Table of Contents

Introduction ................................................................................................................................................. 1
History of Banking in Bangladesh ............................................................................................................. 2
Types of Banks in Bangladesh ............................................................................................................... 3
Scheduled Bank ..................................................................................................................................... 3
Non-Scheduled Banks .......................................................................................................................... 3
Palli Shancay Bank Ltd. ............................................................................................................................. 4
Palli Shancay Bank Ltd. Branches ........................................................................................................ 4
Mission of Palli Shancay Bank Ltd ...................................................................................................... 5
Objectives of Palli Shancay Bank Ltd ................................................................................................... 5
Loan Services of Palli Shancay Bank Ltd. ............................................................................................ 6
Entrepreneurs loan ............................................................................................................................... 6
Medium Entrepreneurs loan ................................................................................................................. 6
Special Entrepreneurs loan: - ................................................................................................................ 7
Savings services of Palli Shancay Bank Ltd. ........................................................................................ 7
Savings Accounts ................................................................................................................................... 7
Special Savings Accounts ...................................................................................................................... 8
Social Security Savings Accounts........................................................................................................... 8
Term Deposit......................................................................................................................................... 9
Rural Pension Scheme Deposit: - .......................................................................................................... 9
Current Deposit ..................................................................................................................................... 9
Online Service........................................................................................................................................ 10
Comparative Analysis Palli Shancay Bank Ltd. vs Islami Bank BD. Ltd. ......................................... 11
Conclusion ................................................................................................................................................. 13
 Introduction
Banking is the backbone of national economy. All sorts of economic and financial activities
revolve round the axis of the bank. As the industry produces goods and commodities, so does the
bank creates and controls money-market and promotes formation of capital. From this point of
view, banking-a technical profession- can be termed as industry. Services to its customers are the
products of banking industry besides being a pivotal factor in promoting capital formation in the
country. As all economic and fiscal activities revolve round this important ‘Industry, the role of
banking can hardly be over emphasized.

Bangladesh is a developing country with an impoverished banking system, particularly in terms of

the services and customer care provided by the government run banks. In recent times, private
banks are trying to imitate the banking structure of the more developed countries, but this attempt
is often foiled by inexpert or politically motivated government policies executed by the central
bank of Bangladesh, Bangladesh Bank. The outcome is a banking system fostering corruption and
illegal monetary activities/laundering etc. by the politically powerful and criminals, while at the
same time making the attainment of services or the performance of international transactions
difficult for the ordinary citizens, students studying abroad or through distance learning, general
customers etc. In the global context, the role banks are far – reaching and more penetrating in the
economic and fiscal discipline, trade, commerce, Industry, export and import- all carried through
the bank. Banks are the only media through which international trade and commerce emanate and
entire credit transactions, both national and International.

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 History of Banking in Bangladesh

The first modern bank Headquartered in Dhaka was Dacca Bank, Established in 1846. It did a very
limited business and did not issue banknotes. It was purchased by Bank of Bengal in 1862.Bank
of Bengal opened branches in Sirajganj and Chittagong in 1873, and in Chandpur in 1900. In 1947,
upon the Partition of Bengal, it had six branches in East Bengal, in Dhaka, Chittagong, Chandpur,
Mymensingh, Rangpur, And Narayanganj.
In the beginning of 1971, there were 1130 branches of 12 banks in operations in East Pakistan.
The foundation of independent Banking system in Bangladesh was laid through the establishment
of the Bangladesh Bank in 1972 by the President order No. 127 of 1972 ( which took effect on 16th
December, 1971) Through the order, the ester branch of the former state bank of Pakistan at Dhaka
was renamed as the Bangladesh Bank as a full-fledged office of the central bank of Bangladesh
and the entire undertaking of the state Bank of Pakistan in, and in relation to Bangladesh has been
delivered to the Bank.
After the independence, banking industry in Bangladesh started its journey with 6 nationalized
commercialized banks, 2 state owned specialized banks and 3 Foreign Banks. In the 1980’s
banking industry achieved significant expansion with the entrance of private banks.
After the liberation of Bangladesh, the 12 banking companies who were doing business in
Bangladesh were nationalized by the Government of the people’s Republic of Bangladesh under
president’s order No. 26 of 1972 entitled “The Bangladesh Bank (Nationalized) order, 1972”
on March 26,1972. These are-

