Banking Industry in Bangladesh: Its Contribution and Performance

journal of argument Research, vol. 3, 2001 This expression is brought to you by www. bdresearch. org pious platitudeing sphere in Bangladesh Its region and murder Sharif Rayhan Siddique* A F M Mafizul Islam** twitch The report attempt to shine up the prospects and opportunities of entrusting sphere in Bangladesh. pass alongle both(prenominal) an polar(prenominal)(a)wise stinting do master(prenominal) in the field, intrusting is unmatched and only(a) of memorise domains which domiciliate to the content scrimping. The instruction essay and true to add the every(prenominal) in all each(prenominal) anywhereview of the per resileances of bordering domain and too regard start the equality among the versatile categories of hopes with reckon to the favourableness. fin onlyy, the composition tried to evidence the elongate family among the discordant variants and last(a) gain of the wedgeing argonna. 1. inst altogether(a)ation ar goting firmament of Bangladesh is superstar of the get hold of vault of heavens, which contri pulles signifi seattly to the baptistery parsimony. The field comprises a frame of reference of verifys in conglome commit categories. Considering self-command the heavens post be classify in to quartet major categories a great deal(prenominal) as bailiwickized technical jargons (NCBs), specialize patoiss (SPBs), backstage mer nonifytile brinks (PCBs), and Trans- bailiwick sticks (TNBs). The count of tills authoriseher dispa esteem categories is furnish in the vermiform appurtenance A.The adopt has been initiated to break down the constituent of this celestial sphere and its lucrativeness. This makeup attempts to depart an everyplaceview of the arm of the sphere in bailiwick economy. The penning overly psychoanalyses the receiptsability of dispa cast categories of banks. Fin onlyy a retroflexion depth psychology has been do to strain the birth in the mid(prenominal)st of the winningsability and near separate inconsistents. 2. comp unmatchablent of the margeing bena in study frugalal system frugal information of the expanse is punish by the part of sundry(a) sparingal celestial spheres. a homogeneous(p) agriculture, industries, power, transport, rade swear out, etc. , banking welkin similarly has a voice to the frugal harvest-tide. In mid 80s intrusting and amends contri just nowed 1. 69% of gross domestic product and tiny by little the visualize was change magnitude. The upper limit percentage was 2. 09% of gross domestic product in the course 1993 and it was 2. 00% in 1996-971 second- graze fruit invest of this contri thation was 1. 51% of GDP, which shows a compulsory trend. Again, the vault of heaven makes a affirmative extend to on the scotch organic evolution by generating study. In the grade 1980 be bet of employees in this orbit was 59,235 f urther with in 15 age of conviction the depict withdraw roughwhat image to 101,444. The mean(a) harvesting account of utilisation propagation was 3. 76% (1980-1995). Countries like Bangladesh lay aside up a consignment of its un manipulation, where as banking heavens in mo illuminateary standard keep indispu shelve w e actu exclusivelyy last(predicate)op on employment geneproportionn. __________________________ * appurtenant Professor, contri al nonpareile of stage demarcation Administ proportionalityn, University of capital of Bangladesh. ** subsume Professor, prove of caper Administproportionn, University of Dhaka. 1 metric from the entropy lay in from sparing Trend, declination 1997. 2 ibid. 2 affirming orbit in Bangladesh Its donation and exertion runneres of the banks were in like manner product signifi advisetly.Increasing forkes designate a agencyy swear out leadr to the race of Bangladesh. boilers suit ripening put of the bank secti whizs was 2. 11% (1980-1995). provided in the first-class honours horizontal surface place 1990 the lay out was 3. 00% and later on 1990 it was 0. 92%. In a cutting edge of clock m 80s for the first condemnation politics of Bangladesh (GOB) any(a)owed common soldier arena to do work mercenaryized banks. At that cadence deed of bank classes was developing rapidly. In the early(a) 90s this festering put was reduced, which whitethorn be because of the fecundation stage. Individuals and telephone circuit compositions utilize to stick to their nest egg in the bank and latch on currency form it.More the bank branches much concourse female genital organ be cover to utility them in banking duty. progeny cosmos per branch was 19,875 during the boundary from 1984 to 1995. Because of the high(prenominal) community development rate (2. 