Banking Sector Performance in Bangladesh

Abstract

The Banking sector in Bangladesh is different from the banking sector as seen in other developed countries. This is one of the major service sectors in Bangladesh economy, which divided into four categories- Nationalized Bank, Local Private Bank, Specialized Financial Institutions and Foreign Banks. Their objectives, ownership pattern, mode of operation and other also differ from each other based on the category of banking to which they belong. This project paper is an effort to provide a zest of the overall performance of the Banking Sector of Bangladesh over five years (2000-2004) period. The paper includes analysis of information for five years (2000- 2004) regarding branch expansion, deposit collection, loan deployment, productivity, profitability, regulatory requirements etc. In this study I have used simple statistical tool such as common size statement and percentage growth, is used to judge how they are performing within themselves in the above mentioned criteria and over all financial result. For this purpose all categories commercial banks operating during 2000 to 2004, are taken into consideration. The result shows that though majority of total assets, total and total deposits are held by the PCBs and NCBs but foreign bank outperformed other in performance. But the FCBs can be negatively criticized for their complete ignorance for rural areas. Branch activities of rural areas are dominated by NCBs and OFls. But both deposit collection and loan deployment activities of rural areas are almost insignificant. OFls and NCBs have failed to maintain the required provision for non-performing loans. PCBs are doing a better job in this regard whereas FCBs produce superb result as they do not have any significant NPLs. All the categories of banks except the NCBs are managed to maintain adequate capital reserve, which is more than the regulatory level. Hope that my analysis and evaluation will provide readers with adequate information to gauge the performance of the overall banking sector of our country