Existing Bank New Bank after Authorized Capital ( Paid-up Capital (

Independence Lac TK. ) Lac TK.)
The National Bank of Pakistan, Sonali Bank 500 200
The Bank of Behawalpur Ltd.
The Premier Bank Ltd. Agrani Bank 500 100
The Habib Bank Ltd.
The Commercial Bank
The United Bank Ltd., Janata Bank 500 100
The Union Bank Ltd.
The Muslim Commercial Bank, Rupali Bank 500 100
The standard Bank Ltd.
The Austrasia Bank Ltd., Pubali Bank 500 100
The Eastern Mercantile Bank Ltd.
The Eastern Banking Corporation Ltd. Uttara Bank 500 100

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 Types of Banks in Bangladesh

Banking Sector of Bangladesh is primarily of 2 types: -

A. Scheduled Bank
B. Non-Scheduled Bank

Scheduled Bank: - The banks which get license to operate under Bank Company Act, 1991
(Amended up to 2013) are termed as Scheduled Bank. State- owned commercial banks, Private
commercial banks, Islamic commercial banks, Foreign commercial banks, and some Specialized
banks are Scheduled Bank. Scheduled Bank are classified into following types:

 State Owned Commercial Banks (SOCBs): there are 6 SOCBs which are fully or majority
owned by the Government of BD.
 Specialized Bank: Two specialized banks are now operating which were established for
specific objectives.
 Private Commercial Banks: There are 40 private commercial banks which are majorly
owned by the private entitles.
 Conventional PCB: 32 conventional PCBs are now operating in the industry. The perform
the banking functions in conventional fashios interests based operations.
 Islami Shariah Based PCBs: There are 8 Islami Shariah Based PCBs in Bangladesh and
they execute banking activities according to Islami Shariah Based principles profit-loss
sharing mode.
 Foreign Commercial Banks: 9 Foreign Commercial Banks are operating in Bangladesh as
the branches of the banks which are incorporated in abroad.

Non-Scheduled Banks: - The banks which are established for special and definite objective and
operate under the acts that are enacted for meeting up those objectives are termed as Non-
Scheduled Banks. These Banks cannot perform all functions of scheduled banks. There are now 6
Non-Scheduled banks in Bangladesh which are: -

 Ansar VDP Unnayan Bank,

 Karmashangosthan Bank,
 Grameen Bank,
 Jubilee Bank,
 Probashi Kollyan Bank,
 Palli Sanchay Bank.

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 Palli Shancay Bank Ltd.

The “Ekti Bari Ekti Khamar [One House One Farm]” project authorities had allocated money for
constructing own buildings for the 100 branches of the bank. Rest of the branch offices would be
built phase by phase, The Palli Sanchay Bank for the poor to reduce poverty, realising the “Ekti
Bari Ekti Khamar” project for the rural development under the LGRD Ministry.

Palli Sanchay Bank Ltd, a state-run specialised bank launched to provide services to the rural
people, has flopped so far due to mismanagement and political interference. The bank, started in
2016 with 47 per cent default loan, has seen it rising to 73 per cent by now, official report shows.
Palli Sanchay Bank, or the rural savings bank, cannot realise the money distributed among the
clients due to what officials said as inadequate manpower. The government had given approval to
hire 11,000 people to raise funds from the people and to monitor the loans. However, the process
came to a halt after recruitment of 6,000 people in the first phase. The bank has collected deposit
amounting to Tk 14.42 billion from clients, along with government financing of Tk 12.27 billion.
As the cooperatives are not repaying loans, an amount of Tk 1.5 billion is not being distributed in
the fear of losing the money.

Palli Shancay Bank Ltd. Branches: -

Palli Sanchay Bank (PSB) will open its branches in all upzilla headquarters to help poor and
extreme-poor become self-reliant by providing them with collateral-free loans and bringing their
micro-savings in a revolving credit scheme.“The bank has already started its operation in 406
upazilas and completed the preparation for opening its branches in rest of the upzilla headquarters.
“Unlike many other banks, PSB encourages and helps underprivileged people in generating
income and building savings, and eventually use their savings in providing more loans under its
revolving credit scheme,” the managing director of the state-owned bank said. PSB provides
financial and banking supports only to the members of the Village Development Organization
(VDO) who want to do income-generating activities under the ‘One House, One Farm’ project.

