Full 2014 2015 PDF

(July 2014-June 2015)
BANGLADESH BANK
(The Central Bank of Bangladesh)
Letter of Transmittal
BANGLADESH BANK
Dhaka
27 January 2016
The Secretary
Bank and Financial Institutions Division
Ministry of Finance
Government of the People's Republic of Bangladesh
Dhaka.
Dear Sir,
In terms of Article 40 (2) of the Bangladesh Bank Order, 1972 (P. O Number 127) I have the
honour to submit to the Government of the People's Republic of Bangladesh the Annual Report
of the Bangladesh Bank for the financial year 2014-2015. Audited Accounts of the Bank for the
financial year was forwarded earlier on 30 August 2015.
Yours faithfully,
(Dr. Atiur Rahman)

Governor
Board of Directors
Dr. Atiur Rahman Chairman
Mr. Md. Abul Quasem Director
Dr. Mustafa Kamal Mujeri Director
Prof. Sanat Kumar Saha Director
Dr. Sadiq Ahmed Director
Prof. Hannana Begum Director
Mr. Md. Ghulam Hussain Director
Dr. M. Aslam Alam Director
Mr. Mahbub Ahmed* Director
Mr. Md. Nojibur Rahman** Director
Mr. Ahmed Jamal Secretary
* Mr. Mahbub Ahmed was appointed as Director of the Board in place of Mr. Fazle Kabir with effect from
27 July 2014.
** Mr. Md. Nojibur Rahman was appointed as Director of the Board in place of Mr. Md. Ghulam Hussain with
effect from 25 January 2015.
Governor
Dr. Atiur Rahman
Deputy Governors
Md. Abul Quasem
Abu Hena Mohd. Razee Hassan
Shitangshu Kumar Sur Chowdhury
Nazneen Sultana
Change Management Adviser

Md. Allah Malik Kazemi
Chief Economist
Dr. Biru Paksha Paul
Executive Directors/Economic Adviser
Md. Ahsan Ullah Md. Abdur Rahim

Md. Mahfuzur Rahman Md. Adbus Sattar Miah
Dr. Md. Akhtaruzzaman Jinnatul Bakeya
S.M. Moniruzzaman Muhammad Mijanur Rahman Joddar
Mohammad Naushad Ali Chowdhury Md. Nazimuddin
Ahmed Jamal Md. Mozibar Rahman
Nirmal Chandra Bhakta Md. Saiful Islam
Subhankar Saha Qazi Nasir Ahmed
Mohammad Masum Kamal Bhuiyan Md. Humayun Kabir
As on 30 June 2015.
Departments* of the Head Office and Department Heads**
Accounts & Budgeting Department Badrul Haque Khan, General Manager@
Agricultural Credit & Financial Inclusion Department Provash Chandra Mallick, General Manager
Bangladesh Bank Training Academy Sheikh Azizul Haque, General Manager
Md. Golam Mostafa, General Manager
Md. Abdul Hamid, General Manager
Nurun Nahar, General Manager
Md. Bozlar Rahman Mollah, General Manager
Md. Mosharraf Hossain Khan, General Manager
Rokeya Akhter, General Manager
Mohammad Matiur Rahman, System Manager
Rokeya Begum, General Manager
Bangladesh Financial Intelligence Unit Md. Nasiruzzaman, General Manager
Banking Regulation & Policy Department Chowdhury Md. Feroz Bin Alam, General Manager
Central Bank Strengthening Project Cell Joarder Israil Hossain, General Manager
Chief Economist Unit Begum Sultana Razia, General Manager
Common Services Department-1 Ranendra Narayan Choudhury, General Manager
Common Services Department-2 A.K.M. Fazlur Rahman, General Manager
Credit Information Bureau Monsura Khatun, General Manager
Department of Banking Inspection-1 Ashok Kumar Dey, General Manager
Department of Banking Inspection-2 Sultan Ahmed, General Manager
Department of Banking Inspection-3 Mohd. Humayun Kabir, General Manager
Department of Banking Inspection-4 Mohammad Golam Haider, General Manager
Department of Currency Management Md. Muslem Uddin, General Manager
Department of Communications and Publications F.M. Mokammel Huq, General Manager
Department of Foreign Exchange Inspection Md. Eskandar Mian, General Manager
Department of Financial Institutions & Market Md. Shah Alam, General Manager
Deposit Insurance Department Mahfuza Khanam, General Manager
Debt Management Department Bishnu Pada Saha, General Manager
Department of Off-site Supervision S.M. Rabiul Hassan, General Manager
Expenditure Management Department Md. Sohrawardy, General Manager
Foreign Exchange Investment Department A.N.M. Abul Kashem, General Manager
Foreign Exchange Operation Department Syed Tariquzzaman, General Manager
Foreign Exchange Policy Department Md. Masud Biswas, General Manager
Financial Integrity and Customer Services Department A.K.M. Amjad Hussain, General Manager
Forex Reserve & Treasury Management Department Kazi Sayedur Rahman, General Manager
Financial Stability Department Debashish Chakrabortty, General Manager
Green Banking & CSR Department Manoj Kumar Biswas, General Manager
Governor's Secretariat A.F.M. Asaduzzaman, General Manager
Dr. Md. Habibur Rahman, General Manager
Human Resources Department-1 Abu Farah Md. Nasser, General Manager
Human Resources Department-2 Md. Azizur Rahman, General Manager
Internal Audit Department Md. Sadrul Huda, General Manager@
Information Systems Development Department Md. Nurul Amin Bhuiyan, Systems Manager
IT Operation & Communication Department Md. Rizwanul Hoque, Systems Manager
Law Department A.K.M. Mohiuddin Azad, General Manager
Monetary Policy Department Md. Abdur Rouf, General Manager
Payment Systems Department K.M. Abdul Wadood, General Manager
Research Department Mohammed Shahidul Alam, General Manager
Bilkis Sultana, General Manager
Md. Abdul Awwal Sarker, General Manager
Asish Kumar Das Gupta, General Manager
Secretary's Department Dr. Abul Kalam Azad, General Manager
Statistics Department A. K. M. Fazlul Haque Mia, General Manager
Md. Mizanur Rahman, General Manager
Security Management Department Lt. Col. (Retd.) Md. Mahmudul Haque Khan Chowdhury,
General Manager@
SME & Special Programmes Department Swapan Kumar Roy, General Manager
Special Studies Cell Md. Elias Sikder, General Manager
*As per alphabetical arrangement. ** As of 30 June 2015.

@ Contractual Basis.
Note: 1) Md. Serajul Islam, General Manager, Sheikh Mozaffar Hossain, General Manager, Md. Abdus Sattar, General Manager, Md. Sultan Masud
Ahmed, General Manager and Laila Bilkis Ara, General Manager are on deputation with EEF Unit, Bangladesh Institute of Bank
Management, Institute of Bankers Bangladesh, Housing Fund and Microcredit Regulatory Authority respectively.
2) Md. Abdur Rashid, General Manager is attached with HRD-1.
Branch Offices* and Office Heads**
Barisal Nurul Alam Kazi, General Manager

Bogra Manoj Kanti Bairagi, General Manager
Chittagong Muhammad Mijanur Rahman Joddar, Executive Director
Khulna Md. Nazimuddin, Executive Director
Prokash Chandra Bhadra, General Manager
Motijheel Md. Mozibar Rahman, Executive Director
Md. Masum Patwary, General Manager
Md. Shahidur Rahman, General Manager***
Dr. Mihir Kanti Chakroborty, Chief Medical Officer@
Mymensingh Md. Shafiqul Islam, General Manager
Rajshahi Jinnatul Bakeya, Executive Director
Sheikh Abdullah, General Manager
Rangpur Md. Khurshid Alam, General Manager
Sadarghat Qazi Enayet Hussain, General Manager
Sylhet Mohammad Mobarak Hossain, General Manager
*As per alphabetical arrangement.

