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Bangladesh Bank


A. Summary of Bangladesh Bank:

  1. Nature of Organization: Central Bank
  2. Legal Stature: Bangladesh Bank Order, 1972
  3. Established on: December 16, 1971
  4. Headquarter: Dhaka (the capital of Bangladesh)
  5. Headed by: Governor
  6. Vision: 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
  7. Number of Departments: 52
  8. Number of branch offices: 10
  9. Number of Employees: 5807
  10. Core Functions:
    • Formulation and implementation of monetary and credit policies.
    • Regulation and supervision of banks and non-bank financial institutions, promotion and development of domestic financial markets.
    • Management of the country's international reserves.
    • Issuance of currency notes.
    • Regulation and supervision of the payment system.
    • Acting as banker to the government.
    • Money Laundering Prevention.
    • Collection and furnishing of credit information.
    • Implementation of the Foreign exchange regulation Act.
    • Managing a Deposit Insurance Scheme.

B. Initiatives and Programmes Relate to Social Economy:

For last several years, Bangladesh Bank (BB) has been striving to brand itself as a ‘developmental central bank’ for establishing a humane, society-oriented, environment-friendly financial sector in Bangladesh. For this purpose, the major reforms and initiatives have been taken by BB relating social economy are:

  • Agriculture sector credit policy. BB undertook a policy to encourage all commercial banks (state-owned, privately-owned, domestic or foreign), by largely drawing on their CSR-induced financing. The commercial banks are being supported by the BBs refinancing schemes (via interest rate subsidies) and are being encouraged to follow a planned approach as coordinated by the BB i.e. “directed-lending”. BB each year now publicly announces its agricultural credit policy, sets disbursement targets for the next financial year.
  • Credit programme for sharecroppers. Sharecroppers as a vulnerable group have historically been outside the financial system for lack of collateral. In 2010, BB has introduced a special refinance facility (of about USD 72 million) exclusively for landless sharecroppers. BB is conducting this in collaboration with BRAC sharecroppers in last five years.
  • 10 Taka account for farmers. A novel initiative has been taken by BB to facilitate the opening of bank accounts for poor farmers, wage labourers, and other vulnerable groups with as small as 10 taka (US 12 cents). These new accounts which are being used by the account holders as savings and payments medium, as well as to receive various input subsidies and social safety net payments from the government.
  • Access to finance for SMEs. The BB has undertaken a comprehensive policy on credit lines for SMEs with a special focus on women, primarily through setting up an indicative target for SME loan disbursement by various commercial banks and non-bank financial institutions. BB is also following an “area approach” and “cluster development policy” and emphasizes priority lending to small businesses and women entrepreneurs. Additionally, there are refinance lines for SME finance amounting to Tk. 21 billion from BB’s own fund and supported fund from ADB, JICA.
  • Mobile banking. With an ever expanding mobile telephony and increasing demand for mobile financial services, the BB initiated Mobile Financial Services (MFS) in 2011. BB’s MFS model is widely appreciated around the world
  • Green banking: BB has been a keen promoter of environment friendly projects and has introduced special refinanced lines to encourage commercial banks and financial institutions to extend loans to such areas such as renewable energy and energy efficient technologies. BB has also introduced incentives towards “planned” promotion of lending towards crop diversification and cultivation of crops that could potentially reduce dependence on their imports.

C. Bangladesh Bank’s Best Practices in Promoting social economy and Sustainable Development:

As a sustainable development oriented central bank, one of the core visions of Bangladesh Bank is to integrate sustainability issues like financial inclusion; inclusive, environment-friendly, socially responsible finance; corporate social responsibilities; green banking into the mainstream operation of banks and financial institutions. Thus, BB’s priority is to bring the under-served people and unaddressed environment into the umbrella of formal financial sector concentrating the following areas:

  • Reflecting sustainability priorities in monetary targets
  • Credit growth and job creation
  • Affecting green investments through interest rates
  • Pursuing social and environmental goals through targeted refinancing lines
  • Refinancing lines, pro-poor growth and inequality reduction
  • Refinancing lines for transition to green energy
  • Aligning credit quotas, ceilings and ratios with sustainability objective s
  • Fostering financial inclusion to reduce poverty and income inequality
  • Integrating sustainability criteria in to reserves management

D. Latest events /activities to announce:

'Emerging Markets' hashonored Dr. Atiur Rahman as 'Central Bank Governor of the Year, Asia 2015'. Emerging Markets (the daily newspaper of record for the World Bank, IMF and regional development bank meetings) recognizes the achievements of the leading policymakers in emerging markets in the Annual Meetings of World Bank-IMF. This award is based on nominations from public and private sector economists, analysts, bankers, investors, and other experts. Emerging Markets stated in describing Dr. Rahman: "...What’s interesting about Rahman’s approach, which has really started to visibly bear fruit over the last year, is that it appears to be generating considerable strength and resilience in the Bangladesh economy. Bangladesh is growing at 6.5% this year; Rahman reckons more than 7% is feasible next year. At the same time inflation has come down from 12% to 6.5%, the exchange rate has remained stable for three years when other emerging market currencies are falling, and reserves have quadrupled under his tenure. He credits this to financial inclusion. “Money needs to touch the ground,” he says. “You can throw money in the air, but it will only create bubbles and inflation.”.....". Ms. Ruth Beddows, Deputy Director of Global Capital commented on Dr. Rahman, “Governor Rahman have significant contribution towards Bangladesh’s sustained spell of economic growth of more than 6 percent, rapid poverty alleviation through innovative financial inclusion programs, stability in the exchange rate, and growing foreign exchange reserves over the past few years. The award signals the confidence he has inspired in the key stakeholders and reflects their faith in central bank policy under his stewardship.

On January 05, 2015, The Banker (UKbasedfinancial magazine of the Financial Times group) has declared the award of Central Bank Governor of the Year, Asia-Pacific for 2015 to Dr. Atiur Rahman, Governor, Bangladesh Bank , in recognition of his work exemplifying how central banks can play essential role in promoting financing of socially and environmentally responsible initiatives without compromising on growth or macroeconomic stability. The Banker's Central Banker of the Year 2015 awards celebrated the officials that have best managed to stimulate growth and stabilise their economy. The Banker described his outstanding efforts in following way: "One of his initiatives supports tenant farmers with no access to financial services or collateral. Bangladesh Bank lent Tk5bn ($64.7m) at bank rate to non-governmental organisation (NGO) BRAC in exchange for a guarantee, and BRAC in turn organised farmers’ loans. Some 1 million tenant farmers received loans as a result of this invitation, 55% of which are women. The project has a 99% recovery rate. Bangladesh Bank also established a project to assist street children in June 2014. This was particularly important as without guardians, these children tend to be excluded from the financial sector. Bangladesh Bank is also promoting and undertaking green financing and bank operational management. Such efforts have not distracted the bank from its core duties, however. Inflation in Bangladesh dropped from 7.5% in 2013, to 6.5% in 2014, while the central bank’s reserves have tripled to $22bn during Mr Rahman’s mandate."

*** For a broader view on Bangladesh Bank, see latest strategic plan of BB.