1

Contents
Page

1. Introduction 4

2. History of Bangladesh Bank 4

3. Vision 4

4. Mission 4

5. Objectives of Bangladesh Bank 4

6. Bangladesh Bank and its Policies 5-6

a) Monetary Policy
b) Reserve Management Policy
c) Exchange Rate Policy
d) Interest Rate Policy
e) Capital Adequacy Policy
f) Loan Classification and Provisioning Policy

7. Categories of Loans 7

a) Continuous Loan
b) Demand Loan
c) Fixed Term Loan
d) Short-term Agricultural Credit

8. Basis for Loan Classification 7-8

(a) Objective Criteria

(b) Qualitative Judgment
i. Accounting of the interest of classified loans
ii. Policy for rescheduling loans
iii. Policy for loans writes off
iv. Large Loan Restructuring Scheme (LLRS)
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9. Payment of Dividend by Bank Companies 8-9

10. Corporate Governance in Bank Management 9-10

a) Policy on Single Borrower Exposure
b) Deposit and Insurance
c) Foreign Exchange System

11. Acts, Laws, Regulations and Guidelines 10

12. Functions of Bangladesh Bank: 10-13

i. Core Functions
ii. Others activities/ functions
a) Bank of issue
b) Banker, Agent & Adviser to the Government
c) Custodian of the cash reserves of the commercial Bank
d) Collection and preservation of deposits
e) Acts as adviser and agent
f) Credit risk management
g) Exchange rate
h) Interest rate
i) LC monitoring
j) Foreign investment
k) Issuance bond and treasury bills
j) Foreign investment

13. Bangladesh Bank’s Departments 13-34

a) Accounts & Budgeting Department.

b) Anti-Money laundering Department
c) Banking Regulation and Policy Department
d) Common services department
e) Debt management department
f) Department of Banking Inspection
g) Department of financial institution and market
h) Department of printing and publication
i) Department of expenditure management
j) Department of foreign exchange service
k) Department of foreign exchange policy
l) Department of governor’s secretariat
m) Department of information system development
n) Investment promotion and financing facility project
o) Department of law
p) Department of policy analysis
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q) Department of security management

r) Special studies cell
s) Department of agricultural credit
t) Bangladesh Bank Training Academy
u) Central bank strengthening project
v) Credit Union Bureau
w) Department of currency management and payment system
x) Department of off-site supervision
y) Equity and Entrepreneurship Fund Unit
z) Foreign exchange inspection and vigilance department
aa) Department of foreign exchange operation
bb) Department of foreign reserve
cc) Department of human resource
dd) Department of internal audit
ee) Department of IT Operation and Communication
ff) Department of monetary policy
gg) Department of research
hh) Department of SME and special programs
ii) Department of statistics

14. Conclusion 34-35

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1. Introduction

Bangladesh Bank is the central bank and monetary authority of Bangladesh. It came into
existence under the Bangladesh Bank Order 1972 (Presidential Order No. 127 of 1972) which
took effect on 16th December 1971. Through this order, the entire operation of the former
State Bank of Pakistan in the eastern wing was transferred to Bangladesh Bank. The powers
and functions of Bangladesh Bank are governed by various laws and acts including the
Banker's Books Evidence Act 1891, Insolvency Act 1920, Banking Companies Ordinance
1962, Bangladesh Bank Order 1972, Foreign Exchange (Regulation) Act 1986, Money Loan
Court Act 1990, Banking Companies Act 1991, Financial Institutions Act 1993 and Rules
1994, Companies Act 1994 and Bankruptcy Act 1997.

2. History of Bangladesh Bank

After the liberation war, and the eventual independence of Bangladesh, the Government of
Bangladesh reorganized the Dhaka branch of the State Bank of Pakistan as the central bank
of the country, and named it Bangladesh Bank. This reorganization was done pursuant to
Bangladesh Bank Order, 1972, and the Bangladesh Bank came into existence with
retrospective effect from 16th December, 1971. The highest official in the bank is the
Governor. The Governor chairs the Board of Director. The Executive Staff, also headed by
the Governor, are responsible for the day to day affairs.

3. 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 education
in Bangladesh

4. Mission
We at Bangladesh Bank are carrying out its following main functions as the country’s central
bank:

• Formulating monetary and credit policies

• Managing currency issue and regulating payment system
• Managing foreign exchange reserves and regulating the foreign exchange market
• Regulating and supervising banks and financial institutions, and advising the

5. Objectives of Bangladesh Bank

As the central Bank of Bangladesh, the broad objectives of the Bank are-
a) To regulate currency issuance and to keep foreign exchange reserves;
b) To manage the monetary and credit system of Bangladesh with a view to
Stabilizing domestic monetary value;
c) To preserve the par value of the Bangladesh Taka;
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d) To promote and maintain a high level of production, employment and real income in
Bangladesh; and to foster growth and development of the country's productive resources.
e) To reserve all the rights of the bank.

6. Bangladesh Bank and its policies

Bangladesh Bank (BB), as the central bank, has legal authority to supervise and regulate all
banks and non-bank financial institutions. It performs the traditional central banking roles of
note issuance and of being the banker to the government and banks. Given some broad policy
goals and objectives, it formulates and implements monetary policy, manages foreign
exchange reserves and lays down prudential regulations and conduct monitoring thereof as
they apply to the entire banking system. Its prudential regulations include, among others:
minimum capital requirements, limits on loan concentration and insider borrowing and
guidelines for asset classification and income recognition. The Bangladesh Bank has the
power to impose penalties for non-compliance and also to intervene in the management of a
bank if serious problem arise. It also has the delegated authority of issuing policy directives
regarding the foreign exchange regime.

a) Monetary Policy
Monetary policy is a set of rules that aims at regulating the supply of money in
accordance with predetermined goals or objectives. Monetary policy plays a very
dominant role in altering the economic activity and the price level in a country. So, it
should be very carefully formulated and implemented in achieving the goals and
objectives as outlined in the Bangladesh Bank Order, 1972 below:

a) Price stability both internal & external

b) Sustainable growth & development
c) High employment
d) Economic and efficient use of resources
e) Stability of financial & payment system

b) Reserve Management Policy

Bangladesh Bank (BB) is empowered by section 7A of Bangladesh Bank Order, 1972
(President’s Order No. 127 of 1972) to hold and manage the official foreign exchange
reserve of Bangladesh. It maintains its foreign exchange reserve in different
currencies to minimize the risk emerging from widespread fluctuation in exchange
rate of major currencies and very irregular movement in interest rates in the global
money market. BB has established Nostro account arrangements with different
Central Banks. Funds accumulated in these accounts are invested in Treasury bills,
repos and other government papers in the respective currencies. It also makes
investment in the form of short term deposits with different high rated and reputed
commercial banks and purchase of high rated sovereign/supranational/corporate
bonds. Forex Reserve & Treasury Management Department of BB performs the
operational functions regarding investment which is guided by investment policy set
by the BB’s Investment Committee headed by a Deputy Governor. The underlying
principle of the investment policy is to ensure the optimum return on investment with
minimum market risk.
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c) Exchange Rate Policy

Towards liberalization of foreign exchange transactions, a number of measures were
adopted since 1990s. Bangladeshi currency, the taka, was declared convertible on
current account transactions (as on 24th March 1994), in terms of Article VIII of IMF
Article of Agreement (1994). As Taka is not convertible in capital account, resident
owned capital is not freely transferable abroad. Bangladesh adopted Floating
Exchange Rate regime since 31st May 2003. Under the regime, BB does not interfere
in the determination of exchange rate, but operates the monetary policy prudently for
minimizing extreme swings in exchange rate to avoid adverse repercussion on the
domestic economy. In the forex market banks are free to buy and sale foreign
currency in the spot and also in the forward markets.
d) Interest Rate Policy
Under the Financial sector reform program, banks are free to charge/fix their deposit
(Bank /Financial Institutes) and Lending (Bank /Financial Institutes) rates other than
Export Credit. At present, Loans at reduced rates (7%) are provided for all sorts of
export credit since January 2004. With a view to controlling the price hike and
ensuring adequate supply of essential commodities, the rate of interest on loan for
import financing of rice, wheat, sugar, edible oil (crude and refined), chickpeas,
beans, lentils, onions, spices , dates and powder milk has been temporarily fixed to a
maximum of 12%.Now, banks can differentiate interest rate up to 3% considering
comparative risk elements involved among borrowers in same lending category. With
progressive deregulation of interest rates, banks have been advised to announce the
mid-rate of the limit (if any) for different sectors and the banks may change interest
1.5% more or less than the announced mid-rate on the basis of the comparative credit
risk. Recently Banks have been advised to upload their deposit and lending interest
rate in their respective website.
e) Capital Adequacy Policy
With a view to strengthening the capital base of banks and making them prepare for
the implementation of Basel-II Accord, banks are required to maintain Capital to
Risk-Weighted Assets ratio 10% at the minimum with core capital not less than 5%
effective from December 31, 2007. However, minimum capital requirement (paid up
capital and statutory reserve) for all banks will be Tk.200 crore as per Bank Company
(Amendment) Ordinance, 2007. Banks having capital shortfall will have to meet at
least 50% of the shortfall by June, 2008 and the rest by June, 2009.Revaluation
reserves of held to maturity (HTM) securities (up to 50% of the revaluation reserves)
has been added to the components of supplementary capital. Besides, 'Hedging the
price risk of commodity transactions' has been included in Short-term self liquidating
trade related contingencies.
f) Loan Classification and Provisioning Policy
In order to strengthen credit discipline and bring classification and provisioning
regulation in line with international standard, Bangladesh Bank issued a master
circular on loan classification and provisioning through BRPD circular no 5 dated
June 5, 2006. The revised policy covers an independent assessment of each loan on
the basis of objective criteria and qualitative factors such type of loans like continuous
loans, demand loan, term loan, fixed term loan and others short term loan.
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7. Categories of Loans