** As of 30 June 2015.
*** Currency Officer (CO).
@ Contractual Basis.
Contents
Chapters Pages
Chapter-1 Macroeconomic Performance and Prospects 1

Global Economic Outlook 1
Developments in the Bangladesh Economy 3
Growth Performance 4
Savings and Investment 5
Price Developments 5
Money and Credit Developments 5
Public Finance 7
External Sector 7
Near and Medium Term Outlook for Bangladesh Economy 8
Chapter-2 The Real Economy 10

Economic Growth 10
Agriculture Sector 11
Industry Sector 11
Services Sector 12
Sectoral Composition of GDP 13
GDP by Expenditure 14
Savings and Investment 14
Chapter-3 Price and Inflation 15
Global Inflation Scenario 15

Consumer Prices in Bangladesh 15
Wage Rate Trends 18
Near Term Inflation Outlook 19
Chapter-4 Money and Credit 21

Stance of Monetary and Credit Policy 21
Reserve Money Developments 25
Income Velocity of Money 26
Bank Credit 27
Bank Deposits 27
Credit/Deposit Ratio 27
Scheduled Banks' Borrowing from Bangladesh Bank 27
Balances of Scheduled Banks with the BB and their Cash in Tills 27
Cash Reserve Requirement (CRR) 28
Statutory Liquidity Ratio (SLR) 28
Bank Rate 28
Interest Rates on Deposits and Lending 28
xi
Contents
Chapters Pages
Chapter-5 Banking Sector Performance, Regulation and Bank Supervision 29
A. Banking Sector Performance 30
A.1. Aggregate Balance Sheet 31
A.2. Capital Adequacy 31
A.3. Asset Quality 32
A.4. Management Soundness 35
A.5. Earnings and Profitability 35
A.6. Liquidity 37
A.7. CAMELS Rating 38
A.8. Operations of Banks in Urban and Rural Areas 38
A.9. Islamic Banking 39
B. Legal Framework and Prudential Regulations 39
B.1. Risk Based Capital Adequacy (RBCA) for Banks 39
B.2. Loan Classification and Loan-Loss Provisions 41
B.3. Corporate Governance in Banks 41
C. Supervision of Banks 41
C.1. Off-site Monitoring of Banks 41
Banking Supervision Specialists (BSS) 41
Risk Management Activities of Banks 42
C.2. On-site Inspection of Banks 43
C.3. Financial Stability and Macro-prudential Supervision 47
D. Banking Sector Infrastructure for Financial Stability and Risk Management 47
D.1. Deposit Insurance Scheme 47
D.2. Activities of Credit Information Bureau 48
Chapter-6 Sustainable Banking 50
A. Green Banking 50
A.1. Policy Initiatives 50
A.2. Green Finance 51
A.3. Environmental Risk Management (ERM) 51
A.4. Climate Risk Fund and Green Marketing 51
A.5. Online Banking and Energy Efficiency 52
A.6. BB's in House Environmental Management 52
A.7. BB's Refinance Schemes for Green Products/Sectors 52
A.8. ADB Supported 'Financing Brick Kiln Efficiency Improvement Project' 53
B. Corporate Social Responsibility 53
B.1. BB's Own CSR Activities 54
B.2. CSR Activities of Banks and NBFIs 54
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Contents
Chapters Pages
C. Financial Inclusion 55
C.1. NFAs for Farmers and other than Farmers 55
C.2. School Banking 56
C.3. Banking for Working/Street Children 56
C.4. Agent Banking 57
C.5. BB Refinance Scheme for Taka 10 Account Holders 57
C.6. NRB Database 57
C.7. Financial Education 58
Chapter-7 Performance, Regulation and Supervision of NBFIs 59
A.1. Assets 59
A.2. Investment 59
A.3. Deposits 60
A.4. Other Liabilities and Equity 60
A.5. Bond and Securitisation Activity 60
B. Performance and Rating of NBFIs 60
B.1. Capital Adequacy 60
B.2. Asset Quality 61
B.3. Management Efficiency 61
B.4. Earnings and Profitability 62
B.5. Liquidity 62
B.6. Sensitivity to Market Risk 62
B.7. Composite CAMELS Rating 62
C. Legal Reform and Prudential Regulations 62
C.1. Capital Adequacy and Progress of BASEL Accord
Implementation in NBFIs 62
C.2. Corporate Governance in NBFIs 63
C.3. Asset Classification and Provisioning 63
C.4. Loan Rescheduling Policy 63
C.5. Core Risk Management 63
C.6. Stress Testing 63
D. Consumer Protection Regulations 64
D.1. Schedule of Charges 64
D.2. Guidelines on Products and Services of Financial Institutions
in Bangladesh 64
E. Cost of Funds Index for NBFIs 64
Chapter-8 Financial Markets 65
Money Market 65
Call Money Market - FY15 65
Repo Auctions - FY15 65
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Contents
Chapters Pages
Reverse Repo Auctions - FY15 66
Bangladesh Bank Bill 66
Government Securities Market 67
Government Treasury Bills Auctions 67
Bangladesh Government Treasury Bonds (BGTB) Auctions 68
Bangladesh Government Islamic Investment Bond (Islamic Bond) 69
Capital Market 70
Investment Financing in Bangladesh 70
Capital Market Activities in FY15 70
Primary Issuance 70
Secondary Market Activities 71
Non-resident Portfolio Investment 72
Activities of the Investment Corporation of Bangladesh 72
Scheduled Banks Investments in Capital Market Securities 72
Measures Supporting Capital Market Development 72
Credit Market 74
Advances of Scheduled Banks by Economic Purposes 74
Industrial Term Loans of Banks and Financial Institutions 74
Investment Promotion and Financing Facility (IPFF) 75
Equity and Entrepreneurship Fund (EEF) 76
Housing Finance 76
Foreign Exchange Market 78
Chapter-9 Agricultural and Rural Finance 79
Annual Agricultural Credit Programme 79
Implementation of Some Important Initiatives of Agricultural Credit
Programme in FY15 79
Disbursement 80
Recovery 81
Sources of Agricultural Finance 81
Bangladesh Bank's Refinance Against Agricultural Loans 81
Agricultural Credit Projects/Programmes Under Bangladesh Bank Supervision 82
Financing of Small & Medium Scale Enterprises 83
Microcredit Operations of the Grameen Bank and Large MFIs 85
Chapter-10 Public Finance 87

A. FY15 Budget and Fiscal Outcome 87
A.1. Revenue Receipts 87
A.2. Expenditure 92
A.3. Financing FY15 Budget Deficit 94
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Contents
Chapters Pages
B. FY16 Budget 94
B.1. Revenue Receipts 95
B.2. Expenditure 95
B.3. Deficit in FY16 Budget and Its Financing 96
Chapter-11 External Sector 97
External Trade and the Balance of Payments - the Overall Situation 97
Exports 98
Destination 98
Composition 99
Export Development Fund 100
Imports 100
Terms of Trade 102
Bilateral and Multilateral Relations 102
Workers' Remittances 103
Foreign Aid 103
Foreign Exchange Market Operations 104
Foreign Exchange Reserves 105
Reserve Management Strategy 105
Transactions under Asian Clearing Union (ACU) 106
Transactions with the IMF 107
Changes in Foreign Exchange Regulations 107
Anti-money Laundering Surveillance 108
Reporting Agencies and their Regulatory Regime 108
Receiving Suspicious Transaction Report (STR) and
Dissemination of the same 108
Initiative Taken for Strengthening BFIU 109
National Initiatives 109
International Cooperation and Initiatives 109
Chapter-12 Payment and Settlement Systems 110
Bangladesh Automated Cheque Processing Systems (BACPS) 110
Bangladesh Electronic Funds Transfer Network (BEFTN) 111
Mobile Financial Services(MFS) 112
e-commerce 113
Online Payment Gateway Service Providers (OPGSPs) 114
New Payment Systems Initiatives 114
Legal & Regulatory Framework 114
Awareness Raising Campaign 115
Chapter-13 Administration 116