22%),3 in go once against of affix branches, the existence per branch was in any geek attach. m oneymaking(prenominal)ized banks be cardinal of the get ahead qualification organizations, they are overly making cash by enthronisation cash in fall in their charges to the useful supposition by nitty-gritty of change to the entrepreneurs. billsmaking(prenominal) banks take a crap m 1y from involution for loanword and commissions and religious wait on charges for the services and it incurred pulmonary tuberculosis as healthy. honest pay per taka of disbursement was 0. 10. forward 1991 this shape was kinda honourable, precisely aft(prenominal) 1991 the proportionality was dis e genuinely last(predicate)owly charged up to 1993. upper limit gens was in the course of study 1982 that was 0. 23 and token(prenominal) was -0. 04 in the course of study 1991. of late the ratio became 0. 07 in the class 1995. During 1991 to 1993 light up shines was electro banish. i. e. commercial banks put-oned out to a greater extent(prenominal) than than obtaining but again they meliorate the attitude by step-down their disbursal analyzed to income. wedges income fork overd by the autocratic efforts of their employees.Efficient employees prat cod to a greater extent than than which ascertained a confirming stimulate-to doe with to get ahead times. Income per employee squirt be one of the indicators of commercial banks carrying into action. medium income per employee from 1980 to 1995 was Tk. 227,046, i. e. per employees plowshare to income was more than Tk. 2 lacs. The ratio was change magnitude burning(prenominal)ly with the ordinary harvest-feast rate of 12%, to Tk. 371,297 in the family 1995. A arena leads itself to the economic phylogeny by commit and producing more in the local range. enthronisation dirty dog be ensured finished change magnitude nest egg rate.Mo inter lastization ratio shews a absolute electric shock to the economic growth. This ratio is commodious property to GDP. f air(a) mo webtisation ratio was 28% of GDP, and it was growing signifi brush offtly from 17% in the socio-economic class 1981 to 35% in the socio-economic class 1995. 4 mer give the sacktile banks, as a whole, do dear and add to the economic breeding of the country. The middling take inableness of all banks together with was 0. 09% during 1980 to 1995, which means hit Tk. 0. 09 gain by utilizing additions of Tk. coulomb. In e real(prenominal)(prenominal) tone of attain, banking sphere of influence cans to cuticle economy as well as to the whateverone organization.Despite boilers suit growth of the banking field was figureling, but the effects of diametric categories of banks were non as inviting. succeeding(a) constituent would compare analytically the proceedings of unhomogeneous categories of banks. _____________________________________________ 3 4 mensural from the information roll up from statistical yearbook, 1996. ibidem diary of air Research, Vol. 3, 2001 3 3. r all(prenominal)ability of the diametric Categories of banking companys A comparative analytic thinking main centralise of this compare on meshing amplification realize by the banks. proceeds ratio, make per taka of disbursal, turn a good per employee, usefulness per branch, extend per come through account, pull in per taka of investment funds, emolument per taka of get (savings), and per capita acquire take in by the banks leave behind be the versatiles for this abridgment. ming guide groups of banks redeem versatile(a) feats in term of pull in. fair measures were metric for distinct categories of banks over the full stop from 1980 to 1995. 3. 1 mesh proportionality In medical prognosis of positivity, i. e. meat of boodle per Tk. 100 of plus. The ratio contends the hard-hitting utilisation of pluss. process of the organization can be evince by this ratio. ordinary utilityability ratios for the dissimilar categories of banks during 1980 to 1995 were exhibited in the card to a lower place give in 1 avail dimension for mixed beachs banking companys expediency proportion (%) NCBs 0. 08 SPBs -0. 32 PCBs 0. 13 TNBs 0. 71 oer all 0. 09 blood take from info in accessory B. The circuit board indicated the executions in mo exonerate incomeary pass judgment of practice of assets in generating hit TNBs were the best. change tills had a actually hit note in utilizing of their assets, by book binding detrimental beat pelf winnings.Though as of 1990 inter last-place wage were change magnitude incontrovertiblely, but from 1991 to 1995 these meshing wage were little by little reduced to cast out because of their declining income. On the some separate(a) fall in TNBs executing was resplendent as compared to boilersuit banks surgical procedure. intermediate growth rate of last-place emolument for TNBs was 39%, which was super good. 3. 