All loans and advances will be grouped into 4(four) categories for the purpose of
classification, namely (a) Continuous Loan (b) Demand Loan (c) Fixed Term Loan and (d)
Short-term Agricultural and Micro Credit.

a) Continuous Loan: The loan Accounts in which transactions may be made within certain
limit and have an expiry date for full adjustment will be treated as Continuous Loans.
Examples are: CC, OD etc.

b) Demand Loan: The loans that become repayable on demand by the bank will be treated as
Demand Loans. If any contingent or any other liabilities are turned to forced loans (i.e.
without any prior approval as regular loan) those too will be treated as Demand Loans. Such
as: Forced LIM, PAD, FBP, and IBP etc.

c) Fixed Term Loan: The loans, which are repayable within a specific time period under a
specific repayment schedule, will be treated as Fixed Term Loans.

d) Short-term Agricultural Credit: It will include the short-term credits as listed underthe
Annual Credit Programme issued by the Agricultural Credit Department of Bangladesh Bank.

8. Basis for Loan Classification

(a) Objective Criteria:

Any Continuous Loan if not repaid/renewed within the fixed expiry date for repayment will
be treated as past due/overdue from the following day of the expiry date. This loan will be
classified as Sub-standard if it remains past due/overdue for 6 months or beyond but less than
9 months, as `Doubtful' if for 9 months or beyond but less than 12 months and as `Bad-Debt'
if for 12months or beyond.

(b). Qualitative Judgment:

If any uncertainty or doubt arises in respect of recovery of any Continuous Loan, Demand
Loan or Fixed Term Loan, the same will have to be classified on the basis of qualitative
judgment be it classifiable or not on the basis of objective criteria. If any situational changes
occur in the stipulations in terms of which the loan was extended or if the capital of the
borrower is impaired due to adverse conditions or if the value of the securities decreases or if
the recovery of the loan becomes uncertain due to any other unfavorable situation, the loan
will have to be classified on the basis of qualitative judgment.

i. Accounting of the interest of classified loans:

If any loan or advance is classified as 'Sub-standard' and 'Doubtful', interest accrued on such
loan will be credited to Interest Suspense Account, instead of crediting the same to Income
Account. In case of rescheduled loans the unrealized interest, if any, will be credited to
Interest Suspense Account, instead of crediting the same to Income Account. As soon as any
loan or advance is classified as 'Bad Debt', charging of interest in the same account will
cease. In case of filing a law-suit for recovery of such loan, interest for the period till filing of
the suit can be charged in the loan account in order to file the same for the amount of
principal plus interest. But interest thus charged in the loan account has to be preserved in the
'Interest Suspense ' account. If any interest is charged in any 'Bad-Debt' account for any other
special reason, the same will be preserved in the 'Interest Suspense' account.
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ii. Policy for rescheduling loans

Experience shows that the existing system of loan rescheduling has created impediments in
the way of realizing defaulted loans. Specially, a tendency has been observed among the
defaulted borrowers to avail the opportunity of loan rescheduling again and again without any
definite business rationale.

iii. Policy for loans writes off In

course of conducting credit operations by banks the quality of a portion of their loan
portfolio, in many cases, deteriorates and uncertainty arises in realizing such loans and
advances. These loans are adversely classified as per existing rules and necessary provision
has to be made against such loans. Writing off bad loans having adequate provision is an
internationally accepted normal phenomenon in banking business. Owing to the reluctance of
banks in Bangladesh in resorting to this system their balance sheets are becoming
unnecessarily and artificially inflated. In order to avoid possible legal complications in
retaining the claims of the banks over the loans written off section 28 ka has been
incorporated in 2001 in the Bank Company Act, 1991. In this context the following policies
for writing off loans are being issued for compliance by banks.

iv. Large Loan Restructuring Scheme (LLRS)

In order to lessen the burden of potential risks involved in large loans Bangladesh Bank has
recently taken some steps to encourage the banks to go for inter-bank loan syndication or
consortium loans. Simultaneously banks are also sanctioning loans to large group or
enterprise separately on bilateral basis. Whenever such loans, provided by the banks without
syndication and on bilateral basis, are required to be restructured or rescheduled the same is
also done by the banks bilaterally with their borrowers.

a) The scheme will be known as "Large Loan Restructuring Scheme (LLRS)". The
objective of the scheme is to ensure a transparent mechanism for restructuring of
loans and to involve all the financing banks in the restructuring process. LLRS will
apply to the loans provided by more than one banks under or outside the consortium
arrangement with outstanding of Tk.50.00 crore and above. The scheme will not be
applicable for loans sanctioned by a single banking company.
b) A two tier committee will be constituted for implementation of the LLRS. The
constitution and functions of the committees will be as under:

9. Payment of Dividend by Bank Companies

Subject to compliance of the provisions of Section 22 of Bank Companies Act, 1991, Banks
generally apply to Bangladesh Bank for obtaining no-objection prior to allowing their
dividend. Decision has been adopted after reviewing the issue that from now on in terms of
the provisions incorporated in Bank Companies Act, 1991, banks can declare their dividend
without prior approval of Bangladesh Bank subject to compliance of the following
conditions: -

I. No dividend in cash or in bonus share (keeping in consideration the order issued on

11.09.01 by the Securities and Exchange Commission in respect of issuance of bonus
share) can be declared with short-fall in capital of the bank.
II. Banks shall have to comply with the following conditions in respect of maintenance
of provision:
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III. Provision against adversely classified loans shall have to be maintained at the rate(s)
specified by Bangladesh Bank;
IV. General provision @ 1% against unclassified loans shall have to be maintained;
V. Provision against 'Investment' and 'Other Assets' shall have to be maintained at the
rate(s) specified by Bangladesh Bank.
VI. Prior to declaration of dividend, the concerned bank shall have to obtain specifically a
certificate from the external auditor to this effect that provisions have been properly
maintained having followed/complied with the rules, regulations and norms issued by
Bangladesh Bank and there is no short-fall in respect of maintenance of capital
adequacy and provision.
VII. In case of declaring dividend in cash at higher rate i.e., beyond 20% , a sum equal to
the amount of dividend in excess of 20% shall have to be kept deposited in the
Dividend Equalization Account which shall be treated as `Core Capital' of the bank
VIII. If any post-facto review during on-sight inspection by Bangladesh Bank reveals any
deviation in compliance of the above conditions in declaring dividend of any year,
prior permission from Bangladesh Bank shall have to be obtained before declaration
of dividend for the next year.

10. Corporate Governance in Bank Management

Board of directors and management of a bank should comprise of the competent and
professionally skilled persons with a view to ensuring good and corporate governance in the
bank management. It is also inevitable to have specific demarcation of responsibilities and
authorities between these controlling bodies over bank's affairs. In absence of specific
division of responsibilities and authorities, even in spite of these bodies’ are being formed
with skilled and efficient persons, the desired goals of an institution cannot be achieved due
to lack of transparency and accountability of all concerned. Such kind of situation is more
undesirable in an institution like bank-company as it deals with huge public money and
interests of the depositors. In view of the above, rescinding the previous instructions the
specific demarcation of responsibilities and authorities among the board of directors, its
chairman, Chief Executive Officer (CEO) of and adviser to the private bank in respect of its
overall financial, operational and administrative policymaking and executive affairs including
overall business activities, internal control, human resources management and development
thereof, income and expenditure etc., along with lending and risk management issues, is
outlined as follows:-

a) Policy on Single Borrower Exposure

As a prudential measure intended for ensuring improved risk management through restriction
on credit concentration, Bangladesh Bank has from time to time advised the scheduled banks
in Bangladesh to fix limits on their large credit exposures and their exposures to single and
group borrowers.

b) Deposit and Insurance

The deposit insurance scheme (DIS) was introduced in Bangladesh in August 1984 to act as a
safety net for the depositors aiming at minimizing the risks of loss of depositors' fund with
banks in which all the commercial banks including foreign banks and the specialized banks
operating in Bangladesh are the member of this scheme by compulsion as provided under
Article of Bank Deposit Insurance Act 2000.
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c) Foreign Exchange System

On 24th March, 1994 Bangladesh Taka (domestic currency) was declared convertible for
current transactions in terms of Article VIII of the IMF Articles of Agreement. Consequent
to this, current external settlements for trade in goods and services and for amortization
payments on foreign borrowings can be made through banks authorized to deal in foreign
exchange, without prior central bank authorization. However, because resident owned capital
is not freely transferable abroad (Taka is not yet convertible on capital account), some current
settlements beyond certain indicative limits are subject to bonafides checks.