Appointment of New Directors in the Board 116
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Contents
Chapters Pages
Executive Committee 116
Audit Committee of the Board 116
Executive Management Team 117
New Appointment in Different Posts 117
Retirement, Voluntary Retirement, Compulsory Retirement, Resignation,
Removal, Suspension and Death 117
Creation/Abolition of Posts 117
Sanctioned and Working Strength of Officials and Staff 117
Promotion 117
Number of Officers on Deputation/Lien 117
Reorganisation/Newly Established Departments of the Bank 118
Welfare Activities and Approval of Scholarship 118
Foreign Training and Study 118
Domestic Training and Study 118
Step towards Automation and Paperless Environment 118
Reward and Recognition 118
Training Courses, Workshops, and Seminars Conducted by the
Bangladesh Bank Training Academy (BBTA) 118
Central Bank Strengthening Project 120
Chapter-14 Bangladesh Bank's Accounts for 2014-2015 121

Income 121
Income from Foreign Currency Financial Assets 121
Income from Local Currency Financial Assets 121
Foreign Currency Revaluation Gain 122
Expenditure 122
Financial Cost 122
Other Expenses 122
Profit for the Year 122
Other Comprehensive Income 122
Profit Appropriation 122
Combined Balance Sheet of Banking and Issue Department 123
Assets 123
Liabilities 123
Notes in Circulation 123
Equity 123
Foreign Currency Reserve 124
Consolidation 124
Auditors 124
Audited Financial Statements as at and for the Year Ended 30 June 2015 125
xvi
Contents
Tables Pages
1.1 Overview of the World Economic Outlook projections 1

1.2 Sectoral GDP growth rates (at FY06 constant prices) 4
2.1 Sectoral GDP growth (at FY06 constant prices) 10
2.2 Sectoral GDP shares (at FY06 constant prices) 11
2.3 GDP by expenditure groups (at current market prices) 12
2.4 Domestic savings and investment (as percent of GDP) 12
3.1 Monthly inflation 15
3.2 Annual average CPI based inflation (FY06=100) 16
3.3 Changes in international prices of major commodities 17
3.4 Inflation in SAARC and other Asian countries 17
3.5 Annual average national level CPI by consumption basket
sub-groups (FY06=100) 18
3.6 Trends of wage rate indices (base: FY11=100) 18
3.7 Global inflationary situation 19
4.1 Money and credit situation 22
4.2 Reserve money position 24
4.3 Income velocity of money 24
4.4 Bank credit - FY15 quarterly positions 25
4.5 Bank deposits - FY15 quarterly positions 26
4.6 Weighted average interest rates of scheduled banks 26
5.1 Banking systems structure 29
5.2 Capital to risk weighted assets ratio by type of banks 31
5.3 NPL ratios by type of banks 32
5.3(a) Ratio of net NPL to total loans by type of banks 32
5.3(b) Amount of NPLs 33
5.4 Required provision and provision maintained - all banks 33
5.5 Comparative position of provision adequacy 34
5.6 Writing-off bad debts in different bank categories 35
5.7 Expenditure - income ratio by type of banks 35
5.8 Profitability ratios by type of banks 36
5.9 Net interest income by type of banks 36
5.10 Liquidity ratio by type of banks 37
5.11 Comparative positions of the Islamic banking sector 39
5.12 The recent position of DITF 48
6.1 Green finance in different products : FY15 51
6.2 Direct and indirect green finance : FY15 51
6.3 Environmental risk rating of banks and NBFIs : FY15 51
6.4 Disbursement trend of BB refinance scheme for green products 52
6.5 Expenditure details of the BB disaster management & corporate social
responsibility fund 53
6.6 CSR expenditure of banks and NBFIs 54
6.7 Total No. of NFAs for farmers and other then farmers as of end June 2015 55
xvii
Contents
Tables Pages
6.8 Total outstanding balance of NFAs for farmers and other than farmers
as of end June 2015 55
6.9 School Banking account and outstanding as of June 2015 56
6.10 Working/street children account and outstanding as of June 2015 57
7.1 Structure of NBFIs 59
7.2 Assets, liabilities and deposits of NBFIs 60
7.3 Total loan /lease and classified loan /leases 61
7.4 Profitability of NBFIs 62
8.1 Volume of trade and weighted average interest rates in call money market 65
8.2 Repo auctions - FY15 66
8.3 Reverse repo auctions - FY15 66
8.4 Auctions of Bangladesh Bank Bill - FY15 67
8.5 Auctions of Bangladesh Government treasury bills - FY15 68
8.6 Auctions of Bangladesh Government treasury bonds - FY15 69
8.7 Bangladesh Government Islamic investment bond 69
8.8 Disbursement & recovery of industrial term loans of banks and financial institutions 69
8.9 Dhaka Stock Exchange (DSE) activities 71
8.10 Chittagong Stock Exchange (CSE) activities 71
8.11 Advances of scheduled banks by economic purposes 73
8.12 Industrial term loans of banks and financial institutions 74
8.13 Outstanding housing loans 76
9.1 Comparative statement of disbursement & recovery of agricultural loan 80
9.2 Agricultural credit performance by lenders - FY15 82
9.3 Bangladesh Bank's refinance against agricultural loans 83
9.4 Microcredit operations of the Grameen Bank and large MFIs 86
10.1 Bangladesh Government revenue and expenditure 87
10.2 Composition of revenue receipts 89
10.3 Composition of revenue expenditure 90
10.4 Composition of social sector revenue expenditure 91
10.5 Sectoral shares in ADP expenditure 91
11.1 Composition of merchandise exports 99
11.2 Composition of merchandise imports payment 102
11.3 Terms of trade of Bangladesh (base : FY06=100) 103
11.4 Foreign aid receipts and debt repayments 104
11.5 Gross foreign exchange reserves of the Bangladesh Bank 105
11.6 Receipts and payments of Bangladesh under the ACU 106
11.7 Outstanding principal liabilities against the facilities received from the IMF 106
12.1 MFS Status 113
13.1 Statement on different training courses, workshops and seminars organised
by the Bangladesh Bank Training Academy (BBTA) during FY15 119
14.1 Sources of income 121
14.2 Bank's expenditure 122
xviii
Contents
Charts Pages
1.1 Domestic savings and investment 4

1.2 National CPI inflation (12 month average : base FY06=100) 5
1.3 Monetary aggregates 5
1.4 Sources of broad money (M2) 5
1.5 Revenue receipt, revenue expenditure, revenue surplus and budget deficit 6
1.6 Budget deficit financing 6
1.7 Export and import growth 7
1.8 NEER, REER & exchange rate 7
1.9 Recent movements in NEER, REER & Taka-Dollar exchange rate
(base: FY11=100, 10 currency basket) 7
2.1 Bangladesh real GDP growth 10
2.2 Domestic savings 13
2.3 Domestic investment 13
3.1 National CPI inflation (12-month average : base FY06=100) 15
3.2 Monthly inflation 16
3.3 Rural CPI inflation (12-month average : base FY06=100) 17
3.4 Urban CPI inflation (12-month average : base FY06=100) 18
3.5 Changes in international commodity prices 19
3.6 South Asian inflationary situation 19
3.7 Wage rate index trends by sectors (base: FY11=100) 20
4.1 Liquidity management operations during FY15 21
4.2 Components of Broad Money (M2) 22
4.3 Domestic credit and its components 23
4.4 Programmes and actual developments of M2 and RM in FY15 23
4.5 Movement of GDP growth, M2 growth, rate of inflation and income
velocity of money 25
4.6 Weighted average interest rates of scheduled banks 26
5.1 Aggregate industry assets 30
5.2 Aggregate industry liabilities 30
5.3 Aggregate capital adequacy position 31
5.4 Aggregate position of NPLs to total loans 32
5.4(a) Aggregate position of NNPL to total loans (net of provisions) 33
5.5 Comparative position of NPLs by type of banks 34
5.6 Provision adequacy position of all banks 34
5.7 Aggregate position of income and expenditure - all banks 35
5.8 Aggregate profitability - all banks 36
5.9 Aggregate NII of the industry 37
5.10 Aggregate position of excess liquidity 37
6.1 Shares of green products in refinancing : FY15 52
6.2 Sector-wise CSR expenditure of banks : FY15 54
xix
Contents
Charts Pages
6.3 Sector-wise CSR expenditure of NBFIs : FY15 54

