Contribution of Banking Sector in the Economy of Bangladesh

Bangladesh Banking Sector

Banks are mainstream of the financial system of a country. Banking system must be robust, resilient and sound for efficient inter-mediation of financial resources. Lack of any one or all these prerequisites would not bring only disaster for the country also cost the real sector.

Our government has taken various types of reform programs time to time making banking system more effective so that positive impact of banking system on our everyday life in economic activities can be more realized.

Bank have played a vital role in economy by providing credit for performing economic activities and at the sometime conglomerate the surplus capital from general public through different types of depository incentives.

Hence we discuss the major sectors of economy like agriculture, industry, business mentioned by Bangladesh Bank and how much wells banks perform these sectors.

Agriculture is the main sector of our economy. According to the new GDP measurement system, it provides about 22 percent of our GDP. Though the total amount of credit increases day by day, the portion of credit has decreased in agriculture, fishery and forestry sector whether it has reduced into half a percent. The rescue of agriculture revenue is hearty than others sectors and this credit directly affects the agricultural production. At present 44 private and foreign commercial banks have to continue their activities. They contain collectively TK 20,365 core as a deposit which is 35 percent of total credit. But unfortunately, they don't give any single coin to agriculture sector, as a credit.

Industrial sector acts as a main sector of GDP in the developed countries but unfortunately, this sector performance is very weak in our country and participation of GDP in this sector is 17.79 percent. This sector gets the highest credit from commercial banks. Business sector has become major role playing sector in our economy. Now-a-days almost 14.47 percent of GDP comes from merchandise sector, which is lucid from different statistical data. In 1981, one reason of gets more credit in business sector is that the probability of default loan is comparatively low vis-a-vis other sectors. But now-a-days, default culture has also increased in trading sector. Only garments artistry takes on prominent credit is TK 786 crore and TK 878 crore respectively provided by private and national commercial banks provide 24 percent of total credit in business sector and it is only 14.31 percent in case of foreign banks.

Bank is one of the main means of government by which government can implement different types of step for eradicating poverty. As the branches of bank are available everywhere from downtown area to remotest rural area government uses this channel to provide any financial benefit quickly.

Some projects are run by bank with the help of government to wipe-out poverty are as follows:

-Rural poor co-operative project in greater Rajshahi, Kustia and Jessore area with the help of Sonali Bank.
-Self-reliance loan project through the self-reliance Bangladesh and financed by Sonali Bank.
-Small and landless farmer’s development project by Janata Bank.
-Small and marginal farming.

Foreign Commercial Banks have provided 39.9 percent of total credit in other sectors. In this time National Commercial Banks and PCB's provided 7.15 percent of their total credit and Private Commercial Banks provided 10.21 percent of total credit in other sectors.

Though banking sector is the life-blood of our financial system, functional arena of bank is rather narrow than wide range and performance of handsome banks is not quite good. Bangladesh government has taken different types of reform according to demand of era, but this types of reform don't make our banking system international standard. But we are not hopeless rather by taking steps we will reach our ambitious target.

Contribution of Banking Sector in the Economy of Bangladesh Contribution of Banking Sector in the Economy of Bangladesh Reviewed by Afsar on October 25, 2018 Rating: 5

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