11. Acts, Laws, Regulations and Guidelines

A set of acts, laws, regulations, and guidelines have been enacted and promulgated time to
time since BB’s establishment which helped BB to perform its role as a central bank
particularly, to control and regulate country’s monetary and financial system. Among others,
important laws and acts include:

1. Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972)

2. Bank Company Act, 1991
3. The Negotiable Instruments Act, 1881
4. The Bankers’ Book Evidence Act, 1891
5. Foreign Exchange Regulations Act, 1947
6. Financial Institutions Act, 1993
7. Bank Deposit Insurance Act, 2000
8. Money Loan Court Act, 2003
9. Micro Credit Regulatory Authority Act, 2006
10. Money Laundering Prevention Act, 2009 and
11. Anti-terrorism Act, 2009

12. Functions of Bangladesh Bank:

Bangladesh Bank performs all the functions that a central bank of any country is expected to
perform, and such functions include maintaining the price stability through economic and
monetary policy measures, managing the country’s foreign exchange and the gold reserve
and regulating the banking sector of the country. Like all other central banks across the globe,
Bangladesh Bank is both the Government’s banker and the banker’s bank, a “Lender of the
Last Resort”. Bangladesh Bank, like most of the central banks of different countries,
exercises monopoly over the issue of currency and the banknotes. Except for the 1 and 2 taka
notes, it issues all other denominations of Bangladeshi Taka.

i. Core Functions
BB as the central bank of Bangladesh executes all the functions that a central bank
traditionally performs as elsewhere in the world. The core functions of BB are briefly
discussed as follows:

1. BB formulates and implements monetary policy aiming at stabilizing domestic

monetary value and maintaining competitive external per value of taka for fostering
growth and development of country’s productive resources in the best national
interest.
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2. BB formulates and implements intervention policies in the domestic money market

and foreign exchange market. BB intervenes the money market with some policy
instruments such as
i. Open market operation (treasury bills/bonds, repo, reverse repo auctions)
ii. Variations in reserve ratios such as cash reserve requirements (CRR) and
statutory liquidity ratio (SLR)
iii. Secondary trading
iv. Discounting rate/ bank rate and
v. Moral suasion
3. BB monitors and supervises scheduled banks and non-bank financial instructions
(NBFIs) that include off-site supervision and on-site supervision in order to enhance
the safety, soundness, and stability of the banking system to ensure banking
discipline, protect depositors’ interest and retain confidence in the banking system.
4. BB holds sole responsibility of the management of international reserve representing
aggregate of BB’s holding of gold, foreign exchange SDR and reserve position in the
IMF;
5. BB, as the central bank of Bangladesh reserves sole responsibility to issue bank note
6. BB performs as a clearing house for the scheduled banks to clear and settle inter-bank
payment arising through drawing cheque, drafts, bills, etc to one another.
7. BB acts as a banker to the government;
8. BB functions as a lender of the last resort for the government as well as for the
country’s scheduled banks;
9. BB acts as an advisor to the government;
10. BB directs the growth expediting programs for the national interest.

Additionally, BB’s functions include some other promotional activities such as development
of new instruments, guidelines for money and financial market participants, providing
training to the banks and NBFIs, monitoring and encouraging corporate social responsibilities
(CSR) executed by banks and NBFIs and so on.

ii. Others activities/ functions:

a) Bank of issue:
The issue of paper money is the most important function of a central bank. In fact the
privilege of note-issue was almost everywhere associated with the origin and development of
central banks. Central banks were generally known as ‘bank of issue’ until the beginning of
the twentieth century. The issue of money was always claimed to be a prerogative of the
government.

b) Banker, Agent & Adviser to the Government:

A central bank functions as a banker to the government of the country. In this capacity, it
conducts the banking accounts of government department, institutions & enterprises. It makes
short-term advances to the Government in normal condition and extra ordinary advances
during a depression, war or other emergency. It carries out the government’s transaction
involving purchase or sales of foreign currencies. As an adviser to the government the central
bank gives advice to the govt. on important matters of economic policy like deficit financing,
trade policy, foreign exchange policy etc.
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c) Custodian of the cash reserves of the commercial Bank:

The commercial banks in the country keep a part of their cash balance as deposits with
The central bank, either voluntarily because conversion or because of some legal

d) Collection and preservation of deposits:

All the scheduled commercial banks have to maintain a certain percentage of their deposits
into central bank. Central bank carefully monitor about this.

e) Acts as adviser and agent:

Central bank advises and directs commercial bank for the betterment of their operations of
banking activities/function. Besides it acts as the agent of scheduled bank in home and
abroad.

f) Credit risk management:

Risk is inherent in all aspects of a commercial operation, however for Banks and financial
institutions, credit risk is an essential factor that needs to be managed. Credit risk is the
possibility that a borrower or counter party will fail to meet its obligations in accordance with
agreed terms. Credit risk, therefore, arises from the bank’s dealings with or lending to
corporate, individuals, and other banks or financial institutions.
Credit risk management needs to be a robust process that enables banks to proactively
Manage loan portfolios in order to minimize losses and earn an acceptable level of return.

g) Exchange rate:

The exchange rates of Taka for inter-bank and customer transactions are set by the dealer
banks themselves, based on demand-supply interaction. The Bangladesh Bank is not present
in the market on a day-to-day basis and undertake purchase or sale transactions with the
dealer banks only as needed to maintain orderly market conditions.
The exchange rates are used as reference rates to purchase or sale transactions for Bangladesh
Bank with Government or different International Organization. But USD/BDT buying and
selling rates represent previous day inter bank market's highest and lowest exchange rates.

h) Interest rate:

Interest rate charged by a central bank for loans of reserve funds to commercial banks and
other financial intermediaries. The discount rate is one important indicator of the condition of
monetary policy in an economy. Because raising or lowering the discount rate alters the rates
that commercial banks charge on loans, adjustment of the discount rate is used as a tool to
combat recession and inflation.

i) LC monitoring:

Bangladesh Bank will ensure proper monitoring to achieve their informed immediately to the
LC issuing bank for necessary. The central Bank will monitor CSR adoption and CSR
performance of banks Purchase contract/LC in case of import into Bangladesh.
 13

j) Foreign investment:
The currency market, also known as the Foreign Exchange market, the disparity I
government investments and development funds given to each. Usually central bank monitor
closely international investment.

k) Issuance bond and treasury bills:

Treasury bills, notes and bonds are sold by the government through Bangladesh Bank
Treasury Department. These are the safest investments in the world, since they are backed by
the Government. Since they are so safe, they tend to have the lowest discount rates. Some
bonds like Premium Bond, Investment Bond, Prize bond. Basically, Bangladesh bank works
to raise money by issuing treasury bills and other debentures.

13. Bangladesh Bank’s Departments

a) Accounts & Budgeting Department.

