An overview of Bangladesh Bank
Bangladesh Bank (BB) was established as a central bank to accelerate the growth of the Bangladeshi economy as well as to take the better monetary policy and to lead other banks. It is a fully government owned bank.
The name of the central bank of Bangladesh is Bangladesh bank. Immediate after independence, in 1972, the former state bank of Pakistan which was in Bangladesh, turns into Bangladesh bank with all assets and liabilities.
The establishment date of BB is 16th December 1971. Bangladesh bank represents this country in world bank, IMF, Asian clearing union, Asian development bank, and other international finance-related organizations.
Bangladesh bank helpline number is 16236, you can call here for any banking query related to banking or finance service in Bangladesh or to allegate.
A governing body under the finance ministry is the administrator of this bank. This governing body has 9 members. Governor is the chairman of this governing body and he is elected for four years. The first governor of BB was A. N Hamidullah and the current governor is Fazle Kabir.
There is also an executive committee to conduct every day’s general sessions and that the members of that committee are the governor, deputy governor and one member from the directors.
The paid-up capital of Bangladesh bank is only 30 million taka. The government of BD is the source of this fund. Its current foreign currency reserve in August 2020 is $ 37.18 billion.
Currency is the medium of exchange of a country and the name of Bangladeshi currency is taka. The code of taka is t and in international currency exchange, the code is BDT. There is a currency museum in Bangladesh bank training academy, Mirpur, Dhaka.
The first currency of Bangladesh is one taka note which came to light on 4th march, 1972. In 1973, the government introduces with 5, 10, 25 & 50 paisa coins (100 paisa equals 1 Taka).
Bangladeshi currency has two types-
Government currency: Those are initiated by the finance ministry and there must have a sign of secretary of finance in those currencies. Those are 1, 2, 5 taka paper currency, coins and 1, 5, 10, 25, 50 paisa coins.
Banknote: There is a sign of governor in all banknotes. Bangladesh bank must reserve gold or foreign currency to initiate a new banknote (BB must reserve at least 30% of the value of that banknote). The six banknote of Bangladesh bank are 10, 20, 50, 100, 500 and 1000 taka paper currency.
Sections of Bangladesh Bank
This bank is conducted by the Bangladesh bank act-1972. It ascertains its policy and activities by banking company ordnance 1962 if necessary.
As the bank of England, Bangladesh bank divides its functions into two main sections, those are (a) issue section which circulates currencies and (b) banking section which governance overall banking system.
Beside these two-section there is some other section to steer this bank smoothly, those are- 1. Accounting section 2. Agricultural loan section 3. Agricultural loan supervises section 4. The banking control section
5. The exchange control section 6. Industrial loan section 7. Rural loan section project 8. Research section 9. Statistical section 10. Administration & expense section 11. Auditor & supervise section
12. Governor secretariat section 13. Engineering section 14. Banking supervises section 15. Workers management section 16. Mass communication and publication section and 17. Bangladesh bank training academy.
Its headquarter is on Motijheel commercial area Dhaka and it has another branch in Dhaka is in Sadarghat. BB has a total 10 branches, two branches in Dhaka and other branches are in Chattogram, Rajshahi, Khulna, Bogura, Rangpur, Barishal and Mymensing.
Functions of Bangladesh bank
As other central banks worldwide, BB also performs significant works. Those functions have four main categories, those are-
- The general or traditional function
- As government bank
- As a banker of other banks
- Special functions
(A) The general or traditional function
- Currency circulation: the principal job of BB is to circulate different values of currencies. In Bangladesh, only BB has rights over currency circulation. BB has 6 official banknotes, those are- 10 taka, 20 taka, 50 taka, 100 taka, 500 taka & 1000 taka banknote.
- Control over money market: As a controller of the money market, BB stabilizes the total amount of currency, quality & loans to control the price of products.
- Value of currency: To make stable a countries economy, it controls the quality and value of the paper currency and coins. To stable the value of the currency it reserves gold or foreign currency against the issued note and coins.
- Currency revaluation: BB revaluate currencies with the permission of the government to cope up with international economics. Revaluation of currencies increases or decrease the exchange rate with foreign currencies.
- Developed banking system: As a central bank BB takes the responsibility of compliment & potential banking system.
- Exchange foreign currency: As a controller of the money market of Bangladesh, BB performs all functions related to foreign currency exchange. This bank also sets the value and quality of native currency and its exchange rate with foreign currency.
- The economic development of the country: BB also works on increasing GDP and its growth rate, improve the standard of living.
(B) Functions as a government bank
- Preservation of funds and assets: Bangladesh bank preserves all the funds and assets of government without any cost.
- Accountant of government: BB stores all the accounts of money and wealth of the Bangladeshi government to help the government.
- Accept deposits: It accepts all deposits in favor of the government.
- Loans: This bank provides loans to the government without any interest.
- Financial transaction: BB transfers money from one place to another, from one sector to another sector with the direction of government.
- Buy & sell foreign currencies: This bank buys and sells foreign currencies in favor of the government.
- Relationship with foreign banks: It builds up relations with other central banks and international organizations worldwide as a representative of the government.
- Advisor and representative of government: It works as a representative of the government at home and abroad. It also provides advises to the government on the development plan, control loans, foreign exchange, create laws on money and banking and control over export-import.
- Collect statistics, storage and its supply: It collects statistics related to the economy of Bangladesh and provides them to the government.
(C) Functions as a bank of other banks
- Establishment of banks: There needs the permission of BB to open a new bank or to open new branches of a bank.
- Control over loans: It controls the overall loans of banks in our country.
- Last source of loan: This bank lends money to other banks when any commercial or scheduled bank faces a shortage of funds.
- Audit accounts: To ensure the compliment banking system and to control banks, BB audits banks.
- Clearance house: BB works as a clearance house to the settlement of those banks’ mutual debts.
- Control: BB controls the functions of banks and other financial institutions.
- Advisor: It works as an advisor to other banks.
- Providing information: Bangladesh bank provides different information and statistics to other banks and financial institutions.
(D) Special functions
- Agricultural development: For the development of agriculture in Bangladesh, BB provides loans to farmers and related institutions with the help of agricultural banks or with the wing of agriculture of other banks.
- Industrial development: BB provides loans to improve the industrial condition of our country with the help of an industrial bank or with the wing of the industry of other banks.
- Cooperative loans: this bank provides loans to farmers, small businessmen, and other peoples with different occupations by cooperative associations and cooperative banks.
- Other functions: In addition to the above Bangladesh bank helps to get financial services on the development of forests, discover and extract minerals, develop on Chattogram hill tract; jute, leather and tea exports.
Role of Bangladesh bank in the economic development of Bangladesh
- Capital formation
- Expansion and contraction of loans
- Medium of exchange
- Scope of investment
- Stops money laundering
- Price stability
- Agricultural development
- Industrial development
- Development planning
- Control inflation
- Foreign currency exchange rate
- Research and provide information