Principles of Insurance and Banking

Chapter Name: Commercial banking

Course Instructor: Nusrat Farzana
Section D
Definition of Bank:

Bank is a financial institution and intermediary, which collect deposits through its different deposit mechanism and
provide loans and advances among the loan Clients/ investors with the view to earn profit. Thus a bank is a financial
intermediary and a dealer of loans and debts. In financial concept, banking means safe custody of money and at the
same time an institution for money transaction.

To regulate the banking business some financial laws of the government are followed, the old ones are the British
Stamp Law, 1881 and English Exchange Bill, 1882. Other laws include the English Financial Act of 1915 and Indian
Company Act of 1931 and the Indian Banking Regulation Act of 1949.

The concept of Banking is an old civilization. Banking activities in its earliest crude form of lending and exchange
prevailed during the ancient period. The legend of huge treasure of the Great King Solomon, the man of great
wisdom, son of David (Alaihee-aas-Salam) and the activities of taxation and banking during his reign in 1005 B.C.

The business of banking is in many English common law countries not defined by statute but by common law, the
definition above. In other English common law jurisdictions there are statutory definitions of the business of banking
or banking business. When looking at these definitions it is important to keep in minds that they are defining the
business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the
definitions are from legislation that has the purposes of entry regulating and supervising banks rather than
regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the
common law one. Examples of statutory definitions:

Banking business means the business of receiving money on current or deposit account, paying and
collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes
such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore),
Section 2, Interpretation).

Banking business means the business of either or both of the following:

1. 1. Receiving from the general public money on current, deposit, savings or other similar account
repayable on demand or within less than [3 months] or with a period of call or notice of less than that
period.
2. 2. Paying or collecting cheques drawn by or paid in by customers.

The Indus Valley Civilization, the Roman Civilization, the Greek Civilization, the Egyptian Civilization, the
Mesopotamian Civilization, the Babylonian Civilization, the Vedic Indian Civilization, the Muslim Civilization played
important roles in giving birth to and flourishing of Bank.
State-owned commercial banks
1. Agrani Bank
2. Sonali Bank
3. Rupali Bank
4. Janata Bank
5. Pubali Bank

Private commercial banks

Private banks are the highest growth sector due to the dismal performances of government banks (above).
They tend to offer better service and products. Here is the list -

1. Uttara Bank Limited

2. Mutual Trust Bank Limited
3. Dhaka Bank Limited
4. Eastern Bank Limited
5. Dutch Bangla Bank Limited
6. Pubali Bank Limited
7. IFIC Bank Limited
8. National Bank Limited
9. The City Bank Limited
10. NCC Bank Limited
11. Mercantile Bank Limited
12. Prime Bank Limited
13. Southeast Bank Limited
14. Standard Bank Limited
15. One Bank Limited
16. Bangladesh Commerce Bank Limited
17. The Premier Bank Limited
18. Bank Asia Limited
19. Trust Bank Limited
20. Jamuna Bank Limited
21. AB Bank Limited
22. NRB Commercial Bank Limited
23. NRB Bank Limited
24. Meghna Bank Limited
25. Farmers Bank Limited
26. Modhumoti Bank Limited
27. South Bangla Agriculture and Commerce Bank Ltd
28. Midland Bank Limited
29. United Commercial Bank Ltd
30. BRAC Bank Limited

There are 8 Islamic Commercial Banks:

1. Islami Bank Bangladesh Limited

2. Shahjalal islami bank Limited
3. First Security Islami Bank Limited
4. Export Import Bank of Bangladesh Limited
5. Al-Arafah Islami Bank Limited
6. Social Islami Bank Limited
7. ICB Islamic Bank
8. Union Bank Limited
Foreign commercial banks 9 foreign commercial banks are operating in Bangladesh. These
are:

1. Citibank NA
2. HSBC
3. Standard Chartered Bank
4. Commercial Bank of Ceylon
5. State Bank of India
6. Habib Bank Limited
7. National Bank of Pakistan
8. Woori Bank
9. Bank Alfalah

Specialized banks

Specialized Banks (SDBs): 4 specialized banks are now operating which were established for specific
objectives like agricultural or industrial development. These banks are also fully or majorly owned by the
Government of Bangladesh.

1. Bangladesh Krishi Bank

2. Rajshahi Krishi Unnayan Bank
3. Bangladesh Development Bank Ltd
4. BASIC Bank Limited
5. Probashi Kallyan Bank
Non-banking financial institutions
1. Uttara Finance and Investments Limited
2. United Leasing Company Limited (ULCL)
3. Union Capital Limited
4. The UAE-Bangladesh Investment Co. Ltd
5. Saudi-Bangladesh Industrial & Agricultural Investment Company Limited (SABINCO)
6. Reliance Finance Limited
7. Prime Finance & Investment Ltd
8. Premier Leasing & Finance Limited
9. Phoenix Finance and Investments Limited
10. People's Leasing and Financial Services Ltd
11. National Housing Finance and Investments Limited
12. National Finance Ltd
13. MIDAS Financing Ltd. (MFL)
14. LankaBangla Finance Ltd.
15. Islamic Finance and Investment Limited
16. International Leasing and Financial Services Limited
17. Infrastructure Development Company Limited (IDCOL)
18. Industrial Promotion and Development Company of Bangladesh Limited(IPDC)
19. Industrial and Infrastructure Development Finance Company (IIDFC) Limited
20. IDLC Finance Limited
21. Hajj Finance Company Limited
22. GSP Finance Company (Bangladesh) Limited (GSPB)
23. First Lease Finance & Investment Ltd.
24. FAS Finance & Investment Limited
25. Fareast Finance & Investment Limited
26. Delta Brac Housing Finance Corporation Ltd. (DBH)
27. Bay Leasing & Investment Limited
28. Bangladesh Industrial Finance Company Limited (BIFC)
29. Bangladesh Finance & Investment Co. Ltd.
30. Agrani SME Finance Co. Ltd.