Bangladesh Bank

Basic financial services such as deposit, credit etc. are considered as entitlement of all people in a society, this is particularly true in developed countries. Inclusiveness of a greater segment of people in financial system is pre requisite for economic development of a country like Bangladesh to ease credit facilities to facilitate employment. Despite a large number of bank branches and micro finance institutions in our country, a large segment of our population, particularly rural poor, has scant access to financial services. Bangladesh Bank has started to find a way out of this situation through commencement of services like deposit collection, small credit disbursement etc. which need to be made available to the common people for the sake of poverty alleviation also. Bangladesh Bank and the Government of Bangladesh (GOB) have adopted several remedial measures to bridge these gaps in financial inclusion.

Bangladesh Bank has introduced refinance schemes for banks against their loans to Small and Medium Enterprises (SMEs) multilateral development partners such as the IDA and ADB are supplementing BB’s refinance programs with their co-financing lines. BB’s refinance schemes for banks against their loans to Small and Medium Enterprises (SMEs) have been expanded from Taka 100 crore to Taka 600 crore for ensuring credit availability to this sector. To widen and strengthen SMEs, recently Bangladesh Bank has formed SME and Special Programs Department; to enhance investment in this sector especially to help women in increasing their contribution to industrialization, BB is detecting the hindrances on the way. In this regard it has been made mandatory that at least 15% of the credit will have to be disbursed among women entrepreneurs. Against the sector in total of Tk. 24000 will be disbursed in the current fiscal (FY 2009-10) through the banking channel.

The agriculture credit program announced by BB for FY 10 enjoins all banks to engage in lending for a comprehensive range of no-and off-farm rural economic activities, with refinance lines available to them from Bangladesh Bank. BB has announced its Annual Agricultural/Rural Credit Policy and Program for FY 2009-10 of TK. 11,500 crore and to ensure institutional credit facility for the share croppers, Bangladesh Bank for the first time has introduced a refinance scheme of TK.500 crore which will be disbursed using NGO linkages. To implement agricultural credit program BB has formulated a three stage monitoring system. Besides, the farmers are now allowed to open their bank account by ten taka only.

Bangladesh Bank is increasing its concentration on infrastructural development because it’s a vital prerequisite for economic development. A Taka 200 crore refinance line has been introduced in FY-10 against bank loans for environment friendly investments in solar energy, Biogas plants and Effluent Treatment Plants (ETP). Already Participatory Agreement with some banks for receiving refinance facility for loan against ETP is under process. In addition commercial banks have been persuaded to invest in power generation plant under Public Private Partnership (PPP). In the meantime BB itself has established a 20 kilo watt solar panel.

In addition, BB is always urging the financial institutions to be more committed to the society by fulfilling their Corporate Social Responsibilities (CSR) and BB issued guidance (DOS Circular No 01 Dated 1st June 2008).

According to vision 2021 of present Govt. poverty has been targeted to reduce below 15%. As a short term measure to achieve this target BB authority hopes the credit facilities for agriculture and SMEs will be very effective and will ease the implementation of long term strategies.

Nevertheless recently, BB has adopted the Strategic Planning in accomplishing 17 core objectives by 2010-14:

  1. Revisit the current monetary policy framework to ensure continuing effectiveness of monetary polices
  2. Strengthen regulatory and supervisory framework to enhance financial sector resilience and stability
  3. Further deepen financial markets in Bangladesh
  4. Financial inclusion and broadening of access
  5. Develop more efficient currency management and payment system
  6. Strengthen reserve management capabilities
  7. Enhance regulatory and supervisory framework against money laundering
  8. Introduce separate and comprehensive guideline and supervision for Islamic banking
  9. Develop more efficient management of government domestic debt
  10. Streamline and transform data reporting, processing and dissemination through full fledged ICT framework
  11. Full automation of credit information bureau (CIB)
  12. Enhance the legal empowerment of BB in different functional areas
  13. Attract, retain and develop people ensuring sound organizational development
  14. Strengthen Risk-based internal control to add value to the Risk Management Process in Bangladesh Bank
  15. Promote CSR activities and preparedness for climate change in Bangladesh with conducive policy direction
  16. Develop effective channels for communicating central bank’s policies and initiatives to stakeholders to enhance effectiveness of implementation
  17. Create a ‘Strategic Planning and coordination Unit as a process owner of BB strategic plan

In order to improve the quality of customer service, "Bangladesh Bank Modernization Program" has been initiated for the cash department, and initiatives such as setting up CCTV as part of improved security system, help desk, separate counter for women, aged and physically handicapped people, using sophisticated machine for note processing, sorting, banding etc., central display board for displaying directives, citizen charter and many others have been taken under this program. Therefore, with the view to reducing poverty and satisfying credit needs for accelerating economic activities; BB's recent initiative in bringing the people under banking services in line with financial inclusion are likely to contribute in economic development of Bangladesh.