The objectives of Accounts and Budgeting Department are to provide information on the
financial position, performance and change in financial position of Bangladesh Bank. To
maintain international standard all financial statements are prepared in accordance with
IAS & IFRS by the department. A&BD is providing relevant, reliable, and accurate
financial information of Bangladesh Bank to the concerned authorities. The department
captures all financial information from other departments/branch offices/ Sonali Bank etc,
and takes necessary action to keep and process this information properly for financial
reporting.
The major functions are appended below:

1. Maintain books of accounts relating to income and expenditure of Bangladesh Bank.

2. Prepare daily Trial Balance
3. Ensure IFRS/IAS in preparing and presenting Financial Statements.
4. Prepare Income Statements monthly, half-yearly and annually.
5. Prepare yearly Financial Statements in compliance with IAS / IFRS.
6. Prepare the weekly Statement of Affairs showing Assets and Liabilities of Banking &
Issue Department.
7. Reconcile the transactions of General Ledger & Subsidiary Ledger and reconcile inter-
branch transactions.
8. Prepare provisional and revised budget of the bank; Reallocation of funds within the
budget allocation.
9. Frame policies i.e. rules and regulations and issue instructions from time to time
pertaining to maintenance of books of accounts, submission of returns, presentation of
financial statements.
10. Maintain Government accounts; publish daily cash balance of the government account.
11. Verify & settle the transactions of Govt. accounts maintained by Sonali Bank
(commercial bank) as agent of Bangladesh Bank.
12. Communicate financial data with CGA and other stake holders of Government
transactions.
13. Prepare compliance reports on external & commercial audit reports.
14. Execute foreign currency transactions through back office.
15. Maintain foreign currency transaction & prepare statement of daily reserve position.
 14

16. Maintain accounts relating to Central Bank Strengthening Project and makes necessary
arrangement for withdrawal of fund & submission of reports/statements from and to
World Bank.

b) Anti-Money laundering Department

The main functions of Anti-Money Laundering Department are to take such actions as are
necessary to prevent and combat money laundering and terrorist financing. The legal
authority of this department emanates from the Money Laundering Prevention Act, 2009 and
Anti-Terrorism Act, 2009. Main functions of this Department are as follows

1. Receive and analyze Suspicious Transaction Reports (STRs) and Cash Transaction Reports
(CTRs) received from the banks and other reporting organizations.

2. Maintain a database of all ‘suspicious transaction reports’ and ‘cash transaction reports’
and related information.

3. Collect information from the reporting organizations about the transactions where there is
reasonable grounds to suspect that the transaction is involved with money laundering and
terrorist financing.

4. Issue necessary directions to reporting organizations for taking counter measures to combat
money laundering and terrorist financing activities from time to time.

5. On-site and off-site supervision of the reporting organizations to ensure compliance

ofrules/regulations/directives issued by the department.

6. Impart training for the officials of the reporting and other related organizations or
institutions as Bangladesh Bank considers necessary.

7. Provide information related to money laundering or suspicious transaction to the

investigating organization subject to compliance of existing laws.

8. The Financial Intelligence Unit (FIU) of the Anti-Money Laundering Department provides
and collects information to/from other FIUs under bilateral arrangements.

9. Work as the secretariat of Inter Agency task Force for Stolen Asset Recovery (StAR).

10. Carry out any other related functions to prevent and combat money laundering and
terrorist financing.

c) Banking Regulation and Policy Department

This department is basically responsible for issuance of prudential guidelines to ensure a

sound and stable banking system. The major areas covered are:

1. Determination of bank rate, capital adequacy requirements, asset classification and

provisioning standard and reserve requirements.

2. Review and drafting of banking statutes.

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3. Prescribing Criteria for corporate governance and insider lending and monitoring thereof.

4. Setting criteria for internal control and risk management system of banks and monitoring
thereof.

5. Determination of accounting standards and disclosure requirements for banks.

6. Issuance of license for opening of new bank and new business center of existing banks.

7. Effecting disciplinary action against Board of Directors/CEO of banks.

8. Monitoring of law suits lodged by and against banks relating to recovery of loans.

9. Attending to works relating to development of priority/special sectors of the economy.

10. Issuance of directives and compliance thereof under the Banking Companies Act, 1991.

d) Common services department

1. Hiring of Bank's accommodation.

2. Appointment of cleaning contractors.
3. Appointment of caterer in BBTA.
4. Works relating to purchase and maintenance of cars & other vehicles.
5. Hiring of staff buses to provide transport facilities to staff.
6. Management of the transport pool and telex/fax services.
7. Purchase of computer & accessories.
8. Purchase of mechanical & electrical equipment and maintenance thereof.
9. Construction of office and residential building and renovation maintenance work etc.
10. All civil, mechanical and electrical works related to office and residential Buildings.
11. Supply of curtain and maintenance thereof.
12. Supplying of drawing, estimates & specification of furniture to the Expenditure
Management Department as and when required.
13. Works related to purchase of land, all kinds of deeds, Agreements (about land) of
Bangladesh Bank.
14. Taking lease & buying of lands for Banks if necessary.
15. Selling of Bank's lands if necessary.
16. To remove complexity arising with regard to ownership of Banks lands.
17. Mutation of the land in favor of Banks, Payments of all lands taxes, City corporation
taxes for Office and Staff Quarters buildings.
e) Debt management department

Bangladesh Bank Order-1972, article 20 and Treasury rules-1998 (Appendix-1, Section-3)

empowers Bangladesh Bank for the issue and management of Government securities. As per
the above mentioned laws & regulations the Debt Management Department acts as the Debt
Manager of the Government in consultation with the Ministry of Finance of the Government
of Bangladesh. The main activity of the department is to manage the internal debt of
Government.
 16

The major functions of the Department:

1. Formulation of policies regarding issuance of Government securities.

2. Preparation of auction calendar for issuance of Treasury Bills and Treasury Bonds.

3. Handling operational and administrative matters pertaining to the issue of Special Treasury
Bills & Bonds.

4. Authorization, regulation and supervision of the Primary Dealer System.

5. Developing the market activities like introduction of new instruments, development of

clearing and settlement systems and widening of investor base for Government securities.

6. Promoting a well functioning debt securities market through building up of a long term
yield curve and benchmark securities.

7. Strengthening the institutional and legal framework with a view to attract more investment
in Govt. securities.

8. Clarification and implementation of policies relating to Sanchayapatras and

Sanchayabonds.

9. Taking measures especially against the fraud and forgery of non-marketable Government
securities.

10. Preparation of weekly Yield Curve for Treasury Bills and Treasury Bonds based on
primary auction.

f) Department of Banking Inspection

Bangladesh Bank, as the apex institution of banking sector in Bangladesh, is shouldering the
responsibility of supervising the activities of commercial banks/Non-Bank Financial.
Some key areas of comprehensive inspection are:-

1. Evaluation of assets giving emphasis on classification and provisioning

2. Assessing capital requirement
3. Verification of window-dressing relating to profit
4. Review of liquidity position regarding maintenance of SLR & CRR
5. Evaluation of loan operation, project financing
6. In-depth Analysis of large loans and concentration of credit
7. Detection of fraud, forgery and action taken thereof
8. Evaluation of management quality and customer services and
9.Compliance with various guidelines/instructions/circulars issued by Bangladesh Bank,
National Board of Revenue, Registrar of Joint Stock Companies and Securities and Exchange
Commission as well as respective banks/NBFIs
 17

Special and surprise inspections are those which are conducted beyond routine programs, viz.
scrutiny of interest subsidy and the cases relating to the sick industries. Special inspections
are conducted regularly on different NBFIs against specific complain received from various
quarters. In addition, jobs assigned by higher authorities are carried out by this department.
The Department also examines and monitors the compliance made by the banks/NBFIs,
whether their actions are adequate/ appropriate in respect of the implementation of the
recommendations made in inspection reports.

g) Department of financial institution and market

The financial institutions (FIs) are playing vital role in the development process of the
country's economy. With the passage of time, this particular sector has flourished not only in
terms of number but also in terms of providing differentiated financial facilities especially in
lease & housing financing areas. With the core objective of regulating and monitoring the
functions of these FIs comprehensively, Bangladesh Bank established the Financial
Institutions Department (FID) which was later renamed as Department of Financial
Institutions & Markets (DFIM). The department not only focuses on the development of the
FIs but also the development of some sorts of instruments (including bonds in private
placements) in the Financial Market under its jurisdiction.

The key functions of this department are addressed bellow:

1. Issuance of licenses to appropriate institutions under the Financial Institutions Act,

1993 & the Financial Institutions Regulation, 1994.
2. Formulating policy guidelines/directives/circulars for ensuring the soundness of
Financial Institutions in Bangladesh.
3. Conducting off-site supervision on financial institutions through collecting, analyzing
and monitoring various data/information on regular basis to ensure compliance of the
existing policies, regulations and practices by them.
4. Assessing financial and managerial soundness of financial institutions through
CAMEL rating.
5. Assessing and approving the issuance of Zero Coupon Bonds, Asset backed
Securitization Bonds, factoring etc. by different banks and financial institutions.
6. Conducting special inspection on core risk management issues (Asset-liability
Management, Credit Risk Management, Internal Control & Compliance, and Information
& Communication Technology Management).

h) Department of printing and publication

The Department of Printing and Publications mainly deals with printing and distributions
(within country and abroad) of all types of publications of the bank. It prepares paper clipping
and publishes monthly house journal, `Bangladesh Bank Parikrama'. it also liaises with
Newspapers, Radio, Television and Mass Media and arranges press briefing/press
conferences for the bank authorities. It issues press releases, clarifications and rejoinders,
advertisement on behalf of Bangladesh bank. Besides, the department deals with installation
and maintenance of murals and paintings in different offices of the bank.
 18

i) Department of expenditure management

Brief description of the functions of various Sections of EMD is outlined below:

1. General Administration of the Department

2. Miscellaneous Payments Section

(i) Payment of donation and subscriptions to local and foreign Institutions;

(ii) Arrangement for supply of liveries to eligible C & D category staff

(iii) Payment of coolie/labor charges, washing charges

(iv) Payment of paper bills, legal bills, advertisement bills, postal/courier bills/
(ornate), contractor's bills etc.

