banking industry of bangladesh

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Letter of 1ronsmitto/ Date: 18 November 2008 To ........ Subject: Submission of Report on Banking Industry in BangIadesh Dear Sir, HereamsubmittingthereportonBankingIndustryinBangIadesh prescribedby youinyourcoursendustrialStudies.ForthisPurpose,havegonethroughinternet, differentbooks,articles,journals,interviewofauthoritiesandemployeesofthe respectiveorganizationsandclasslecturesheetsfortherelevantinformationofthe assigned topic. Please call me for any further information at your convenient time and place. Yours truly,

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1hanklna ?ou d. Tanvir Ahmed d: 233 BBA: 5 Faculty of BBA Cambrian Collage

1ob/e of nontent entive smmery As the world grapples with the continuing pain oI the Iinancial crisis, an independent network oI eleven banks will come together in Bangladesh to try to build a viable, sustainable Iuture Ior the Iinancial industry. Members oI the Global Alliance Ior Banking on Values (GABV) believe that they can demonstrate that a brave new Iuture Ior the banking industry is possible, and that their members are already delivering it.The banks, Irom wealthy and developing countries around the world, intend to grow sustainable banking globally. They are spending three days near Dhaka, working together to build a capital raising programme, develop an education programme to develop a new breed oI sustainable bankers to handle the money they raise, and agree how they will have a greater inIluence on the mainstream Iinancial industry.The GABV, which uses Iinance to deliver sustainable development Ior unserved people, communities and the environment, represents seven million customers in 20 countries, with a combined balance sheet oI over $14 billion. It has announced an ambitious commitment to support the expansion oI $2 billion in lending to green proiects and underserved communities around the world. And all this, in a country which many experts believe will be hit hardest and earliest by the impact oI climate change.The GABV aims to raise $250 million in new capital by pooling the expertise and resources oI its members. "Raising this money will result in $2 billion in new lending, at a time when credit continues to be scarce," said Peter Blom, Chair and co-Iounder oI the GABV and CEO oI Triodos Bank in the Netherlands. "The stakes are high. II we don't get people to listen, the potential impact Ior hundreds oI millions oI people in this part oI the world alone, could be catastrophic. At the same time the opportunity is colossal. There is an enormous amount oI positive work being done. A saIe, sustainable Iuture will only happen iI we can develop a better Iinancial system. Our network is collaborating to make that happen."The banks operate in countries as diverse as Germany, Mongolia, Peru, and the US, and have weathered the Iinancial storm with considerable success. According to Katrin KaeuIer, research Iellow at the Massachusetts Institute oI Technology (MIT), they share a number oI characteristics that could be adopted more widely to build a sustainable world economy. "Many oI these banks have continued to be successIul during the downturn. BeIore we return to business as usual it seems sensible to examine why. There's no one secret, but these banks all have sustainability embedded in everything they do. They are transparent, values-driven institutions that promise a genuinely diIIerent Iuture Ior banking." ntrodntion The banking industry in Bangladesh has flourished over the years, making double-digit profitpercentages,sustaininggrowthandsurvivingcut-throatcompetitionwhile providingattractivereturnstoshareholders.However,thegreedformorewithout befitting platform and fundamentals, brings its own challenges and questions in people's minds.Newsaboutbankdirectorsandchairmen'sinvolvementinpoliticsand underhand deals using banks' goodwill raises question about the banks' independence inrunningtheiroperations.talsomakesyouthinkwhetherallthedisclosuresinthe annualreportsandotherregulatorypaperworkareonlythe glowingshellover ahuge hollow.Atthetimesofquestioningmyselfwhetherexcessiveregulation isthereason behindtheveneerofgoodnessorwhetherthereareotherregulatorymalpractices, disconnectsordeficienciesthatallowthesebankstotakeadvantageofthesituation. Theimageofthebankingindustryhasmanytimesbeentarnishedbyseveralstories regardingtheownersinrecentmediareleases.Despitetheconsiderableprogress made,foreigncountriesarestillsomehowtreatingourbankingindustryactivitiesas questionable. Countering the image issue is not the only block in the road to developing a respectable and successful institution, there are also the problems of 2 Ps 3Cs and a