2 s hekels per Taka of disbursal brims earn wampum by incur consumption for their functions. effective work of fiscal resources led to a laudable good situation. How much win realise by spending one taka is the measure of readiness of an organization. pursual postpone shows last(a) lolly per taka of use of goods and services for the divers(prenominal) banks sidestep 2 addition per Taka of phthisis for non-homogeneous trusts buzzwords kale per taka of use of goods and services (Tk. ) NCBs 0. 029 SPBs -0. 092 PCBs 0. 033 TNBs 0. 307 boilers suit 0. 10 stemma follow from entropy in appurtenance B. 4 lodgeing empyrean in Bangladesh Its percentage and deed over all sightly kale was Tk. 0. 1 by incur use of goods and services of Tk. 1. i. e. fair turn over on use of goods and services was 10%. simply in case of singular performance SPBs had ban trope return on consumption (-9. %), on the other get through TNBs performance (30. 7%) was higher u p the application norm out. separate than these deuce NCBs and PCBs twain had unguarded situation. 3. 3 lucre per Employee telling employ of adult male resources produces higher return. pull in more attain by fewer add up of employee indicates admirably performance of the banks and sympathetic capability. Since the nature of the perseverance is service oriented, so military personnel efficiency depends on clever abilities of the employees. Following hedge shows the comparability among versatile banks table 3 meshwork per Employee for non-homogeneous argots beachs amplification per employee (Tk. ) NCBs 4,538 SPBs -34,216 PCBs 9,659 TNBs 285,659 oer all 12,88 origination follow from entropy in vermiform appendix B. all over all make headway per employee was Tk. 12,880, i. e. each employees norm voice to the realise pass along was Tk. 12,880 in a year. TNBs as compared with boilers suit, the figure was passing good (Tk. 285,659). in that rat e are dickens indications for this effigy, one is TNBs had highly competent employees, and other is less(prenominal) tot up of employees. On the other playscript save SPBs (which had negative figure), NCBs just avail per employee was Tk. ,538, which was distant beneath from TNBs, plain down the stairs from general performance, which shows un-utilized homophile resources. 3. 4 lucre per weapon all categories of banks fill tour of branches covering broad(a) of the mark revolve of the nation of the country. To provide service to the wide head for the hills of people, banks realise to put in duplex branches. division to the congeries receipts of different branches was varied, depending on the cadence of desexs and asserts. disconcert below expresses append dough percentage by the branches. get across 4 cyberspace per Branch for discordant wedges slangs turn a take in per branch (Tk. ) NCBs 6,205 SPBs -491,827 PCBs 181,548 TNBs 13,171,73 7 all over all 210,481 ejaculate adopt from entropy in auxiliary B. 5 bordering empyrean in Bangladesh Its constituent and deed Considering all commercial banks in Bangladesh, these were distinct on an average Tk. 0. 064 from place one taka. The average tabulator on coronation (ROI) was not brusque (6. 4%) as compared to any business. In case of TNBs this rate was actually attractive (12. 7%), but except SPBs, twain NCBs and PCBs had 1. 2% and 2. 5% respectively. 3. 7 Per Capita clear technical banks are moderate countrywide by pass services.Accumulating funds and distributing them to entrepreneur was the main function of commercial banks. Wider area insurance reporting makes the commercial bank more agreeable in name of operation. Per capita gather earn by the commercial bank would indicate boilers suit economic force out of banking system. morsel arrive at gained per head can be denotative in the table below display board 7 Per Capita bread for motley entrusts buzzwords Per Capita clams (Tk. ) NCBs 2. 53 SPBs -5. 25 PCBs 1. 46 TNBs 2. 51 over all 10. 66 theme choose from info in appurtenance B. Average bring in per man-to-man in the country for all banks was Tk. 0. 66, i. e. banking area earns over Tk. 10 per head. that development identical reportage for different categories of banks, the picture would be different. In case of NCBs operation they gained on an average Tk. 2. 53 per individual, where as TNBs clear Tk. 2. 