(v) Payment of cash money for buying presentation and crest for staff/officers of the
Bank who proceeded on LPR

(vi) Payment of local conveyance bills, pocket money, hostel charges for training
purposes;

(vii) Payment of honorarium for members of the Board of Directors and other experts;

(viii) Payment All sorts of entertainment bills

3. Dead Stock and Stationery Section

(i)Procurement & maintenance of records of dead stock and stationery articles

(ii)Maintenance and repair of furniture and fixtures

(iii)Disposal/sale of old/broken dead stock articles

(iv)Supply of all sorts of stationery articles to staff/officer

4. Provident Funds Section

(i)Maintenance of contributory Provident Funds Accounts and SDL Scheme

(ii)Payment of gratuity, death benefits etc

(iii)Sanction of PF Advance
 19

(iv)Arrangement for holding Administrator's meeting

(v)Investment of Funds.

5. Pension Section

(i)Maintenance of General Provident Fund Accounts of employee

(ii)Payment of Commutation money, death benefits etc

(iii)Fixation of monthly pension and supply of pension books to pensioners etc

(iv)Sanction of GPF Advance

(v)Investment of Funds

6. Telephone Section
(i)Arrangement for connection and installation of official/residential /PABX
/Direct Telephones, Fax, Telex, E-mail, Internet, SWIFT net connectivity etc

(ii)Procurement of Land Telephone/Mobile set/Fax/Telex /Franking machines and

related accessories

(iii) Repairing of Telephone Fax, Telex, etc

(iv)Payment of monthly Mobile/Telephone/Fax/Telex/Internet bills

(v) Maintenance of PABX and Intercom System

7. Medical Section

(i)Make arrangement for Health Insurance policy and renewal of the policy for
ED and above official, make payment of premium

(ii)Payment of Health insurance Bills in case of foreign tours

8. Travelling Allowance Bills Section.

(i)Make advances to employees for travelling home and abroad

(ii)Adjustment of T.A. Bills

(iii)Maintenance of personal accident insurance policy

 20

9. Expenditure Section

(i)Work relating to pest control etc. of branch offices;

(ii)Sanction of death benefits and compassionate allowances to the members of

the deceased employees of offices (other than Head Office);

(iii) Payment of monthly, quarterly, half yearly and Yearly medical allowance.

10. Salaries Section

(i)Payment of salaries & allowances;

(ii)Disbursement of festival and incentive bonus

(iii)Payment of overtime bills, stipend and leave encashment

(iv)Payment for compassionate allowance for the members of the deceased

employees of Head Office

(v)Preparation of Income Tax Assessment sheet on behalf of the employees &

payment there of

11.Advance Section

(i)Sanctioning of various staff advances under Staff Advance Scheme

(ii)Recovery of staff advances

(iii)Calculation of interest of staff advances

(iv)To arrange for conducting physical inspection of land/constructed

houses/Flats /Buildings etc. purchased under house building advance scheme

(v)Maintenance of documents under safe custody

(vi)Monitor court cases related to different types of advances

j) Department of foreign exchange service

1. Dealing with the cases of shares transferred to resident by the non-resident and accord
permission for outward remittance of the sales proceeds of the shares held by the non-
residents of a company incorporated in Bangladesh not listed with Stock Exchange after
determining per share value.
 21

2. Dealing with the cases of outward remittances in connection with opening of

representative office in abroad by Bangladeshi companies/firms.
3. Dealing with the cases of share lending to a non-resident by the resident as per Section
18(2) of the Foreign Exchange Regulations Act, 1947.
4. Dealing with the cases of outward remittances to meet necessary capital/revenue
expenditure to establish exchange houses in abroad by Bangladeshi Banks.
5. Dealing with the cases of capital investment/equity participation in abroad by a
Bangladeshi individual/firm.
6. Monitoring of foreign portfolio investment of foreign investors in Bangladesh through
NITA.
7. Monitoring the activities of subsidiaries of Bangladeshi companies in abroad established
under the directives stated in Para 23 of Ch-16 of the Guidelines for Foreign Exchange
Transactions.
8. To accord permission under Section 18A of the Foreign Exchange Regulation 1947 to the
individuals/firms/companies to work as agents in Bangladesh of non-resident
companies/firms and monitoring repatriation or receiving commission as agent.
9. Releasing funds in favor of Bangladeshi individuals or firms earned as consulting fees or
other fees without obtaining prior permission from Bangladesh Bank.
10. To accord permission under Section 18A of Foreign Exchange Regulation Act, 1947 for
foreign nationals employed in Bangladesh (those who are employed in branch/liaison offices
of foreign companies/firms).
11. To accord permission for opening branch/liaison Office in Bangladesh by foreign entities
including airlines, companies, firms under Section 18B of Foreign Exchange Regulation Act,
1947 and monitoring the remittance as sales proceeds thereof.
12. Post-facto checking of profit remittance of branch offices of foreign banks.
13. Post-facto checking of profit remittance of branch offices of foreign companies/firms.
14. Post-facto checking of dividend remittance of foreign share holders of Bangladeshi
companies.
15. Post-facto checking of remittance of Royalty/technical know-how/management fees,
audit fees, travelers' fees, software fees (training, installation, purchase), travel agents' fees,
global health care fees, expatriate's salary, etc.
16. Post-facto checking of remittance of Management fees/salaries/insurance premium, etc.
of foreign expatriate of the international hotels, e.g. Pan Pacific Sonargaon Hotel, Hotel
Sheraton, Hotel Radisson and Westin.
17. To accord permission for remittance of Management fees/salaries/insurance premium,
etc. of foreign expatriate of the international hotel Westin.
18. Formulation of policy/guidelines for service sector as a whole related to permission under
Section 18A of Foreign Exchange Regulations Act, 1947.
19. Examination of draft bilateral investment promotion agreements with different countries
and international agencies relating to investment and providing opinion as asked by different
government authorities on the issue.
20. Providing opinion to various government authorities on service sector industry and its
policy matters.
21. Preparing summary statement for the Honorable Governor on the proposals of private
sector foreign borrowing sent by the Board of Investment to the Governor as the Chairman of
the Private Foreign Loan Scrutiny Committee.
22. Miscellaneous.
 22

k) Department of foreign exchange policy

The FEPD is responsible for formulating and implementing policies related to foreign
exchange and makes institutional arrangements for receipts and payments and settlements
with the external world in terms of the authority vested in Bangladesh Bank by the Foreign
Exchange Regulation (FER) Act. 1947 as adapted in Bangladesh specifically:

1. It sets the criteria and conditions for holding and dealing in foreign exchange by resident
entities and issues licenses to Authorized Dealers and Money Changers.

2. It sets supervisory and monitoring guidelines for offsite and onsite supervision of foreign
exchange transactions and formulates & implements instructions regulating inflows and
outflows on external settlements in both the current and capital accounts, including external
borrowings and amortization payments.

3. It formulates policies and makes institutional arrangements in regards to exchange rates.

4. It maintains liaison between the Bangladesh Government and foreign bilateral/multilateral

agencies on the issues of
(I) external trade
(II) receipt and utilization of official grants/Loans
(III) private inflows of remittances, etc.

5. It initiates legal proceedings to address violations of Foreign Exchange Regulation Act-

1947 as adapted in Bangladesh.

6. It monitors reporting of foreign exchange receipts against exported goods and receipt of
goods against payment from Bangladesh.

7. It supervises and monitors Authorised Dealers (AD) and ensures compliance of ADs with
the prudential supervisory limits on their open exchange positions.

l) Department of governor’s secretariat

1. The department attends to all matters relating to the meetings of Board of Directors,
Executive Committee and Audit Committee. Besides, it arranges meeting of Executive
Management Team.

2. It attends to all matters relating to participation of Bank’s top Executives (Governor and
Deputy Governors) in various Meetings, Seminars, Conferences, Symposia and Workshops
etc. both in home and abroad.

3. It prepares different statements (Monthly, Half-yearly and Yearly) regarding Bank’s

information and sends those to the concerned ministry.

4. The department allots 'meeting room' for holding meetings organized by different
departments of the Bank.
 23

m) Department of information system development

The major objective of the Information Systems Development Department is raising the
overall efficiency of Bangladesh Bank in performing its functions as the central bank by
improving the flow of up to date and accurate information related to monetary, financial and
associated sectors of the economy. With this end in view this department takes necessary
steps to successfully computerise the jobs (Export Development Fund Management,
CAMELS Rating, FIU Reporting, Government Securities, FC Revaluation, Banking
Statistics, Web-based L/C Monitoring, ForEx Clearing etc.) of different departments of the
bank.