7.1 Investment pattern of NBFIs as of 30 June 2015 60
7.2 Asset, liability and their ratios of NBFIs 60
7.3 NBFIs total, classified loan/leases and their ratios 61
8.1 Call money rate 65
8.2 Weighted average yield of BGTBS in FY15 68
8.3 Trends in market behaviour of DSE 71
8.4 Sectoral shares of total advances: FY15 73
8.5 Industrial term loans of banks and financial institutions: FY15 74
8.6 Taka-US Dollar exchange rate: FY15 78
9.1 Targets for agricultural credit disbursement in FY15 81
9.2 Actual agricultural credit disbursement in FY15 81
10.1 Composition of tax revenue : FY15 (revised) 88
10.2 Composition of tax revenue : FY16 (estimated) 88
10.3 Budget deficit financing : FY15 (revised) 92
10.4 Budget deficit financing : FY16 (estimated) 92
11.1 Key indicators of external sector 97
11.2 Trends of trade, current account and overall balances 99
11.3 Destinational pattern of exports in FY15 99
11.4 Import growth 102
11.5 Terms of trade of Bangladesh 103
11.6(a) Wage earners' remittances in FY14 104
11.6(b) Wage earners' remittances in FY15 104
11.7 Liquid foreign exchange holdings abroad 105
12.1 No. of regular value instruments cleared through BACPS and
associated amount 111
12.2 No. of high value instruments cleared through BACPS and
associated amount 111
12.3 No. of EFT entries and associated amounts 112
12.5 Trends of interbank ATM transaction through NPSB 112
14.1 Bank's income, expenditure and profit 121
Box
5.1 Liquidity Management by Islamic Banks in Bangladesh 45
6.1 Financial Literacy and Bangladesh Bank's Initiatives 58
8.1 Financial Derivative Market of Bangladesh 77
10.1 Financing of Budget Deficit in Bangladesh 93
11.1 Appreciation Pressure of Taka and Its Impact on Trade 101
12.1 Electronic Money 113
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Contents
Appendices Pages
Appendix-1 Chronology of Major Policy Announcements: FY15 215
Appendix-2 Bangladesh Bank's Research in FY15 225
Appendix-3 Bangladesh: Some Selected Statistics 233
Tables
I Trends of Major Macroeconomic Indicators 235
II Medium-Term Macroeconomic Framework : Key Indicators 236
III Gross Domestic Product (GDP), Investment and Savings 237
IV Growth and Sectoral Share of GDP (at FY06 constant prices) 238
V Development of Government Budgetary Operation 239
VI Money and Credit 240
VII Consumer Price Index (CPI) and Rate of Inflation -
National (base : FY96=100) 241
VIII Quantum Index of Medium and Large-scale Manufacturing
Industry (base : FY06=100) 242
IX Reserve Money and Its Components 243
X Reserve Money and Its Sources 244
XI Deposits of Public and Private Sector 245
XII Selected Statistics of Scheduled Banks 246
XIII Movements in Selected Interest Rates (end period) 247
XIV Government Borrowing (net) from the Banking System 248
XV Government Borrowing from other than Banks 250
XVI Balance of Payments 251
XVII Category-wise Exports 252
XVIII Category-wise Imports 253
XIX Sector-wise Comparative Statement of Opening, Settlement and
Outstanding of Import LCs 254
XX Foreign Exchange Reserves 255
XXI Period Average Taka-US Dollar Exchange Rates 256
XXII Country-wise Workers' Remittances 257
XXIII List of Scheduled Banks 258
XXIV List of Financial Institutions 260
XXV List of Major Publications 261
Appendix-4 Banking Performance Indicators 263