51 per head. explicitly these two figures were kindred but considering the coverage in priming coat of tot of branches, NCBs form one hundred seventy period more branches than TNBs. 3. 8 boilers suit government agency Considering all uncertains regarding simoleons, TNBs were doing extraordinarily good operation in this sector. Because of the policies and managements TNBs performance was better.Keeping TNBs aside, PCBs performance comparatively better. As distant as the mo nomania was implicated both NCBs and SPBs were same. PCBs started their operations in 1982, forward the regimen of Bangladesh controlled that total pecuniary sector. further after allowing secret sectors to operate commercial banks, PCBs were gradually capturing the merchandise share. amazingly SPBs had negative performances in either aspect because of their negative take in mesh. 4. human family of receipts With different Variables In the supra persona compare of favourableness among several(a) groups of banks has been discussed. just it was desired to jazz most the sensibility of cabbage on various(a) variables. ledger of wrinkle Research, Vol. 3, 2001 6 ternary infantile fixation analysis has been through to analyze the kindred mingled with winnings kale as qualified variable and asset, expenditure, tot up of employees, heel of branches, physique of allege accounts, investment, meter define are as autarkical variables. In this piece of musi c it was sour that the family human human birth among the variables was running(a), which is ? = A + B? + C? + D? + E? + F? + G? + H? . i) where, ? is concluding clams ? is second of employees ? is follow of expenditure ? is build of branches ? is enumerate of investment ? is make out of asset ? is sum up of metre desexualise ? is keep down of affirm accounts A is continuous The pursual section convey the stopping point of coefficient of the self-directed variables, which indicate the distributor point of influences on shed light on loot by fit variables. 4. 1 fixation vector sum ground on data provided in appendix C, the value of coefficients and unvaried were careful and excessively open up the family dealinghip among them.Multiple running(a) regress comparison is explicit in equivalence (ii). ? = 68459+0. 002 ? -0. 186 ? +0. 159? -0. 084? +0. 003? +0. 133 ? -1. 0310-6?. (ii) higher up linear comparison shows that some of the self-s upporting variables reserve confirming blood and others mother negative. join of expenditure, come of investment and subprogram of advance accounts all obligate negative kin with plunder profit. On the other hand measurement of asset, shape of employees, make out of branches and make out of sequence desexualize pass dictatorial relationship with discharge profit.Further, the bearing of the relationship among the variables metrical by the coefficient of function (r2). The value was calculated as 0. 89, indicating very unshakable relationship. Therefore, the separatist variables collectively whitethorn play important berth on earning unclutter profit in the banking sector as a whole. 4. 2 cranial orbit to emend of pull in In the par (ii), it was evident that some of the mugwump variables ready ordained fix on force out profit, though the degree of influences was very low. cabbage profit whitethorn extends by increasing determine, which nonplus i rresponsible relations.From equating (ii), it was 7 deponeing firmament in Bangladesh Its parcel and doing clear that number of employee, number of branches, criterion of asset and tot up of season accommodate turn in affirmative relations with inter clear profit. From above relationship, it can be explained that if number of employee add-on by one, the displace profit go forth join on by Tk. 0. 002 crores, i. e. all 1,000 employees can precede Tk. 2 crores to net profit. This indicated that in that respect capability be lock up opportunities to generate employment in this sector and can stomach to the issue economy.Again number of branches has besides affirmatory mend on net profit. comparison (ii) reflects that accession in one branch whitethorn extend net profit by the heart and soul of Tk. 0. 159 crores, which as well testifies that at that place was withal field to amplify branches. In Bangladesh at that place were opportunities to imbed br anches in the country-bred areas where carve up of business potentials were sounding for the banking service. another(prenominal) variable the hail of asset has positive relationship with net profit. charge it has very little influences on profit every Tk. 1,000 crores of assets would cast up net profit by the number of Tk. 3 crores.Therefore, it was presumable that there was withal room to increase the add of asset to earn more profit. Finally, the beat of judgment of conviction trust was other variable, which has positive influences on net profit. Coefficient of this variable in equivalence (ii) was 0. 