T--people,product,complianceandethics,competition,changemanagementand technologyamongothers.Thoughsomeonemaydiffer,competitioninBangladesh seemstobethedeadliestofall.tnotonlybringsinpositivedevelopmentsbutalso encouragesmalpractice. There iscompetitionnotonlyfromotherbanksbutalsofrom non-bank financial institutions (NBF) and micro finance institutions (F). Not only are the institutions competing, the regulators and customers are also pitting one against the other,makingthesituationextremelydifficultgivingyouthefeelingofbeingstuck betweenarockandahardwall.Acustomerwill oftentrytomakethebestoutofthe situationbynotcomplyingwiththeregulatoryrequirement,referringtotheservice provided by another bank or banks. The requirement of bankers to meet steep targets often results in succumbing to the demand of these corporates, resulting in bypassing of theregulation.Onebypassresultsinanotherandthenanotherresultinginawhole networkofmalpractices,whichoftenbecomesthenorm.Competitioninthebanking industryisalsohittingfromthecapitalmarketend,withthecorporatesincreasingly going to the equity market to raise funding. This not only hits the banks in the belly by affectingtheircorebusinessbutalso indirectlyaffectstheircontributiontomarketcap whichdroppedfrom59%in2007tolessthan25%inJune2010.oreimportantlyit forcesthemtorisktheirpositionbyoverexposingthemtovolatilecapitalmarket through proprietary trading and position taking in order to maintain profitability. All of us feelthatthebankingindustrybadlyneedsskilledhumanresourceswhowillnotonly service old products but will also create and launch new innovative products. Educating the market remains the first requirement towards creating new products and developing skilledhumanresources.Besidespeopleandproductissues,youneedtobeever vigilantabouttheever-changingtechnologyandregulatoryrequirements.Thenew offering in the market which has got all banks running are the requirements of BASEL &AutomatedClearingHouse.Themajorchallengewithchangeofregulationisthat oftentheregulatorsareinahurrytoimplementasuddendecision,rollingoutaction plans without proper research or understanding the broad implications and capabilities ofthebankstocomplywithit.Theoutcomeisdelayinimplementation,confusion amongstakeholdersandnewtechniquestobypasstheseregulations.Thisinitsturn creates a non-level playing field for those who comply with the regulation versus those cleverly"managing"thesituationwithouthavingtocomply.Toomuchnoiseandless action,attimes,createsdoubtaboutthesincerityofthepurpose.Asalaw-abiding citizenyouwonderwhyit issoeasyto"manage"non-compliance?Thefinalquestion remains--whoislosingoutbythis?Ultimately,everycitizenofthecountry,asour country suffers. The banking sector could be our pride and a major growth engine of the economy. Regulators are taking appropriate decisions to implement proper regulations attherighttime.Anappropriateexampleiswhenseveralfinancialinstitutionsshifted towardstheriskiercapitalmarkettocounter the lowergrowth intheircorebusinesses usingthedepositorsmoney,theregulatorsaptlysteppedintomakemerchantbanks separatesubsidiaries.Theregulationsarethere.Theproblemisenforcingtheminan honestmanner.ftheregulatorsandthelegalsystemwerehonestthenallthese recurringimageissuesandmalpracticescouldhavebeenavoided.Facingthe challengeshead-oninacompliantmannershouldbeourgoaltowardscreatinga sustainable, profitable and forward-looking banking sector. We need to do more and run faster with clear visibility about the destination. Perhaps, it also has to do a lot with the overall governance and accountability situation in the country. Objectives of the study There are two types of objectives of this study. Both of them are being described below: 1.Primary Objectives :Theprimaryobjectiveofthisstudyistounderstandttecurrentscenariointhe garments industry in Bangladesh. 2.Secondary Objectives: secondary objectives are.. OTo know briefly about a some garments companies of Bangladesh OTo identify what factors are affecting the garments industry in Bangladesh OTo identify the performance of garments industry in Bangladesh Limitations of the study: Since ourstudy isbasedon bothprimaryandsecondarydata, there isapossibility of gettingfakeinformation.fthesurveyedpersonnelprovideuswithanyfabricated informationabouttheiropinionoftheirorganization,thenthereportfindingsmaybe erroneous. Above all, this study is weak in some points. The notable ones are as under: OThesurveywasconductedinaveryshorttimesowewerenotabletocollect more information. OThissurveymadeoncrisissituationofBangladesh,soitwasdifficulttocollect more samples. OOnly the big and the reputed Garments Company consider here as sample. OThequestionnairecontainssomequestionsthat,ifansweredproperly,might damagethecompany'simage.nthistypeofquestion