Tables I Banking System Structure 265
II Capital to Risk Weighted Assets Ratio by Type of Banks 265
III NPL Ratios by Type of Banks 265
IV Ratio of Net NPLs to Total Loans by Type of Banks 266
V Amount of NPLs 266
VI Required Provision and Provision Maintained-All Banks 266
VII Comparative Position of Provision Adequacy 267
VIII Writing-off Bad Debts in Different Bank Categories 267
IX Expenditure -Income Ratio by Type of Banks 267
X Profitability Ratios by Type of Banks 267
XI Net interest income by Type of Banks 268
XII Liquidity Ratio by Type of Banks 268
XIII Branch, Deposit and Advance in The Banking System-Rural and Urban 268
xxi
List of Abbreviations
A/C Account BTMA Bangladesh Textile Mills Association
ACC Anti-Corruption Commission BTMC Bangladesh Textile Mills Corporation
A&BD Accounts & Budgeting Department BTRC Bangladesh Telecommunication Regulatory
ACU Asian Clearing Union Commission
ACUD Asian Clearing Union Dollar BWG BIMSTEC Working Group
ADB Asian Development Bank CAAB Civil Aviation Authority, Bangladesh
ADP Annual Development Programme CAMD Capital Adequacy and Market Discipline
ADR Advance Deposit Ratio CAMEL Capital Adequacy, Asset Quality, Management,
ADs Authorised Dealers Earnings and Liquidity
AML Anti Money Laundering CAMELS Capital Adequacy, Asset Quality, Management,
ASEAN Association of South East Asian Nations Earnings, Liquidity and Sensitivity to Market Risk
ATA Anti-Terrorism Act CAMLCO Chief Anti Money Laundering Compliance Officer
ATDTL Average Total Demand and Time Liabilities CAPM Capital Asset Pricing Model
ATDP Agro- based Industries and Technology CAR Capital Adequacy Ratio
Development Project CBSP Central Bank Strengthening Project
ATM Automated Teller Machine CCB Countercyclical Capital Buffer
BAB Bangladesh Accreditation Board CDA Chittagong Development Authority
BACH Bangladesh Automated Clearing House CET1 Common Equity Tier-1
BACPS Bangladesh Automated Cheque CFI Cost of Funds Index
Processing Systems CFT Combating the Financing of Terrorism
BASIS Bangladesh Association of Software and CIB Credit Information Bureau
Information Services CID Criminal Investigation Department
BB Bangladesh Bank CIPC Customers' Interests Protection Centre
BBS Bangladesh Bureau of Statistics CIT Cheque Imaging and Transaction
BBTA Bangladesh Bank Training Academy CPI Consumer Price Index
BCBL Bangladesh Commerce Bank Ltd. CRAR Capital to Risk-weighted Asset Ratio
BDBL Bangladesh Development Bank Limited CRMR Comprehensive Risk Management Report
BEFTN Bangladesh Electronic Fund Transfer Network CRO Chief Risk Officer
BFIU Bangladesh Financial Intelligence Unit CRR Cash Reserve Requirement
BGAPMEA Bangladesh Accessories & Packaging CSE Chittagong Stock Exchange
Manufacturers & Exporters Association CSR Corporate Social Responsibility
BGIIB Bangladesh Government Islamic Investment Bond CTRs Cash Transaction Reports
BGMEA Bangladesh Garment Manufactures & Exporters DBI-1 Department of Banking Inspection-1
Association DBI-2 Department of Banking Inspection-2
BGTBs Bangladesh Government Treasury Bonds DBI-3 Department of Banking Inspection-3
BIMSTEC Bay of Bengal Initiative for Multi-Sectoral DBI-4 Department of Banking Inspection-4
Technical and Economic Cooperation DC Data Centre
BJMC Bangladesh Jute Mills Corporarion DFEI Department of Foreign Exchange Inspection
BLFCA Bangladesh Leasing and Finance Companies DFIM Department of Financial Institutions & Market
Association DFIs Development Finance Institutions
BIRP Bank Intervention Resolution Plan DIS Deposit Insurance Scheme
BIC Basel Implementation Cell DITF Deposit Insurance Trust Fund
BKB Bangladesh Krishi Bank DMD Debt Management Department
BKMEA Bangladesh Knitwear Manufacturers and DMS Document Management System
Exporters Association DSE Dhaka Stock Exchange
BoP Balance of Payments DSEX DSE Broad Index
BPC Bangladesh Petroleum Corporation DSIB Domestic Systematically Important Bank
BPO Bangladesh Post Office DOF Directorate of Fisheries
BPSSR Bangladesh Payment and Settlement Systems DOS Department of Off-site Supervision
Regulations DRR Diagnostic Review Report
BRDB Bangladesh Rural Development Board DRS Disaster Recovery Site
BRPD Banking Regulation & Policy Department DTIS Diagnostic Trade Integration Study
BSBL Bangladesh Samabaya Bank Limited D&T Demand and Time
BSEC Bangladesh Securities and Exchange Commission EC Election Commission
BSS Banking Supervision Specialists ECF Extended Credit Facility
xxii
EDD Environmental Due Diligence IASB International Accounting Standards Board
EDF Export Development Fund ICAAP Internal Capital Adequacy Assessment Process
EDW Enterprise Data Warehouse ICB Investment Corporation of Bangladesh
EEF Equity and Entrepreneurship Fund ICML ICB Capital Management Ltd
EFT Electronic Fund Transfer ICT Information and Communication Technology
EGBMP Enterprises Growth and Bank Modernisation IDA International Development Agency
Programme IDCOL Infrastructure Development Company Limited
EI Expenditure-Income IFC-BICFInternational Finance Corporation-Bangladesh
EIF Enhanced Integrated Framework Investment Climate Fund
EMT Executive Management Team IFRSs International Financial Reporting Standards
EPB Export Promotion Bureau IFS International Financial Statistics
EPZ Export Processing Zone IIFM Islami Interbank Fund Market
ERM Environmental Risk Management IMF International Monetary Fund
ERP Enterprise Resource Planning IPFF Investment Promotion & Financing Facility
ERR Environmental Risk Rating IPO Initial Public Offering
ERQs Exporters Retention Quotas IR Insolvency Ratio
ETP Effluent Treatment Plant ISS Integrated Supervision System
EU European Union ISTCL ICB Securities Trading Company Ltd.
EWS Early Warning System IT Information Technology
FAO Food and Agriculture Organisation ITC International Trade Centre
FCBs Foreign Commercial Banks ITM Inter-bank Transaction Matrix
FCK Fixed Chimney Kiln JCS Joint Cooperation Strategy
FDI Foreign Direct Investment JICA Japan International Cooperation Agency
FIs Financial Institutions JPY Japanese Yen
FICSD Financial Integrity and Customer Service KSA Kingdom of Saudi Arabia
Department KYC Know Your Customer
FoB Free on Board L/C Letter of Credit
FPM Financial Projection Model LAN Local Area Network
FRTMD Forex Reserve & Treasury Management LCR Liquidity Coverage Ratio
Department LDCs Least Developed Countries
FSD Financial Stability Department LIBOR London Interbank Offered Rate
FSPDSME Financial Sector Project for the Development of LOLR Lender of Last Resort
Small and Medium-sized Enterprise LPG Liquefied Petroleum Gas
FSSP Financial Sector Support Programme LSF Liquidity Support Facility
FTA Free Trade Agreement M2 Broad Money
FY Financial Year (July- June) MANCOM Management Committee
GDE Gross Domestic Expenditure MCR Minimum Capital Requirements
GDP Gross Domestic Product MFIs Microfinance Institutions
GDS Gross Domestic Savings MFS Mobile Financial Services
GFET Guideline for Foreign Exchange Transaction ML Money Laundering
GFSR Global Financial Stability Report MLT Medium and Long Term
GHG Green House Gas MMT Million Metric Tons
GNI Gross National Income MoF Ministry of Finance
GNS Gross National Savings MoU Memorandum of Understanding
GoB Government of Bangladesh MPD Monetary Policy Department
GVA Gross Value Added MPS Monetary Policy Statement
H1 First Half MRA Microcredit Regulatory Authority
H2 Second Half MSFSCIP Marginal and Small Farm System Crop
HBFC House Building Finance Corporation Intensification Project
HFT Held for Trade MSME Micro Small and Medium Enterprise
HHI Herfindahl-Hirschman Index MTMF Medium Term Macroeconomic Framework
HHK Hybrid Hoffman Kiln NAFTA North American Free Trade Agreement
HRD-1 Human Resources Department-1 NBFIs Non-bank Financial Institutions
HRD-2 Human Resources Department-2 NBR National Board of Revenue
HTM Held to Maturity NCC National Coordination Committee
IAD Internal Audit Department NCDP Northwest Crop Diversification Project
IADI International Association of Deposit Insurance NCT Net Current Transfer
IAMCL ICB Asset Management Company Ltd NDA Net Domestic Assets
xxiii
NEER Nominal Effective Exchange Rate SAARC South Asian Association for Regional Cooperation
NFA Net Foreign Assets SC Steering Committee
NFAs No-Frill Accounts SCBs State -owned Commercial Banks
NGOs Non-Governmental Organisations SCDP Second Crop Diversification Project
NII Net Interest Income SDC Swiss Agency for Development and Cooperation
NIM Net Interest Margin SDR Special Drawing Rights
NITA Non-resident Investor Taka Account SEC Securities and Exchange Commission
NNPL Net Non-performing Loans SEF Small Enterprise Fund
NOC No Objection Certificate SEIP Skills for Employment Investment Programme
NRTA Non-resident Taka Accounts SEZ Special Economic Zone
NOC No Objection Certificate SHOGORIP Shashya Gudam Rin Prokalpa
NPLs Non-performing Loans SIM Subscriber Identity Module
NPO Non-profit organisation SLR Statutory Liquidity Ratio
NPS National Payment Switch SMEs Small and Medium-sized Enterprises
NPSB National Payment Switch Bangladesh SMEDP Small and Medium-sized Enterprise
NRB Non-resident Bangladeshi Development Project
NSD National Saving Directorate SMESDP Small and Medium-sized Enterprise Sector
NSFR Net Stable Funding Ratio Development Project
OECD Organisation for Economic Co-operation and SME&SPD SME & Special Programmes Department
Development
SPCBL Security Printing Corporation (Bangladesh) Ltd.
OMO Open Market Operation
SPM Suspended Particulate Matter
OMS Order Management System
SREP Supervisory Review Evaluation Process
OPGSPs Online Payment Gateway Service Providers
SRP Supervisory Review Process
PCBs Private Commercial Banks
STRs Suspicious Transaction Reports
PDs Primary Dealers
SWIFT Society for Worldwide Interbank Financial
PFDS Public Food Distribution System
Telecommunication
PFI Participating Financial Institution
TA Technical Assistance
PKSF Palli Karma Sahayak Foundation
TDTL Total Demand and Time Liabilities
POL Petroleum, Oil and Lubricants
TF Terrorist Financing
POs Partner Organisations
TMSS Thengamara Mohila Sabuj Sangha
POS Point of Sale
TSL Two Step Loan
PPP Public Private Partnership
PRGF Poverty Reduction and Growth Facility TVCs Television Commercials
PSD Payment Systems Department UAE United Arab Emirates
QIIP Quantum Index of Industrial Production UK United Kingdom
QRR Quick Review Report UNCTAD United Nations Conference on Trade and Development
RAJUK Rajdhani Unnayan Kartripakkha US United States
RAKUB Rajshahi Krishi Unnayan Bank USA United States of America
RBCA Risk Based Capital Adequacy USD US Dollar
REER Real Effective Exchange Rate VAT Value Added Tax
Repo Repurchase Agreement VPN Virtual Private Network
RM Reserve Money VSBK Vertical Shaft Brick Kiln
RMD Risk Management Department WAN Wide Area Network
RMG Ready Made Garments WAR Weighted Average Resilience
RMP Risk Management Paper WAR-WIR Weighted Average Resilience-Weighted
RMU Risk Management Unit Insolvency Ratio
ROA Return on Assets WASA Water Supply & Sewerage Authority
ROE Return on Equity WEO World Economic Outlook
RR Regional Representative WFE World Federation of Exchanges
RTGS Real Time Gross Settlement WG Working Group
RWA Risk Weighted Assets WIR Weighted Insolvency Ratio
S&P Standard and Poor's WTO World Trade Organisation
xxiv
Chapter-1
Macroeconomic Performance and Prospects
Global Economic Outlook Table 1.1 Overview of the World Economic