Currently, the bank has 1.3 million member families of 24,000 VDOs. The members have so far
deposited about Tk 7.3356 billion in their bank accounts while the bank disbursed loans of over
Tk 2 billion among 140,000 members for supporting their income-generating initiatives. The
amount of loan depends on the investment plan of the borrowers. However, a small entrepreneur
can get a loan of Tk 10,000 to 50,000; medium entrepreneur over Tk 50,000 to Tk 300,000 and
special entrepreneur over Tk 300,000 to Tk 100,000. The rate of interest for all of the loans is 8
per cent.

Besides, the VDO members can take benefit of the different saving products of PSB including
general savings, special savings, social security savings, student savings, term deposits and rural
pension scheme.

Apart from the financial support, the bank is also providing the VDO members with necessary
training to improve their skills in poultry, fisheries, livestock, nursery and agriculture.

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Mission of Palli Shancay Bank Ltd.: -
The “One House One Farm” project had been showing a new path in poverty alleviation, the same
way the “Palli Sanchay Bank” would help rural people build their fortune themselves and shield
them from the high interest charged by microfinance institutions. The bank members would get
loan at less than 10% interest. The initiative of the government would reduce poverty of the
country to below 20% by 2015 from the present rate of 29.75%.
1. Increase in savings trend in underprivileged people and incentives in contrast to storage
for increasing savings trend.
2. Funds created in the savings of underprivileged people, providing basic loan assistance
on easy terms, converting them into income generating productive farm every household,
processing the product and marketing the products, making the poor financially self-
dependent.
3. Skill development in different sectors of agriculture, agriculture, fishery, poultry,
livestock, nursery and fruit cultivation etc.
4. Establishing the dreams of hunger and poverty-free Bangladesh by creating the
opportunity for product oriented activities, marketing and self-employment in the
respective courtyards with the help of funded capital, to build each and every house as a
central focal point for economic growth.

Objectives of Palli Shancay Bank Ltd.: -

1. Increase in savings trend in underprivileged people and incentives in contrast to storage
for increasing savings trend.
2. Increasing efficiency through training, with the help of necessary loans, make every
home a focus of productive activity and increase investment in the marginal level in the
agricultural sector.
3. Ensuring empowerment of women by enhancing the skills and capabilities of the
entrepreneurs through training to implement the income generating program.
4. Creating a group of human resources, ensuring integrated rural development, positively
plays a positive role in poverty alleviation.
5. Attaching the underprivileged population to poverty alleviation activities in the harmony
of modern information technology, ensuring maximum utilization of natural and human
resources.
6. Implement the Micro Savings Model of the Honorable Prime Minister and converting
every house to the farm for the development of the destiny of the poor.

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Loan Services of Palli Shancay Bank Ltd.: -
At the function, loans ranging from Tk 20,000 to Tk 30,000 were given to borrowers. Some
borrowers said the loan limit should be increased as it was small compared to what they needed.
“No bank gives any loan with 8% interest rate. But the Palli Sanchay Bank does. The bank
also provides seasonal loans.” The loans are given for cow fattening, raising milking cows,
manufacturing agro-industrial tools and spare parts, producing vegetable and spices and
establishing agro-based small industries, cottage industries, fisheries and nursery.

1. Entrepreneurs loan
2. Medium Entrepreneurs loan
3. Special Entrepreneurs loan

Entrepreneurs loan: -

To fulfill its commitment to play a vital role to its socio-economic development of the country
Palli Shancay Bank Ltd. has introduce an entrepreneur credit scheme for its customers. The
objective of the scheme is:

 To encourage and develop medium and small entrepreneurs.

 To provide credit with minimum complexity.
 To generate employment.

This scheme covers agricultural sector, small and cottage industry, service industry, household
durable and consumer credit, information technology sector and energy sector. The amount of
entrepreneur loan credit ranges 50,000/= Taka.

