Bank Company Act, 1991, empowers BB to issue licenses to carry out banking business in Bangladesh. Pursuant to section 31 of the Act, before granting a license, BB needs to be satisfied that the following conditions are fulfilled: "that the company is or will be in a position to pay its present or future depositors in full as their claims accrue; that the affairs of the company are not being or are not likely to be conducted in a manner detrimental to the interest of its present and future depositors; that, in the case of a company incorporated outside Bangladesh, the Government or law of the country in which it is incorporated Bangladesh as the Government or law of Bangladesh grants to banking companies incorporated outside Bangladesh and that the company complies with all applicable provisions of Bank Companies Act, 1991."
Licenses may be cancelled if the bank fails to comply with above provisions or ceases to carry on banking business in Bangladesh.
The commercial banking system dominates the financial sector with limited role of Non-Bank Financial Institutions and the capital market. The Banking sector alone accounts for a substantial share of assets of the financial system. The banking system is dominated by the 4 State Owned Commercial Banks, which together controlle more than 30% of deposits and operates 3383 branches (50% of the total) as of June 30, 2008.
Out of the 5 specialized banks, 2(Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit need of the agricultural sector while the other two (Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangstha (BSRS)) are for extending term loans to the industrial sector of Bangladesh.
Non-Bank Financial Institutions (NBFIs)Non-Bank Financial Institutions (NBFIs) are licensed and regulated under the Financial Institution Act, 1993. NBFIs play an important role in financing various sectors like industry, trade, housing, transport, information technology as well as the capital market. There are 30 NBFIs in the country. At present there are 115 branches of which 59 in Dhaka, 22 in Chittagong and the rest 34 in other districts.
As on 31th December, 2010 the total amount of capital and reserve of the NBFIs stood at BDT 44689.29 million. Total assets and total deposits of the NBFIs were BDT 251527.34 million and BDT 94374.80 million respectively. Total outstanding loans and leases of the NBFIs was BDT 178094.20 million.
Major sources of funds of NBFIs are Term Deposit, Credit Facility from Banks and other NBFIs, Call Money as well as Bond and Securitization. NBFIs are allowed to mobilize term deposit only of tenor not less than six months. At present term liabilities are subject to a statutory liquidity requirement (SLR) of 5 percent inclusive of average 2.5 percent cash reserve ratio (CRR). SLR for the NBFIs operating without taking term deposit is 2.5 percent. BASEL Accord now in the process of test run phase will be made compulsory from 2012.