Outlook projections
1.1 The global economic growth for 2015 (annual percentage change)
Projections
is projected to be 3.1 percent, slightly lower 2013 2014 2015
2016
than the actual 3.4 percent growth in 2014 World output 3.3 3.4 3.1 3.6
Advanced economies 1.1 1.8 2.0 2.2
(latest World Economic Outlook, October United States 1.5 2.4 2.6 2.8
Euro area -0.3 0.9 1.5 1.6
2015). However, global economic growth in Germany 0.4 1.6 1.5 1.6
France 0.7 0.2 1.2 1.5
2016 is expected to increase to 3.6 percent in Italy -1.7 -0.4 0.8 1.3
Spain -1.2 1.4 3.1 2.5
light of the modest recovery in advanced United Kingdom
Japan
1.7 3.0 2.5 2.2
1.6 -0.1 0.6 1.0
economies and higher growth prospects for Canada 2.0 2.4 1.0 1.7
Other advanced economies 2.2 2.8 2.3 2.7
emerging markets and developing economies. Emerging market and developing economies 5.0 4.6 4.0 4.5
Emerging and developing Asia 7.0 6.8 6.5 6.4
China 7.7 7.3 6.8 6.3
In the advanced economies, growth is ASEAN-5 5.1 4.6 4.6 4.9
South Asia
expected to be 2.0 percent in 2015 and Bangladesh 6.0 6.3 6.5 6.8
India 6.9 7.3 7.3 7.5
increase to 2.2 percent in 2016. However, Pakistan 3.7 4.0 4.2 4.5
Sri Lanka 7.3 7.4 6.5 6.5
growth in emerging markets and developing World trade volume (goods and services) 3.3 3.3 3.2 4.1
Imports
economies is projected for 2015 at 4.0 Advanced economies 2.0 3.4 4.0 4.2
Emerging and developing economies 5.2 3.6 1.3 4.4
percent, 0.6 percentage point lower than in Exports
2014, but expected to increase to 4.5 percent Emerging and developing economies 4.4 2.9 3.9 4.8
Commodity prices (U.S. dollars)
in 2016. Oil -0.9 -7.5 -46.4 -2.4
Nonfuel -1.2 -4.0 -16.9 -5.1
Consumer prices
1.2. The forecast of modest economic Emerging market and developing economies 5.8 5.1 5.6 5.1
South Asia
growth in advanced economies reflects the Bangladesh 7.5 7.0 6.4 6.6
India 10.0 5.9 5.4 5.5
gradual acceleration of economic activity in Pakistan 7.4 8.6 4.5 4.7
Sri Lanka 6.9 3.3 1.7 3.4
the US as well as the euro area supported by
Source: World Economic Outlook, October 2015, IMF.
lower fuel prices, higher employment,
monetary easing, higher investment, etc. and
percent in 2015 and 1.6 percent in 2016. The
the restoration of the Japanese economy
economic growth in Japan is projected to be
towards a positive growth path. Growth rate of
0.6 percent in 2015, and 1.0 percent in 2016
the United States is expected to increase to
from negative 0.1 percent growth in 2014.
2.6 percent in 2015 and 2.8 percent in 2016
from 2.4 percent in 2014. The prospect of 1.3 The growth in emerging market and
economic recovery in the euro area seems developing economies in 2015 is expected to
reasonable with the increase in domestic decline as a result of lower commodity prices,
demand and growth is projected to be 1.5 slower capital inflows, embargoes and conflicts
1
Chapter-1 Macroeconomic Performance and Prospects
in a number of countries and the gradual fall expected to improve in 2015 and 2016, since
in growth in China. However, the growth is export growth is projected to be stronger than
projected to rebound in some countries in import growth. In emerging markets and
2016. Growth rate of China is forecast to developing economies, growth rate of imports
decrease to 6.8 percent in 2015 and 6.3 is projected to decline from 3.6 percent in
percent in 2016 from 7.3 percent in 2014. 2014 to 1.3 percent in 2015, and then rise to
India's economic growth is expected to remain 4.4 percent in 2016. Exports of advanced
unchanged in 2015 and projected to be 7.5 economies are expected to grow by 3.1
percent in 2016 taking advantage of the percent and 3.4 percent in 2015 and 2016
recent policy reforms and gradual increase in respectively while the same in emerging
investment. markets and developing economies are
expected to grow by 3.9 percent and 4.8
1.4 Consumer prices in advanced
percent during the same years.
economies are expected to decline to 0.3
percent in 2015 from 1.4 percent in 2014 and 1.6 According to Global Financial Stability
then increase to 1.2 percent in 2016. In Report (GFSR) of October 2015, the financial
contrast, consumer prices in emerging stability has improved in advanced economies
markets and developing economies are reflecting a strong macro-financial
expected to increase to 5.6 percent in 2015 environment in those which coincided with
from 5.1 percent in 2014. However, it is broadening of economic recovery, augmented
expected that the declining oil and other confidence in monetary policies, and abated
commodities prices will reduce the overall deflation risks. Although resilience to external
consumer prices by 0.5 percentage points shocks has increased in many emerging
restoring it to 5.1 percent again in 2016. The market economies, several key economies
headline inflation in advanced economies face substantial domestic imbalances and
decreased in 2014 as a result of low oil and lower growth. Some of the emerging market
other commodity prices.
economies relied on rapid credit creation to
1.5 World trade volume growth is projected side step the worst impacts of the global
to decrease from 3.3 percent in 2014 to 3.2 crisis. As a result, banks in emerging market
percent in 2015 and then increase to 4.1 economies have thinner capital cushions,
percent in 2016. The balance of trade in while nonperforming loans are set to rise as
advanced economies is expected to corporate earnings and asset quality
deteriorate in 2015 and 2016, since export deteriorated. These developments in
growth is projected to be weaker than import emerging market banking systems stand in
growth. The growth rate of imports for contrast to those in advanced economies,
advanced economies is expected to increase where banks have spent the past few years
from 3.4 percent in 2014 to 4.0 percent in deleveraging and repairing balance sheets,
2015 and further to 4.2 percent in 2016. raising capital, and strengthening funding
However, the balance of trade in emerging arrangements. Against a challenging
markets and developing economies is backdrop of falling commodity prices and
2
Macroeconomic Performance and Prospects Chapter-1
weaker growth, several emerging market economic activity, particularly in services