This department prepares necessary systems for automation of jobs (Employee Advances,
Payroll, Income Tax, CPF/GPF, Local Currency Clearing etc.) of different departments as
well as the branch offices of the bank, provides necessary training and extends all sorts of
assistance for successful automation of the systems.This department is responsible for
development, maintenance and implementation of the clearing systems in the branch offices
of Bangladesh Bank.

This department is also responsible for the operation and maintenance and performance
tuning of the AS/400 midrange computer system and ensuring the integrity and security of
the data well as ICT Business Continuity Planning (BCP) related activities for the Bank. This
department does necessary planning for computerisation of the bank.

This department is also extending all necessary support to implement on-line banking,
Enterprise Data Warehouse (EDW) and bank wide network (LAN and WAN) under the
Central Bank Strengthening Project and would be responsible for the efficient running of
those systems in the bank.

n) Investment promotion and financing facility project

Bangladesh Bank has been implementing the Investment Promotion & Financing Facility
Project (IPFF) on behalf of Finance Division, Ministry of Finance with the financial
assistance of the International Development Association (IDA). The main objectives of IPFF
are:
1. to supplement the resources of Bangladesh financial markets to provide term finance, for
infrastructure and other investment projects beyond the capacity of local financial
institutions; and

2. to promote the role of private sector entrepreneurs in the development of capital projects,
especially infrastructure.

Under IPFF, government-approved private infrastructure development projects which are

developed through PPP basis are being financed through selected participating banks /
financial institutions (PFIs). Eligible sectors to be financed under IPFF are:

• port development (sea, river and land)

• environmental, industrial and solid waste management
• highways and expressways including flyovers,
 24

• water supply and distribution sewerage and drainage

• industrial estates and park development etc

o) Department of law

1. To provide legal opinion to various operational departments of Bangladesh Bank (BB) in

relation to the legal issues arising in the performance of their day to day activities.

2. To manage and conduct bank's litigation by engaging appropriate lawyer.

3. To check and verify the draft affidavit in opposition and brief advocates, as and when
required.

4. To maintain computerized database of cases filed by/against BB.

5. To liaise and build relationships with lawyers, various departments, ministries, banks and
financial institutions.

6. To respond to the legal notices served on BB.

7. To obtain expert opinion from specialist lawyers, retainers and panel lawyers on different
legal matters relating to various cases of BB.

8. To vet the chain of documents, Memorandum of Association, Articles of Association,

Memorandum of Understanding, Contracts /Agreements etc.

9. To monitor pending court cases and take necessary steps.

10. To scrutinize the bills of advocates related to the bank's cases and arrange for payment.

11. To organize "In house training" for the officers of the various departments and also for
the officers of Law Department for their capacity building.

12. To enlist panel/specialist lawyers.

p) Department of policy analysis

The goal of the Policy Analysis Unit (PAU) is to upgrade the capacity of research and policy
analysis at the Bangladesh Bank (BB) in order to assist BB in promoting and maintaining
macroeconomic and price stability conducive to rapid growth and sustainable poverty
reduction. In order to fulfill its goal following functions are accomplished in the Unit.

1. The Unit spearheads research on all aspects of macroeconomics, including monetary policy
and central banking, with emphasis on identifying interactions among and transmission
mechanisms of different policies to assess the impact of various policy measures on the
economy and recommend appropriate policy adjustments. The principal goal of PAU
activities is to provide policy advice to BB senior management.
 25

2. In order to disseminate information on recent developments in the monetary sector and the
country’s macro-economy and contribute toward improved understanding of the monetary
and financial policy stance of BB, the Unit undertakes the preparation of Bangladesh Bank
Quarterly and two bi-annual flagship publications, Monetary Policy Review and Financial
Sector Review on a regular basis. The analytical and research work of PAU are disseminated
through Policy Notes and Working Papers.

3. The activities of PAU also cover the undertaking of extensive training programs,
conducted by leading professionals from home and abroad, on issues of policy-relevant
research and analytical techniques to upgrade the in-house capacity of professionals in PAU
as well as in BB and other relevant organizations.

4. Toward ensuring timely dissemination of research findings and in order to generate

awareness and encourage discussion on issues of monetary and related policies and its
interaction with public and private sector developments, the Unit conducts a regular
seminar/workshop series for the researchers of PAU, BB and other organizations.

q) Department of security management

Security Management Department was established in 1985 to ensure the overall security of
Bangladesh Bank. At present this department performs it's duty headed by a General
Manager.

This department deals with planning, implementation of security plan through placement of
security staff and reviewing of the overall security arrangement for the Banks properties,
premises, treasures and documents. For protection of vault appropriate number of police force
are kept in reserve and placed in appropriate security points with the approval of police
authority.

Officers of the Department perform different official formalities Administrative function,

Supervision and other Official and field works as per Bank's rules and regulations.

r) Special studies cell

The Cell has successfully prepared the Draft of “Comprehensive Rules of Business” for
Bangladesh Bank which is now being reviewed. Lunched working in December, 2002 for the
purpose of updating the followings:

1. Banking Department Manual

2. Issue Department Manual
3. Central Stationery Department Manual
4. Building Payment Section Manual
5. Common Services Organization Manual
6. Manual of Office Procedure
7. Manual for Procedure and Method of Store Keeping
 26

s) Department of agricultural credit

Agricultural Credit and Special Programmes Department (ACSPD) is entrusted with the
responsibilities of formulating national agricultural credit policy and its implementation. It
also monitors and reviews the agricultural credit disbursement and recovery position of the
commercial banks and specialised banks. The department also arranges refinance facilities to
two specialised banks e.g. Bangadesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank
(RAKUB) against Govt. guarantee. It also provides Demand Loan to the aforesaid two banks
as and when approached by them. The department collects information and maintains data in
respect of agricultural credit which are supplied to the Ministries of the Government,
International bodies like International Monetary Fund (IMF), World Bank (WB), Asian
Development Bank (ADB) etc. as and when required.

Work’s relating to formulation of policies and implementation of agricultural projects

financed by Development Partners, Government of Bangladesh and Bangadesh Bank are also
done by this Department. Monitoring the ongoing projects, extending refinance facilities to
the participating banks against their disbursement to target groups, coordinating disbursement
and recovery activities of these banks and arranging repayment of project loan to government
and Development Partners as per amortization schedules are the other functions of this
department. The department also provides loan facilities to some specialised banks like
Grameen Bank, Ansar VDP Unnayan Bank etc. against government guarantee for extension
of micro credit services to the rural people.

t) Bangladesh Bank Training Academy

Bangladesh Bank Training Academy (BBTA) will perform diversified activities in the light
of its objectives. The functions of BBTA are as follows:
i) To keep constant touch and work in collaboration with the Training &
Development Wing of HRD.
ii) To formulate and design Annual Training Plan, course calendar, syllabus,
course contents, to review curriculum periodically, to design need based
training for the targeted people and ensure successful implementation of the
training courses month wise.
iii) To arrange courses/workshop/seminar on the request of different department/
offices of Bangladesh Bank and outside organizations.
iv) To arrange Foundation Training Course for the newly recruited Assistant
Directors of Bangladesh Bank.
v) To impart training to Bangladesh Bank employees/officers, as well as
scheduled Bank/Financial institution/Non banking financial institution/NGO
personnel
vi) To invite experts/resource persons in different training courses with a view to
imparting quality training.
vii) To give special emphasis on computer and IT training to cope with the
technological advancement and financial innovations.
viii) To give emphasis on developing English Language skill of the Bangladesh
Bank officials
ix) To enrich the library in BBTA.
 27

u) Central bank strengthening project

Bangladesh Bank has been implementing the Central Bank Strengthening Project (CBSP)
with financial assistance of the International Development Association (IDA). The objective
of the project is to develop Bangladesh Bank into an effective and modern central bank
through strengthening its capability to play due role as the country's monetary authority as
well as regulatory and supervisory authority of the banking sector.
CBSP has the following major components and sub-components:
1. Strengthening the Legal Framework
2. Reorganization and Modernization of Bangladesh Bank
a. Functional Reorganization
b. Automation of BB
c. Human Resource Development
3. Capacity Building
a. Strengthening Research Department
b. Strengthening Prudential Regulation and Supervision
c. Strengthening Accounting and Auditing

v) Credit Union Bureau

Under the existing laws the banks and financial institutions are not permitted to extend new
credit facilities or renew existing credit facilities to default borrowers. Also defaulters are not
allowed to participate in parliamentary election, float shares in the capital market, and qualify
for directorship of banks /financial institutions, insurance companies and CIP (Commercially
Important Person) status. In order to facilitate the banks and financial institutions to ascertain
the full credit exposure of the borrowers/owners fully automated Credit Information Bureau
was established in 1992. CIB collects credit related information from banks on monthly
(having outstanding balance of TK.10 million and above) and quarterly (having outstanding
balance of TK. 50 thousand and above but below TK. 10 million) basis. Same informations
are also collected from financial institutions (having outstanding balance of TK.50 thousand
and above) on quarterly basis. The classified credit card having outstanding balance of TK.10
thousand and above are also collected on quarterly basis. On the basis of these collected data
CIB data base is created and updated. On the basis of the data base CIB supply full credit
exposure of the related borrowers/owners as per request of the banks/financial institutions on
regular basis.

w) Department of currency management and payment system

Currency management and Payment Systems is one of the core central banking functions. In
compliance with the Bangladesh Bank Order, 1972 the Department of Currency Management
and Payment System was organized to procure currency notes and coins and to arrange
steady and prompt supply of the same as per needs of the country.

