credit system primarily focused on financing trade and the public
sector, which collectively absorbed 75 percent of total advances. This approach reflected
the early priorities of the newly independent nation, laying the groundwork for economic
development and stability.

After the liberation of Bangladesh, the twelve Banking companies who were doing business
in Bangladesh, were nationalized by the Government of the People's Republic of
Bangladesh.

Nationalized Banks Before Independence

Sonali Bank National Bank of Bank of Bhawalpur Premier Bank Limited
Pakistan
Rupali Bank Muslim Commercial Australasia Bank Standard Bank Limited
Bank Limited
Agrani Bank Commerce Bank Habib Bank Limited
Limited
Janata Bank United Bank Limited Union Bank Limited
Pubali Bank Eastern Mercantile
Bank Limited
Uttara Bank Eastern Banking
Coporation
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Industry Size

In Bangladesh, the Net Interest Income in the Banking market is forecasted to reach
US$21.48bn in 2024.

• Traditional Banks dominate the market with a projected market volume of

US$18.96bn in 2024.
• The Net Interest Income is expected to exhibit an annual growth rate (CAGR 2024-
2028) of 2.11%, resulting in a market volume of US$23.35bn by 2028.

Structure

According to the Bangladesh Bank Order, 1972 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 with retrospective effect from 16 December 1971. Other than
Bangladesh Bank, banks in Bangladesh are primarily categorized into two types: Scheduled
and Non-Scheduled banks.

Scheduled banks are licensed under the Bank Company Act, 1991 (Amended to 2013).
Currently, there are 61 scheduled banks in Bangladesh.

The names of the Scheduled Banks whose operations are recorded in this volume are as
below:

A. STATE OWNED BANKS:

1. Agrani Bank Limited.

2. Janata Bank Limited.
3. Rupali Bank Limited.
4. Sonali Bank Limited.

B. SPECIALSED BANKS:

1. Bangladesh Krishi Bank.

2. Rajshahi Krishi Unnayan Bank.
3. Bank of Small Industries and Commerce
Bangladesh Ltd.
4. Bangladesh Development Bank Limited.
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C. PRIVATE BANKS:

a) Foreign Banks:

1. Standard Chartered Bank

2. State Bank of India
3. Habib Bank Ltd.
4. Citi Bank, N.A.
5. Commercial Bank of Ceylon Ltd.
6. National Bank of Pakistan
7. Woori Bank
8. The Hong Kong & Shanghai Banking
Corporation Ltd.
9. Bank Al-Falah Ltd.

b) Private Banks (Incorporated in Bangladesh excluding Islamic Banks):

1. AB Bank Ltd.
2. National Bank Ltd.
3. The City Bank Ltd.
4. International Finance Investment and
Commerce Bank Ltd.
5. United Commercial Bank Ltd.
6. Pubali Bank Ltd.
7. Uttara Bank Ltd.
8. Eastern Bank Ltd.
9. National Credit and Commerce Bank Ltd.
10. Prime Bank Ltd.
11. Southeast Bank Ltd.
12. Dhaka Bank Ltd.
13. Dutch Bangla Bank Ltd.
14. Mercantile Bank Ltd.
15. Standard Bank Ltd.
16. One Bank Ltd.
17. Bangladesh Commerce Bank Ltd.
18. Mutual Trust Bank Ltd.
19. Premier Bank Ltd.
20. Bank Asia Ltd.
21. Trust Bank Ltd.
22. Jamuna Bank Ltd.
23. BRAC Bank Ltd.
24. NRB Commercial Bank Ltd.
25. South Bangla Agriculture and Commerce
Bank Ltd.
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26. Meghna Bank Ltd.

27. Midland Bank Ltd.
28. The Farmers Bank Ltd.
29. NRB Bank Ltd.
30. Modhumoti Bank Ltd.
31. NRB Global Bank Ltd.

c) Islamic Banks

1. Islami Bank Bangladesh Ltd.

2. ICB Islamic Bank Ltd.
3. Al-Arafah Islami Bank Ltd.
4. Social Islami Bank Ltd.
5. EXIM Bank Ltd.
6. First Security Islami Bank Ltd.
7. Shahjalal Islami Bank Ltd.
8. Union Bank Ltd

Amalgamation

On April 2024 the central bank of Bangladesh issued banking merger policy for merger of
weak banks with strong banks – both voluntary and mandatory.
Following merger process are ongoing:

o Padma Bank Limited merged with EXIM Bank PLC

o National Bank Limited merged with United Commercial Bank PLC
o BASIC Bank PLC merged with City Bank PLC
o Bangladesh Development Bank PLC merged with Sonali Bank PLC
o Rajshahi Krishi Unnayan Bank merged with Bangladesh Krishi Bank
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Balance Sheet of Conventional Bank ( One Bank PLC)

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Balance Sheet of Islamic Bank ( Islami Bank Bangladesh PLC)

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Balance Sheet of Islamic Bank ( Islami Bank Bangladesh PLC)

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