Academic Doc

Topics: Bank, Commercial bank, Fractional-reserve banking Pages: 6 (1519 words) Published: December 31, 2012
In the world of modern ages importance of banking business is immeasurable. Agricultural and industrial prosperity cannot be imagined without the existence of an expedient banking system in the country. Absence of a fair banking system is identified as a prime cause of backwardness of any country in respect of its commerce and industry. Banks have been playing effective role in the capitalistic as well as socialistic countries of the world in their internal distribution of wealth. Banking system of Bangladesh has not also remained less advanced in the above banking atmosphere. After liberation the then government of the new born country being recognized as Bangladesh in the world society made all the existing banks nationalized by an ordinance named as "Bangladesh Bank Ordinance" dated the 26 March, 1972.

|Structural from of Banking system : |[pic] | |Later on government of the self declared President H.M. Er shad | | |following a denationalization policy allowed establishment | | |of banking institution in the Private sector and released three of | | |such nationalized banks in the private sector. | | |[pic] | |

structure of Bangladeshi banking system is somewhat identical with that of British system. Bangladesh Bank occupies the central position in the banking sector of Bangladesh. Whole Banking Sector is controlled and run by central Bank. All scheduled banks including their foreign correspondent branches, private banks, some financial Institutions are under the control of Bangladesh Bank. Many branches of commercials banks and that of the Krishi Bank arre in operation throughput the country. Commercial banks enjoy the advantages of branch system of Banking in this country. But as the number of branches here are less as against the actual need banks of this country could not take the fuller advantage of the above system.

Role of banks in the Economic development :-
There should be no anonymity as about the importance of Banking in the Economic development of a developing country like Bangladesh. Banks performs some vital role that are conducive to economic development are as follows:-       (i) To create generate capital market.

      (ii) To play effective role in the Economy by supplying capital.       (iii) To persuade quench, bill of exchange etc. for easy mode of exchange       (iv) Financing of industries.
      (v) Financing of Trade and Commerce and rendering services to its chants.       (vi) Financing of Agriculture.
(vii) To maintain balance of foreign trade and to check price hike in the market by controlling credit.

Classification of banks based on operation:
      Human needs are diversified and unlimited. Therefore it will not be so unlikely if banks of various nature or type exist in the country. On the basis of activities and operation banking institutions of our country may be classified as follows.

      (a) Central Bank or Bangladesh Bank :- In consultation with the Govt. it maintains and controls the total banking sector of the country. Owing to its position, importance and guardianship controlling role over the scheduled bamks it is also named as Central Bank. It determines priority sector for investment, rate of interet on loans and deposit, controls, monitory system, designs policy regarding foreign currency, foreign trade & commerce andabove all it acts for and on behalf of the govt. to assist...
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