1. Currency Management Division's functions:

a. To procure currency notes and coins of different denominations.
b. To ensure steady and smooth supply of bank notes and coins.
c. To oversee and review policies relating to Cash Department from time to time.
d. To issue guidelines in respect of disposal of soiled and non-issue notes.
e. To issue policy guidelines in respect of re-issue notes.
 28

f. To issue policy guidelines in order to withdraw and payment of exchange value of torn,
defective and soiled notes.
g. To provide logistic support for smooth functioning of Cash Department.
h. To ensure standard policy measures in order to combat counterfeiting of currency notes
and to create awareness about forged notes.
i. To ensure safe arrangements for preserving and movement of government treasury

2. Payment System's Division's functions:

Payment Systems Division, DCMPS is working for building up an efficient, secured and
reliable national Payment Systems in Bangladesh being within the scope of Remittance and
Payments Partnership (RPP) Project. RPP, a DFID grant funded project, was undertaken in
October 2006 DFID for modernizing the existing Payment Systems. The goal of this project
is to build safe, faster and efficient remittances, to establish Automated Clearing House
consistent with international standards and a sustainable payment system in Bangladesh.
Payment Systems Division (PSD) is entrusted with the responsibilities of achieving project
objectives with the help of international payment consultants. Bangladesh Bank has already
completed installation & testing of Data Center (DC) of Bangladesh Automated Clearing
House (BACH) at Motijheel bank premise & its Disaster Recovery (DR) Center at Mirpur
and established connectivity between banks & the DC/DR Center. It is expected that BACH
will go live in Dhaka City within a short span of time. Bangladesh Bank will be able to
establish an efficient payment and settlement system consistent with international standards.
PSD's current activities are as follows:
a. Oversee the existing clearing house in Dhaka and other 7 branch offices of Bangladesh
Bank
b. Formulating National Payment and Settlement Systems Strategy (NPSS) for
modernizing country's payment and settlement system.
c. Preparing required legal and regulatory framework for NPSS.
d. Communicating and assisting the commercial banks and other participants for their
readiness.
e. Standardization of payment instruments and allocation of newly formatted routing
numbers to the bank-branches and other participants.

x) Department of off-site supervision

To enhance the safety, soundness and stability of the banking system by overseeing
individual banks on the basis of various returns/financial statements and ensure banking
discipline as well as depositor's interest and confidence in the banking system.

1. Performance analysis and monitoring of the scheduled banks on the basis of CAMELS.
Banks having weaknesses in any areas of operation are brought under Early Warning
category or Problem Bank category and monitored very closely to improve their
performance.

2. Monitoring maintenance of Statutory Liquidity Requirements (CRR, SLR) of scheduled

banks. Imposing and realising penal interest and penalty for the shortfall of CRR and SLR.

3. Assessment and monitoring of Capital Adequacy of banks. Review and monitoring of

loans/deposits of Government and state owned Enterprises with scheduled banks.
 29

4. Monitoring the overall credit, deposit, investment and liquidity position of the banking
system.

5. Monitoring the activities of the state owned commercial Banks (Sonali Bank Ltd.; Janata
Bank Ltd. Agrani Bank Ltd. and Rupali Bank Ltd.) and two specialized banks (Bangladesh
Krishi Bank and Rajshahi Krishi Unnayan Bank) in accordance with the conditions of MOU
signed by the respective banks.

6. Review of the minutes of the Board of Directors, Executive Committee, Board Audit
Committee meetings and the audited Financial Statements of scheduled banks and advising
the banks to take necessary remedial measures theiragainst.

7. Provide deposit insurance coverage and safety nets to protect depositor's interest and thus
enhance market discipline and systemic stability.

8. Review of the Large Loan portfolio of the scheduled banks.

9. Maintaining asset/liability of the liquidated banks and dealing with the court cases relating
to the properties of liquidated banks, as official liquidator.

10. Attending various complaints against the banks (including those relating to Bank
Guarantees.)

y) Equity and Entrepreneurship Fund Unit

Equity and Entrepreneurship Fund (EEF) was introduced in the fiscal year 2000-2001 to
encourage the investors to invest in the risky but otherwise promising two sectors, viz
software industry and food processing and agro-based industry. Bangladesh bank is
authorized by the Government to manage the EEF.

1. Objectives of EEF
2. Eligibility for EEF assistance
3. How much EEF assistance can you get
4. What to do by the entrepreneurs
5. Steps to be taken by the Bank/FI
6. Investment Agreement
7. Application form for EEF

z) Foreign exchange inspection and vigilance department

Foreign Exchange Inspection and Vigilance Department started its journey as a division on 6
June 2006 with the objective of ensuring the risk management of Foreign Exchange
transactions and taking measures with a view to minimizing fraud and forgery in our banking
industry. The division was upgraded as a full-fledged Department on 25 November 2007 with
an expanded purview on the banking industry.

Foreign Exchange Inspection and Vigilance Department (FEIVD) conducts the following
inspections:
 30

1. Comprehensive Inspection on 'Foreign Trade and Foreign Exchange Transaction' of

AD branches and Head offices of Scheduled banks as per Annual Inspection Program.
2. Inspections on Foreign Exchange Risk Management, which covers dealing room
operations of head office of the commercial banks.
3. Special inspections on specific areas, complaints (received from different public and
private agencies and individuals), media reports etc.
4. To examine the veracity of findings/ irregularities presented in the inspection report.
5. To collect data from various sources on banking and financial activities

aa) Department of foreign exchange operation

The Foreign Exchange Operation Department is entrusted with the supervision and
monitoring of all the activities in connection with foreign exchange operations. The work of
this department is done in terms of Foreign Exchange Regulations Act, 1947 as adapted in
Bangladesh and Guidelines for Foreign Exchange Transaction (GFET)
The activities of the department are as follows:

1. Taking actions against objections under nonpayment of bills of local & back to back
L/C.
2. Preparation of monthly consolidated report on Overdue Bill of Entry as collected from
AD bank branches.
3. Maintaining Database of Overdue Bill of Entry.
4. Waiving Overdue Bill of Entry.
5. Revalidation of LCAF value.
6. Taking actions against of nonpayment of local L/C.
7. Taking actions against PSI objections.
8. Approval of Re-export/Re-import matters.
9. Collection of various statements related to Foreign Exchange Transactions from
scheduled banks.
10. Collection of various statements from different agents who earns foreign currency as
commission.
11. Re-attestation and Post facto checking on Export Realization Certificate.
12. All works related to Nonresident Blocked accounts.
13. Collection of statements of money changers on monthly basis, Verification and renewal
of license.
14. Renewal of limited money changing license.
bb) Department of foreign reserve

1 Management, maintenance and investment of foreign exchange reserve held by Bangladesh

Bank
2 Maintenance of Clearing Accounts of authorized dealers in foreign exchange
3 Making transactions in foreign currencies with authorized dealers on cash or spot basis
4 Settlement of transactions among ACU member countries through ACU mechanism
5 Repayment of Government external debt including debt servicing and arrangement of
miscellaneous outward remittances to meet Government forex requirement
6 Keeping of the accounts for the funds/ loans received from donors and disbursement
thereof, also collection of FC cheques on behalf of Government
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cc) Department of human resource

Human Resources Department (HRD) manages centrally the manpower of the bank at work
places through resourcing, placement, training, performance, discipline etc. It emphasizes on
strategic and value added Human Resources (HR) activities involving the designing, updating
and amending HR polices and procedures for continuous improvement. To execute the above
mentioned issues – HRD’s functions are accomplished under the following divisions:

1. Planning and Resourcing Division.

2. Development and Benefit Division.
3. Performance and Reward Division.

dd) Department of internal audit

Internal Audit is to provide independent, objective assurance and consulting services

designed to add value and improve the Bangladesh Bank operations. It is to help Bangladesh
Bank (the Bank) accomplish its objectives by bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of risk management, control, and governance
processes. The scope of work of the Department is to determine whether the Bank's network
of risk management, control, and governance processes, as designed and represented by
management, is adequate and functioning in a manner to ensure:

1. Risks are appropriately identified and managed.

2. Interaction with the various governance groups occurs as needed.

3. Significant financial, managerial and operating information is accurate, reliable, and

timely.