sovereigns are at greater risk of losing sector, agriculture, exports, and non-formal
investment-grade ratings in the medium term. sector businesses. Domestic supply chain
was disrupted due to disruptions of inter-
1.7 According to World Economic Outlook
district transportation. Yet, Bangladesh
(WEO) of October 2015, the balance of risks
economy remained resilient and recorded a
is still tilted to the downside. Vulnerabilities
6.5 percent growth of GDP in FY15. Higher
and financial stability risks in emerging market
growth of industry sector along with
economies have likely increased amid lower
satisfactory growth of services sector helped
growth, recent commodity price declines, and
to achieve this satisfactory growth of the
increased leverage after years of rapid credit
overall economy. The growth of agriculture
growth. Increased financial market volatility
sector was lower in FY15 compared to the
can pose financial stability challenges in
preceding fiscal year due to the lower growth
advanced economies, with substantial
in crops and horticulture sub-sector. During
spillovers onto emerging markets, including
FY15, the average inflation showed a
through tighter financial conditions and a
downward trend due to favorable international
reversal of capital flows. The main medium-
commodity price movements and sound
term risk for advanced economies is a further
macroeconomic management.
decline of already-low growth into near
stagnation, particularly if global demand 1.9. A cautious yet growth and investment
falters further as prospects weaken for friendly monetary policy stance was
emerging market and developing economies. implemented during FY15. Bangladesh Bank
In emerging markets, medium-term risks maintained policy continuity by keeping the
come from spillovers from much slower policy rates unchanged to dispel the
potential growth in China, or lower potential inflationary pressure and support economic
growth more generally. growth. Broad money (M2) registered a 12.4
percent growth in FY15 against the target set
Developments in the Bangladesh Economy
at 16.5 percent and the actual growth of 16.1
1.8 Over the last decade, the Bangladesh percent in FY14. Total domestic credit
economy secured an average of 6.2 percent decreased from 11.6 percent in FY14 to 10.1
growth rate well above the global economic percent in FY15. Private sector credit growth
growth. Despite political doldrums, structural was 13.2 percent in FY15 which was slightly
constraints and global volatility, the higher compared to the preceding fiscal year
Bangladesh economy maintained its but remained lower against the targeted
macroeconomic stability and high growth growth rate of 15.5 percent. On the other
trajectory. In FY15, Bangladesh graduated to hand, the growth of credit to the public sector
the status of a lower middle income country registered a negative growth rate at 2.5
from the low income country, and to OECD percent in FY15 against the target set at a
Export Credit Eligibility group 5, which is just 25.3 percent increase. But a good amount of
below India but ahead of all other South Asian resources through selling National Savings
neighbours. The recurrence of political Certificates and a higher amount of NBR tax
problems in January 2015 took toll on revenue was collected.
3
1.10 Due to a steady appreciation of the Table 1.2 Sectoral GDP growth rates
(at FY06 constant prices)
Real Effective Exchange Rate (REER), export FY06-FY13 R P
FY14 FY15
(Average)
has suffered to some extent. The growth of
export fell from 12.1 percent in FY14 to 3.3 1. Agriculture 4.4 4.4 3.0
a) Agriculture and forestry 3.9 3.8 2.1
percent in FY15 but the growth of imports i) Crops and horticulture 3.9 3.8 1.3
ii) Animal farming 2.5 2.8 3.1
increased from 8.9 to 11.3 percent during the iii) Forest and related services 5.4 5.0 5.1
b) Fishing 6.3 6.4 6.4
same period. The higher growth of imports 2. Industry 8.6 8.2 9.6
compared to exports led to an increase in a) Mining and quarrying 7.0 4.7 7.5
b) Manufacturing 9.1 8.8 10.3
trade deficit to the tune of USD 9917 million i) Large and medium scale 9.4 9.3 10.2
ii) Small scale 7.9 6.3 10.7
in FY15 from USD 6794 million in FY14. c) Power, gas and water supply 8.2 4.5 7.0
Workers' remittances growth stood at 7.5 d) Construction 7.5 8.1 8.6
3. Services 5.9 5.6 5.8
percent in FY15 compared to 1.5 percent a) Wholesale and retail trade, repair of motor vehicles,
motorcycles, and personal and household goods 6.7 6.7 6.6
negative growth in FY14. A surplus in the b) Hotel and restaurants 6.1 6.7 6.9
c) Transport, storage and communication 7.8 6.1 6.0
overall balance of payments was maintained d) Financial intermediations 9.5 7.3 8.8
despite a deficit in current account balance. e) Real estate, renting and other
business activities 4.0 4.3 4.7
The foreign exchange reserves reached USD f ) Public administration and defence 7.9 6.9 7.5
g) Education 7.1 7.3 7.6
205021 million at the end of FY15, at a h) Health and social works 5.1 5.1 5.7
comfortable level to meet over seven months i ) Community, social and personal services 3.1 3.3 3.4
of imports of goods and services. Bangladesh GDP (at FY06 constant market prices) 6.2 6.1 6.5
R = Revised, P = Provisional.
Bank continued its interventions in the Source: Bangladesh Bureau of Statistics.
domestic foreign exchange market by

Chart 1.1 Domestic savings and
purchasing foreign currencies as and when
investment
deemed appropriate. As a result, nominal 35
30
Taka-USD exchange rate remained stable
Percent of GDP
25
during FY15. 20
15
10
Growth Performance
5
0
1.11 The growth of agriculture sector
FY06
FY07
FY08
FY09
FY10
FY12
FY14
FY15
FY11
FY13
decreased to 3.0 percent in FY15 from 4.4

Domestic savings Investment
percent in FY14 due to the lower growth in
crops and horticulture sub-sector. The growth
rates of different sectors of GDP are 1.13 Services sector growth increased
presented in Table 1.2. slightly to 5.8 percent in FY15 from 5.6
percent in FY14. This was driven by the
1.12 Industry sector growth increased to higher growth of financial intermediations;
9.6 percent in FY15 from 8.2 percent in FY14. public administration and defence; health and
In fact, the rate of growth of all sub-sectors of social works; real estate, renting and other
industry sector increased in FY15 compared business activities; education; hotel and
to FY14. The most notable increase was in restaurants; and community, social and
the case of small scale manufacturing sub- personal services sub-sectors. However,
sector. growth of wholesale and retail trade, repair of
4
motor vehicles, motorcycles, and personal and Chart 1.2 National CPI inflation (12 month
household goods and transport, storage and average : base FY06=100)
communication sub-sectors was lower than 12
10
the preceding fiscal year. Financial
8
intermediations sub-sector performed well
Percent
6
registering a growth of 8.8 percent in FY15 4
compared with 7.3 percent in FY14 (Table 1.2). 2
0
Savings and Investment FY12 FY13 FY14 FY15
General Food Non-food

1.14 Gross fixed investment as a
percentage of GDP increased marginally to Chart 1.3 Monetary aggregates
29.0 percent in FY15 from 28.6 percent in 60
50
FY14 (Chart 1.1). Within gross fixed
40
investment, public investment grew faster
Percent 30
than the private investment. As a result, the 20
share of public investment in GDP increased 10
from 6.6 percent in FY14 to 6.9 percent in 0

FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY15, the share of private investment
increased slightly from 22.0 to 22.1 percent of Net domestic assets Net foreign assets
Broad money (M2)
GDP over the same period. The national
savings as a percentage of GDP decreased
slightly from 29.2 percent in FY14 to 29.1 Chart 1.4 Sources of broad money (M2)
percent in FY15. Domestic savings as a 10,000
percentage of GDP increased from 22.1 8,000
percent in FY14 to 22.3 percent in FY15. The 6,000
billion Taka
domestic savings-investment gap as a 4,000
percentage of GDP increased to 6.7 percent 2,000
in FY15 from 6.5 percent in FY14. 0
-2,000
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Price Developments
1.15 The average inflation rate (base: Net foreign assets Net credit to public sector
Credit to private sector Other assets (net)
FY06=100) decreased to 6.4 percent at the
end of FY15 from 7.4 percent at the end of
FY14. This was driven by decrease in food Money and Credit Developments
inflation from 8.6 percent at the end of FY14 to
6.7 percent at the end of FY15. On the other 1.16 In FY15, Bangladesh Bank pursued
hand, non-food inflation showed a gradual a cautious but growth supportive monetary
increase and stood at 6.0 percent in June policy. The policy stance for FY15 was
2015 compared with 5.5 percent in June 2014. designed in line with the target of 7.3 percent
Point-to-point inflation also decreased to 6.3 real GDP growth in a scenario of 6.5 percent
percent in FY15 from 7.0 percent in FY14. annual average CPI inflation. To keep the
5
inflation at target level, BB continued to Chart 1.5 Revenue receipt, revenue expenditure,
pursue a restrained policy stance in both H1 revenue surplus and budget deficit
12
and H2 of FY15 and policy rates namely repo
10
and reverse repo rates were kept unchanged
8
Percent of GDP
at 7.25 and 5.25 percent respectively. 6
4
1.17 Broad money (M2) recorded lower
2
growth of 12.4 percent in FY15 against the
0
target growth of 16.5 percent and 16.1
FY06
FY07
FY08
FY09
FY10
FY12
FY13
FY14
FY15
FY11
percent actual growth in FY14. The lower
growth in broad money was attributed mainly Revenue receipts Revenue expenditure
Revenue surplus Overall budget deficit
to the lower growth in domestic credit. The
growth of domestic credit from the banking
system declined to 10.1 percent against the Chart 1.6 Budget deficit financing
target growth of 17.4 percent for FY15 and 5
the actual 11.6 percent growth in FY14. The 4
lower growth in domestic credit resulted from 3

Percent of GDP
the lower investment demand for several 2
reasons. The credit to public sector recorded 1
a negative growth of 2.5 percent in FY15, 0
which was much low compared with the target -1