Medium Entrepreneurs loan: -

Palli Shancay Bank Ltd. To fulfill its commitment to play a vital role to its socio-economic
development of the country has introduce an medium entrepreneur credit scheme for its
customers. The objective of the scheme is:

 To encourage and develop medium and small entrepreneurs.

 To provide credit with minimum complexity.
 To generate employment.

This scheme covers agricultural sector, small and cottage industry, service industry, household
durable and consumer credit, information technology sector and energy sector. The amount of
entrepreneur loan credit ranges from 50,001/= to 3,00,000/= Taka.

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Special Entrepreneurs loan: -

Palli Shancay Bank Ltd. to fulfill its commitment to play a vital role to its socio-economic
development of the country has introduce a special entrepreneur credit scheme for its customers.
The objective of the scheme is:

 To encourage and develop medium and small entrepreneurs.

 To provide credit with minimum complexity.
 To generate employment.
 This scheme covers agricultural sector, small and cottage industry, service industry,
household durable and consumer credit, information technology sector and energy sector.
The amount of entrepreneur loan credit ranges from 3,00,000/= to 10,00,000/= Taka.

Savings services of Palli Shancay Bank Ltd.: -

1. Savings Accounts
2. Special Savings Accounts
3. Social Security Savings Accounts
4. Students Savings Accounts
5. Term Deposit
6. Rural Pension Scheme Deposit
7. Current Deposit

Savings Accounts: -

For opening Saving Account, any individual or a group of individuals can step into any Branch
of Palli Shancay Bank Ltd..
 Fill out a form.
 Deposit cash or easily cashable instrument of any amount.
 Finally receive a Savings accounts.

Customer Benefit:
 Quick & easy processing.
 Transaction Notifications.
 Personalized Cheque Book is available.
 Nominal service charge.
 Interest Rate 4%, Drawing after 6 months, & automatically add accounts after 1 year.

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Special Savings Accounts: -

For opening a Special Saving Accounts, any individual or a group of individuals can step into
any Branch of Palli Shancay Bank Ltd.. This is a mandatory for all members of the association.

Customer Benefit: -
 Quick & easy processing.
 Transaction Notifications.
 Personalized Cheque Book is available.
 Nominal service charge.
 Interest Rate 5%, Drawing after 6 months, & automatically add accounts after 6months or
1 year.

Social Security Savings Accounts: -

For opening a Social Security Savings Accounts, any individual or a group of individuals can
step into any Branch of Palli Shancay Bank Ltd..
Customer Benefit: -
 Quick & easy processing.
 Transaction Notifications.
 Personalized Cheque Book is available.
 Drawing money any time.
 Nominal service charge.
 Interest Rate 6%, Drawing after 6 months, & automatically add accounts after 6months or
1 year.

Students Savings Accounts: -

For opening a Students Savings Accounts, any individual or a group of individuals can step into
any Branch of Palli Shancay Bank Ltd..
Customer Benefit

 In all branches of the bank, the student can open the account by depositing 10 taka.
 Transaction Notifications.
 Personalized Cheque Book is available.
 Drawing money any time.
 Interest Rate 5%, Drawing after 6 months, & automatically add accounts after 6months or
1 year.

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Term Deposit: -

For opening a term deposit accounts, any individual or a group of individuals can step into any
Branch of Palli Shancay Bank Ltd..
Customer Benefit
 Quick & easy processing.
 Transaction Notifications.
 Personalized Cheque Book is available.
 Drawing money any time.
 Nominal service charge.

Interest Rate:
 From 3(three) months and above but less than1 Year– 5.00%
 From 1 year to 3 years– 5.25%
 From 5 years and– 5.50%

Rural Pension Scheme Deposit: -

For opening a Rural Pension Scheme Deposit, any individual or a group of individuals can step
into any Branch of Palli Shancay Bank Ltd..
Customer Benefit
 Quick & easy processing for opening an accounts.
 Transaction Notifications.
 Personalized Cheque Book is available.
 Drawing money any time.
 Nominal service charge.
 Interest rate from 5 years and– 6.00%

Current Deposit:

For opening a current deposit accounts, any individual or a group of individuals can step into any
Branch of Palli Shancay Bank Ltd..
Customer Benefit
 Quick & easy processing.
 Transaction Notifications.