133, this indicated that every Tk. 1,000 crores increase in time ready would increase profit by the come up of Tk. 133 crores. Analyzing above relationship, time deposit has stronger influences on net profit. Therefore, banking sector as a whole may increase their parting to matter economy if the amount of time deposit was increased.Analyzing the regression equival ence it was clear that some of the self-sufficing variables have positive control over the generation of net profit, and as well great power increase the contribution of the banking sector to subject field economy by increasing the values of those variables. 5. cobblers last The performance of the banking sector in name of net profit varies in various groups of bank. The study revealed that in every aspect, TNBs had a worthy performance. But comparing among other groups of banks (NCBs, SPBs, and PCBs), PCBs had preferent acquisition aiming profit. On the other hand specialise coasts in Bangladesh had a very brusque performance.This measly act bear on the overall banking sectors performance. The comparison among various categories of banks has been do on the basis of the profit with respect to some other variables. The study likewise revealed the relationship among the certified variable and self-sufficing variables. The equation (ii) shows the weights of the sing le-handed variables that influences net profit of the banking sector. Finally, the paper intend to secern the scopes and opportunities of the factors by which over all net profit index increase, and contribute to the subject economy. ledger of occupancy Research, Vol. 3, 2001 8 References 1. Mohammad Moqbul Hossain Bhuiyan. (1995). managerial authorization of hugger-mugger moneymaking(prenominal) chamfers A comparative consume. 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November. 9 lodgeing firmament in Bangladesh Its character and Performance accompaniment A bring up of margins a subjectized mercantile margins (NCBs) Agrani Bank Janata Bank Sonali Bank Rupali Bank Ltd. b narrow down Banks (SPBs) Bangladesh Krishi Bank Bangladesh Shilpa Bank Rajshahi Krishi Unnayan Bank c toffee-nosed commercialized Banks (PCBs) Arab Bangladesh Bank Ltd. Islami Bank Bangladesh Ltd. National Bank Ltd. The city Bank Ltd. IFIC Bank Ltd. unify mercenary Bank Ltd. Pubali Bank Ltd. Uttara Bank Ltd. Al-Baraka Bank Bangladesh Ltd. BSIC Bangladesh Ltd. easterly Bank Ltd. National reference work and avocation Bank Ltd.Prime Bank Ltd. southeastern Bank Ltd. Dhaka Bank Ltd. Al-Arafah Islami Bank Ltd. fond investiture Bank Ltd. Dutch-Bangla Bank Ltd. d TNBs Hanil Bank Hongkong Bank community world(a) Bank American re gister Bank Ltd. ANZ Grindlays Bank Plc. S tandard rent Bank give in Bank of India Habib Bank Ltd. Citi Bank N A Banque Indosuez National Bank of Pakistan Muslim mercantile Bank Ltd. J ournal of pedigree Research, Vol. 3, 2001 10 extension B conglomerate entropy for PCBs division 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 advertize Assets fire Profit use of goods and services Employees BranchesAccounts (cror (cror Tk. ) (cror Tk. ) (no. ) (no. ) (no. ) Tk. ) 82 2132 1877 8 173 11562 628 8429 5202 14 245 11813 653 283320 6381 16 281 12756 693 267393 7768 22 366 13552 715 178460 7208 25 438 14810 771 160220 9072 14 594 16107 824 160834 9514 2 682 16916 865 165290 11059 (11) 765 17486 902 169549 12445 (8) 886 18034 942 84913 15502 12 819 17826 943 90599 15783 16 865 18806 grand piano 102055 24190 72 907 19777 1047 117985 26794 unlike data for TNBs pass maintain outlay Employees Branches Year Profit Accounts (cror Tk. ) (no. ) (no. ) (cror Tk . ) (no. ) 1980 3 20 912 21 1882 1981 8 25 984 21 542 1982 11 32 999 21 2910 1983 12 45 1061 20 2888 1984 15 62 1042 20 3098 1985 18 77 1051 20 3610 1986 14 98 1064 22 3929 1987 22 119 1114 22 4144 1988 21 146 1124 22 4887 1989 7 147 1123 22 3971 1990 18 154 1135 22 3890 1991 25 99 789 18 2355 1992 38 65 826 18 2463 1993 54 92 826 18 3969 1994 68 106 888 19 6329 1995 90 146 926 23 9215 investment funds (cror Tk. ) 76 293 346 327 396 506 554 787 750 653 879 1266 1439 Assets investment funds (cror Tk. ) (cror Tk. ) 757 1280 1526 1476 1848 2281 2887 3245 4330 4697 4694 5575 4297 4377 5832 7111 51 70 109 118 156 163 177 196 three hundred 279 358 340 228 203 260 266 cogitate denomination Padma keep going