4. Employees’ actions are in compliance with policies, standards, procedures, and

applicable laws and regulations.

5. Resources are acquired economically, used efficiently, and adequately protected.

6. Programs, plans, and objectives are achieved.

7. Quality and continuous improvement are fostered in the Bank's control process.

8. Significant legislative or regulatory issues impacting the Bank are recognized and
addressed appropriately.

ee) Department of IT Operation and Communication

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IT Operation and Communication Department undertakes various functions in order to

facilitate computer/data entry operation, maintenance of bank's hardware & software (except
midrange system), so that computer use can be optimized. It also provides network
communication, administration and maintenance support to different departments and branch
offices so as to enhance efficiency of operation and integration. The department involves in
planning and evaluation of hardware and software of Bangladesh Bank.

The department is working towards office automation of various departments and branch
offices of Bangladesh Bank including development of systems and programs on personnel
management, matching of EXP forms, transport management, library management, medical
systems etc. It is responsible for developing and maintaining systems and programs to
process data of various periodicities on international trades and services, exchange rates,
loans and grants, foreign assets and liabilities, share price index etc.

The department is responsible for developing and maintaining the website of Bangladesh
Bank. It also involves in auditing ICT operation activities of Bangladesh Bank and all other
banks and maintenance of related policy and guideline.

Apart from these in association with Bangladesh Bank Training Academy, it also imparts
regular training on computer orientation and software packages.

ff) Department of monetary policy

1. The Monetary Policy Department (MPD) formulates monetary policy in the form of
projected growth path of broad money M2 as an intermediate target, consistent with
projections for GDP growth and targeted limit for price inflation over each fiscal year.
Reserve money (currency in circulation and balances of banks with the Bangladesh Bank)
is used as a main instrument for implementation of monetary policy, in the annual reserve
money program formulated by MPD.
2. The MPD prepares Monetary Policy Statement - the half-yearly release of Bangladesh
Bank’s monetary policy stance that is going to be adopted in next six months. The policy
stance has been set based on the assessment of the real sector, external sector, and fiscal
and monetary developments in preceding six months and the outlook for near future.
3. The MPD prepares “The Major Economic Indicators: Monthly Update” for reviewing
current economic situations of Bangladesh for the meeting of Board of Directors of
Bangladesh Bank.
4. The MPD prepares background papers for the auction committee's decisions in the
meetings for auction of government treasury bills and treasury bonds. These background
papers cover ongoing developments in the overall liquidity situation, government's
borrowings from the banking system, various components of broad money, reserve
money and macro-economic indicators.
5. Since introduction of repurchase agreement (Repo) and reverse repo MPD has been
participating as one of the members of the auction committee. It supplies the required
statistics/information to the committee in taking decision and issues press release on the
auction result on regular basis.
6. The MPD prepares statements on liquidity forecasting on daily basis for maintaining
the excess reserves as well as targeted path of reserve money. The MPD analyses
borrowing of scheduled banks from Bangladesh Bank on monthly basis.
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7. The MPD works out the nominal and real effective exchange rate indices on
continuous basis, with a view to monitoring the external competitiveness of Taka vis-à-
vis other major currencies.
8. The MPD prepares fortnightly and monthly reviews of the current economic situation
covering developments in real and financial sector of the economy.
9. The MPD monitors net international reserves (NIR), reserve money, broad money and
statement on domestic financing with a view to see if any of that variable deviates from
the set target.

The MPD conducts study on monetary and exchange rate policies and other economic issues.
It also provides comments and makes recommendations on various issues like money market,
exchange rate, national budget and other international financial affairs.

gg)Department of research

The main function of the research Department is to prepare necessary reports and carry out
research works on an ongoing basis for providing guidelines for policymaking of the higher
authority and to help formulate country’s monetary policy in the context of economic growth,
balance of payments position and government fiscal stance with a view to stabilizing
inflation.

This Department coordinates the IMF country consultations with comprehensive

macroeconomic data and information on different sectors of the economy to the visiting IMF
missions for their surveillance and eventual negotiations for financial and technical
assistance.

The Department prepares the Bank’s Annual Report and the Quarterly Bangladesh Bank
Bulletin. It also prepares the full draft of the “Resume of the Activities of Banks and
Financial Institutions” published annually by the Ministry of Finance. In adition, it prepares
and circulates on a regular basis weekly, monthly, quarterly, half-yearly and annual
reviews/statements on money supply, reserve money and domestic credit situation, balance of
payments, government revenue income and expenditure, food price situation, CPI inflation
etc. and undertakes special studies or periodic research on different economic issues as per
defined requirement from time to time. In addition, the Department makes
recommendations/comments on various economic issues demanded by the IMF or
government organizations and also provides materials with valuable recommendations for
national budget preparation and replies to the questionnaire of the parliament. The
Department also prepares working papers/quarterly reviews and provides data/materials on
money, credit and exchange rate for Coordination Council regularly. The Department keeps
the top executives of the Bank fully abreast of the latest economic developments. Domestic
and international economic developments are brought within the purview of comprehensive
reports and reviews, which are submitted for perusal of the Bank’s Board of Directors and
senior executives. Frequent references on important economic issues received by the Bank
from the Ministry of Finance, Planning Commission and other ministries of the Government
for examination and opinion are also dealt with by the Department.
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hh)Department of SME and special programs

1. Refinance Schemes for SME:

i. Bangladesh Bank Fund

ii .ADB Fund

iii. EGBMP (IDA) Fund

iv .Women Entrepreneurs Refinance Scheme

2.Disbursement of ADB Fund Tk. 660.00 cr. (recently signed agreement)

3. Housing Refinance Scheme
4. Agro-processing Refinance Scheme
5. Monitoring of SME loan disbursement, recovery etc
6. Credit Guarantee Scheme
7.Development of policy and preparation of statement regarding Salt Loan, Weaver Loan,
Silk Industry Loan, Industrial Loan
8. Voluntary Retirement Scheme (VRS)
9. Sick Industry

ii)Department of statistics

The Department is primarily engaged in collecting and compiling data of various periodicity
on money and banking, international trade, monetary accounts, balance of payments,
exchange rates, external reserves, foreign direct investment and private external debt.Besides
the Annual Report. Bangladesh Bank Quarterly (Which is published in collaboration with the
policy Analysis Unit of Bangladesh Bank) and the quarterly Bangladesh Bank Bulletin
(Which is published in collaboration with the Research Department, Bangladesh Bank), the
Department regularly brings out three annuals, one quarterly and one monthly booklet.The
Department also acts as the correspondent of the International Monetary Fund (IMF) and is
the source of all economic and financial data of Bangladesh for IMF publications, such as,
International Financial Statistics, Direction of Trade Statistics, and Balance of Payments
Yearbook etc.

Conclusion

In our economy, Bangladesh bank is the most important part of our country. Like in our
report, we got the information that Bangladesh Bank tries to develop in our banking sector.
And also Bangladesh bank is strengthening in our money market and to assist to our capital
market. And also Bangladesh bank tries to develop in our agriculture sector and rural
development and poverty reduction and to develop in our industry sector in many ways like
Bangladesh bank provides many types of facilities to them. In order to uphold the mission,
Bangladesh Bank’s aim would be to provide the required leadership by discharging its duties
in a manner that shows a clear vision, far-sighted, intelligent and responsive based on an
effective and efficient communication strategy. At all times, Bangladesh Bank’s aim would
be to remain committed, efficient, capable, logistically supported, speedy, focused, and
aggressive where necessary in order to ensure that the Bangladesh Bank always remains a
credible and prestigious institution with an efficient organizational structure committed to
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achieving its goals.. The Bangladesh Bank always remains a reliable and important institution
with an efficient organizational structure. In Bangladesh Bank reserve is now cross to 10
billion US dollar for the strong monetary policy. Basically, Bangladesh Bank plays central
role as a banker of the government. And also it is the head of the country’s commercial banks
and other financial institutions of our country. Bangladesh Bank as central bank does money
business with and other financial contract with World Bank, international monetary fund
(IMF),Asian development bank(ADB) on behalf of government.In this report, we have tried
to focus on the functions of Bangladesh Bank. Bangladesh Bank plays an important role in
one’s organization. Bangladesh bank always tries to impose something new for the people of
our country.