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  Personalized Cheque Book is available.
 Drawing money any time.
 Nominal service charge.
 There is no interests rate for this current accounts.

Online Service: -
It would be a unique initiative in the country, even in SAARC countries to set up such a bank
funded by the savings of the poor beneficiary groups of the project and would be established with
100% online banking system as the existing system of online transaction of the project would
be handed over to the bank, the project director said.
Palli Shancy bank bank for the poor people would be established so that the rural people could
utilize their savings for a better life, and change their fate.

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Comparative Analysis Palli Shancay Bank Ltd. vs Islami Bank BD. Ltd.

Sl No. Partiqulars Palli Shancay Bank Ltd. Islami Bank BD Ltd.

Palli Sanchay Bank, a state-run Islami Bank Bangladesh Limited
specialised bank launched to is a commercial banking business
1. Type provide services to the rural
people.

51 percent of the paid up capital Islami Bank Bangladesh Limited

of the government will be 51 is a based on Islamic Shari’ah with
percent and the remaining 49 63.09% foreign shareholding
2. Stake Holder percent were given to the
shareholders of the loan holders
under the project.

“The bank has already started its
operation in 406 upazilas and
completed the preparation for
3. Branches
opening its branches in rest of the
upzilla headquarters
Islami Bank Bangladesh Limited
is a largest branch network (246
Branches & 30 SME/Krishi
Branches i.e. total 276 Branches).

The Palli Sanchay Bank for the Islami Bank Bangladesh Limited
poor to reduce poverty, realising is a first Islamic Bank in the South
the “Ekti Bari Ekti Khamar” East Asia.
4. Visibility
project for the rural development
under the LGRD Ministry.

Authorized Capital of the Bank is Authorized Capital of the Bank is

Authorized Tk. 10,000.00 Million. Tk. 20,000.00 Million ($ 250.47
5.
Capital Million

Paid-up Capital is Tk. 20000 Paid-up Capital is Tk. 12,509.64

Paid-up Million. Million ($ 156.66 Million)
6.
Capital
Increase in savings trend in To establish Islamic Banking
underprivileged people and through the introduction of a
incentives in contrast to storage welfare oriented banking system
7. Mission
for increasing savings trend. and also ensure equity and justice
in the field of all economic
activities

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 Apart from the financial support, Our vision is to always strive to
the bank is also providing the achieve superior financial
VDO members with necessary performance, be considered a
8. Vision training to improve their skills in leading Islamic Bank by
poultry, fisheries, livestock, reputation and performance.
nursery and agriculture.

Highest standard of Honesty, Strict observance of Islamic

Integrity & Morale, Welfare Shari’ah, Highest standard of
9. Core value Banking, Equity and Justice Honesty, Integrity & Morale,
Welfare Banking, Equity and
Justice
Loan Services of Bank, Savings Deposit schemes, Investment
Products and services of Bank, Online Service. modes, Foreign exchange service
10.
Services
Palli Shancay Bank Ltd. banks are Islamic Bank BD Ltd. banks are
not allowed to borrow money allowed to borrow money from
11. Borrowing
from RBI for regular banking RBI for regular banking purposes.
purposes
Palli Shancay Bank Ltd. in the Islamic Bank BD Ltd. in the
Second
12. second schedule. second schedule
Schedule

Members of It cannot become member of It can become a member of

13. clearing clearing house. clearing house.
house

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Conclusion: -

Bangladesh Bank is trying to Improve the strength of banking sector of Bangladesh, for this reason
It wants to Increase banks paid up capital and reserve from 20 million to 40 million between few
years. Because In India its now 30 million and in Pakistan its 50 million. If any bank face difficulty
to improve their paid up capital and reserve, then Bangladesh Banks suggestion Is to merge with
another bank.

Palli Shancay Bank Ltd. playing its leading role in socio-economic development of the country.
Since inception Palli Shancay Bank Ltd. has been rendering its Banking services with the needs
of the nation to cope with the demands of people in the country. By doing many other works for
state & society, NCC Bank has emerged as the pioneer of playing key role in the country.

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