Banking Business in Bangladesh
Banking Business:
Banks are very old form of financial institution that channel excess funds from surplus unit to deficit unit in consideration of a price called Interest. Banking business definitely established on a relationship of Debtor-Creditor between the surplus unit called depositors and the bank and between the deficit unit called borrowers and the bank. Here, opportunity cost of money works as interest is considered the price of the credit. For the development of an economy, bank furnishes a huge contribution and modern economy cannot be imagined without the services of bank. Economic development of a country requires a well organized, smooth, easy to reach and efficient saving-investment process. The function of a single bank is not limited to its geographical region only rather it has reached beyond the border of the country. So, banking business has been shaped as global business and the rest other business greatly depends on the strength of banking business performance.
Problems:
A single bank is highly connected with other banks for payment system and other functions of bank. The failure of a single bank not only affects its shareholders and depositors rather it affects rest other banks and even all rest other business. The failure of a single bank creates an economic turmoil situation and is regarded as a disaster for the economy. The recent global recession is also an example of economic disaster that occurred for the failure of banking business. So, the government of any country must have a high concern about the performance of all banks. To supervise and regulate the performance of banking business, there is a supervisory authority called central bank in each country. The supervisory authority creates smooth and efficient atmosphere for fund flow and payment system. Supervisory authority measures the performance and assess the strength and weakness of banks and takes necessary actions.
The banking sector of Bangladesh compared to its
Banks are very old form of financial institution that channel excess funds from surplus unit to deficit unit in consideration of a price called Interest. Banking business definitely established on a relationship of Debtor-Creditor between the surplus unit called depositors and the bank and between the deficit unit called borrowers and the bank. Here, opportunity cost of money works as interest is considered the price of the credit. For the development of an economy, bank furnishes a huge contribution and modern economy cannot be imagined without the services of bank. Economic development of a country requires a well organized, smooth, easy to reach and efficient saving-investment process. The function of a single bank is not limited to its geographical region only rather it has reached beyond the border of the country. So, banking business has been shaped as global business and the rest other business greatly depends on the strength of banking business performance.
Problems:
A single bank is highly connected with other banks for payment system and other functions of bank. The failure of a single bank not only affects its shareholders and depositors rather it affects rest other banks and even all rest other business. The failure of a single bank creates an economic turmoil situation and is regarded as a disaster for the economy. The recent global recession is also an example of economic disaster that occurred for the failure of banking business. So, the government of any country must have a high concern about the performance of all banks. To supervise and regulate the performance of banking business, there is a supervisory authority called central bank in each country. The supervisory authority creates smooth and efficient atmosphere for fund flow and payment system. Supervisory authority measures the performance and assess the strength and weakness of banks and takes necessary actions.
The banking sector of Bangladesh compared to its