Financial System of Bangladesh: Money Market and Capital Market

Financial System: The Financial System is a set of institutional arrangement through which surplus unit transfer their fund to deficit units.


Structure of Financial System: The main constituents of financial system are
i) Financial Institutions
ii) Financial Instruments, and
iii) Financail Markets.

Financial Institutions: The modern name of Financial Institution is Financial Intermediary (FI), because it mediates or stand between ultimate borrowers and ultimate lenders and helps transfer funds from one to another.
The Financial system helps production, capital-accumulation and growth by
i) encouraging savings and
ii) allocating them among the alternative uses and users.

Banking Sector:
1. Local Private Commercial Bank: 30
2.Govt. Commercial Bank: 4
3. Specialized Bank: 5
4. Foreign Commercial Bank: 9
No of Total Schedule Bank: 48

Central Bank: Bangladesh Bank
Bangladesh Bank (BB) , as the central bank, has legal authority to supervise and regulate all the banks. It performs the traditional central banking roles of note issuance and of being banker to the goverment and banks. It formulates and implements monetary policy, manages foreign exchange reserves and supervises banks and non-bank financial institutions. Its prudential regulations include minimum capital requirements, limits on loan concentration and insider borrowing and guidelines for asset classification and income recognition. BB has the power to impose penalties for non-compliance and also to intervene in the management of a bank if serious problems arise. It also has the delegated authority of issuing polity directives regarding the foreign exchange regime.

State owned commercial Banks:
i) Sonali Bank Limited
ii) Janata Bank Limited
iii) Agrani Bank Limited
iv) Rupali Bank Limited

Local Private Commercial Banks
Foreing Private Banks
Specialized Banks
Non-Banking Financial Institutions
Insurance Companis of Bangladeh
Housing Finance
i) House Building Finance Corporation (HBFC)
ii) Delta Brac Housing Finance Corporation
ii) National Housing


Financial Instruments
Financial Instruments are of two types:
i) Primary (or Direct)
ii) Secondary (or Indirect)

Money Market Instruments: 
i) Treasury bill.
ii) Certificate of Deposit(CD)

Capital Market Instruments:
i) Stocks
ii) Govt. Securities
iii) Consumer and Bank Commercial Loan

4 comments:

  1. The Financial System is a systematic organization of institution through which surplus unit (those have surplus amount of funds) transfer their fund to deficit units (those need funds to be financed) so that both the parties surplus and deficit unit get the financial benefit. Financial institutions or other individual financial companies use different kinds of financial instruments to transfer of funds according to their needs. Sometimes people or institution collect funds directly from direct sources and sometimes they collect with the help of financial intermediaries.
    http://ordnur.com/academic-study/finance/financial-system-of-bangladesh/

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