Bank plays an important role in this modern world. The development of industries and business sectors of a country mainly depends on good banking system. The industries and businessman are taking short and long term loan from banks. In the modern world international businesses are fully depended on banks. Without sound banking system no country can develop in international trade.
Bank constitutes an important segment of the financial infrastructure of any country. The economic history of many countries reveals that economic development and growth of financial infrastructure go hand in hand. Financial system of a country is the heart of a country’s economic system as it connects suppliers of the funds and demanders of fund, which is needed to produce economic goods. It also provides a large arena of employment opportunity. As Bangladesh is containing a bank base economy, its economic development is largely depended on the development of banking sectors.
Bangladesh appeared as a new nation on the world map in the year 1971. After independence financial institutions, especially banks played a vital role in re-constructing the war-torn economy of Bangladesh. Bangladesh Bank is the central bank of the country and is in charge of monetary policies of the Government and controls all commercial banks.” Development and growth of our banking system may be divided into three parts. The performance of our banking system during 1972 to 1982 was commendable in respect of expending network and providing easy credit to the socially desirable sectors but equally frustrating with regard to maintaining validity and customer services. The second phase from 1983 to 1989 was characterized by denationalization and privatization of banking system without broad-basing the prudential and information regulatory framework; however, these measures of denationalization and privatization could not bring the viability and operational efficiency of banking system.
Under the above circumstances and with the recommendation of World Bank, a Financial Sector Reform Project (FSRP) was undertaken in 1989 by the government, which can be identified with third phase of the development of our banking system. The government of Bangladesh has also enacted some important acts namely financial institutions act 1993, Securities and Exchange Commission act 1993, the companies’ act 1994 and recently Bankruptcy act 1997.
The present day banking structure has evolved over several decodes. The far-reaching program of economic reform is being carried out at present towards efficient utilization of scare resources and the development of private entrepreneurship. Banks are financial service firms, producing and selling professional management of the public’s fund as well as performing many other roles in the economy. Banks are those financial institutions that offer the widest rang of financial functions of any business firm in the economy.
Competition is strengthened by the entry of new and innovative provides of financial services, through the development of Money market and Capital market. Money market is designed for the making of short-term loans where individuals and institutions with temporary surplus of funds meet borrowers who have temporary cash shortages. Capital market is deigned to finance long-term loans where individuals and institutions with temporary surplus of finds meet borrowers who have temporary cash shortages. Capital market is designed to finance long-term investments. Private sector commercial banks are private companies operate under the legislative framework, which covers both Company Act, and Banking Company Act, under the ongoing financial liberalization, EXIM Bank emerges as a new Bank in private sector to operate at the Banking arena of Bangladesh It is committed to provide high quality financial services/ products to contribute to the growth of GDP of the country through stimulating trade and commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth , poverty alleviation, raising standard of living of limited income group and overall sustainable socio-economic development of the country.