FY06
FY07
FY08
FY09
FY10
FY12
FY13
FY14
FY15
FY11
growth of 25.3 percent for FY15 and 8.8
percent actual growth in FY14. The growth
Total financing Net foreign financing
rate of the credit to private sector increased Net domestic financing Bank borrowings
Non-bank borrowings
moderately from 12.3 percent in FY14 to 13.2
percent in FY15 against the target growth of
1.18 The income velocity of money
15.5 percent. Accordingly, the growth rate of
net domestic assets (NDA) declined to 10.0 decreased slightly to 1.92 in FY15 from 1.93
percent in FY15 against the target growth of in FY14, indicating increased financial
20.2 percent and actual growth of 11.0 deepening in the economy.
percent in FY14. The net foreign assets (NFA)
1.19 The weighted average interest rate on
of the banking system grew by 20.7 percent in
bank advances and deposits declined to 11.7
FY15 which remained high against the target
percent and 6.8 percent respectively at the
growth of 3.6 percent but low compared with
38.6 percent actual growth in the preceding end of FY15 from 13.1 percent and 7.8
fiscal year. The lower growth of NFA in FY15 percent respectively at the end of FY14. The
compared to FY14 was due to weak export spread between them also narrowed slightly
growth compared to high import growth. to 4.9 percent from 5.3 percent over the same
Reserve Money (RM) grew at a rate of 14.3 period as lending rates declined more than
percent in FY15 which was lower than the deposit rates. Lending rates declined due to
projected growth rate of 15.8 percent and sluggish domestic credit demand and part of
actual growth of 15.4 percent in FY14. which was met by overseas loans.
6
Public Finance Chart 1.7 Export and import growth

14
1.20 The Government has undertaken a 12
range of regulatory and structural fiscal 10
8
measures to strengthen revenue collection
Percent
6
and widen fiscal space through public 4
expenditure control. 2
0
FY12
FY13
FY14
FY15
1.21 The overall budget deficit (excluding
grants) to GDP ratio increased from 3.6
Exports Imports
percent in FY14 to 5.0 percent in FY15.
However, domestic financing of the budget
deficit increased to 3.6 percent of GDP in Chart 1.8 NEER, REER & Exchange rate
FY15 from 2.8 percent of GDP in FY14.
NEER, REER & Exchange rate
135
125
1.22 The growth of total revenue increased 115
from 9.6 percent in FY14 to 16.4 percent in 105
95
FY15. Consequently, revenue-GDP ratio
85
increased from 10.5 percent to 10.8 percent 75
over the same period. 65
55
FY11
FY12
FY13
FY14
FY15
1.23 Public expenditure as a percentage of
GDP increased from 14.0 percent in FY14 to REER NEER Exchange rate
15.8 percent in FY15. It grew by 27.3 percent
in FY15 compared to 8.2 percent in FY14.
Current expenditure in FY15 accounted for Chart 1.9 Recent movements in NEER, REER
8.4 percent of GDP which was 8.2 percent in & Taka-Dollar exchange rate (base :
FY11=100,10 currency basket)
FY14. 145
NEER, REER & Exchange rate
135
125
External Sector 115
105
95
1.24 The export earnings (including EPZ) 85
continued to increase; from USD 29777 75
65
million in FY14 to USD 30768 million in FY15. 55
Sept.14
Aug.14
Dec.14
May.15
Mar.15
Oct.14
Nov.14
Jun.15
Jan.15
Feb.15
Apr.15
Jul.14
During the same time total import payments

increased from USD 36571 million to USD
NEER REER Exchange rate
40685 million. Trade deficit increased to USD
9917 million in FY15 from USD 6794 million in was a surplus of USD 1406 million in FY14.
FY14. The services and income account The capital and financial account continued to
including primary income and secondary register surplus and rose to USD 5791 million
income registered a surplus of USD 8271 in FY15 from USD 3453 million in FY14. The
million. Current account balance registered a overall balance of payments registered a
deficit of USD 1645 million in FY15, which surplus of USD 4373 million in FY15, which
7
was USD 5483 million in FY14. Gross with Taka 77.63 as of end June 2014. The
international foreign exchange reserves stood nominal effective exchange rate (NEER) of
at USD 25021 million at the end of FY15 Taka, calculated against a trade weighted 10
representing 7.4 months of import cover. currency basket (base: FY11=100),
appreciated by 9.16 percent in FY15. The real
1.25 The growth of export earnings was effective exchange rate (REER) of Taka also
lower from 12.1 percent in FY14 to 3.3 appreciated by 14.03 percent in FY15.
percent in FY15. Total export earnings as a
percentage of GDP also decreased from 17.2 1.29 Outstanding external debt of
to 15.8 percent over the same period. While Bangladesh decreased to USD 23488.6
tobacco, chemical products, plastic products, million as of end of FY15 from USD 24387.9
jute goods, knitwear, woven garments, home million as of end of FY14. However, the
textile, footwear and engineering products outstanding debt-GDP ratio declined to 12.05
experienced a positive growth; some of the from 14.11 over the same period.
export items like fish, shrimps, vegetables, cut
Near and Medium Term Outlook for
flower, fruits, petroleum by-products, leather, Bangladesh Economy
cotton & cotton products, raw jute, and
specialised textiles experienced a negative 1.30 GDP growth in Bangladesh will
growth. continue to grow at a stable rate, averaging
annually 7 percent in the near to medium
1.26 Import payments as a percentage of term. Moderate recovery in the euro area and
GDP decreased from 21.2 percent in FY14 to USA will have positive effect on growth
20.9 percent in FY15. Imports grew at a rate of provided that domestic private investment
11.3 percent in FY15 compared with 8.9 picked up. The increase in the public
percent growth in FY14. Total import bills for consumption from the implementation of new
all items except milk & cream, oil seeds, edible pay scale, large infrastructure spending on
oil, sugar, pharmaceutical products and raw power, road communication, transportation
cotton increased in FY15 compared to FY14. and establishment of Special Economic
Zones (SEZ) will bring about a momentum of
1.27 The workers' remittance inflows
the GDP growth in the near to medium term.
experienced a moderate growth of 7.5 percent
in FY15 compared to 1.5 percent negative CPI inflation will remain low in the short term.
growth in FY14. Moreover, low inflation is supported by supply
factors and the declining import prices. Over
1.28 Active foreign exchange intervention
the medium term the impact of these factors
by BB continued in FY15 to keep the nominal
on inflation will gradually fade away, yet
Taka/USD exchange rate stable. As a result,
inflation is expected to remain below the
the exchange rate of Taka against USD
Government projection (around 6 percent)
remained almost stable throughout the whole
made in the 7th Five Year Plan.
FY15. The nominal exchange rate of USD
depreciated by 0.22 percent in FY15. It stood BB's monetary policy stance will support the
at Taka 77.80 as of end June 2015 compared momentum of inclusive, equitable and
8
environmentally sustainable growth, further BB remains active in support of a market-

consolidating inflation moderation and based exchange rate regime while seeking to
macroeconomic stability. Banks and financial avoid high exchange rate volatility. Low cost
institutions are drawing on low cost refinance financial support from Export Development
windows of BB against their financing of Micro Fund (EDF) and other funds will be provided
Small and Medium Enterprise (MSME) output to the exporters to expand productive capacity
initiatives and environmentally benign green in textiles, apparels and leather sectors in
projects. Bangladesh Bank's supervisory order to accelerate exports. Besides, recent
oversight on credit disbursement and loan sustained pick up in investment and
recovery disciplines in banks and financial consumption imports will ease appreciation
institutions will intensify; with particular
pressures on Taka in the near future,
emphasis on risk management, internal audit
enhancing its export competitiveness. The
and internal controls, accountability and
ongoing Government's efforts to boost
transparency. The FY16 monetary programs
overseas employment in Middle and Eastern
projects 16.5 percent domestic credit growth
Asian countries will accelerate inflow of
against preceding year's 10.4 percent actual;
remittances. BB expects 14 percent growth in
to accommodate 7.0 percent real GDP growth
imports, 7.5 percent growth in exports and 10
with 6.2 percent inflation. The domestic
percent growth in remittances in FY16. The
demand growth is expected to pick up steadily
in the near and medium term as a result of foreign reserves are projected to keep rising
improvements in business environments. to reach USD 26 billion in FY16 from USD 25
Moreover rapid growth in gross fixed capital billion in FY15. However, Bangladesh's
formation in the public sector will continue to aspiration to become an upper middle income
have a positive impact on growth of corporate country by 2030 might be realistic if its
capital expenditure. Investment will also be economy is going ahead overcoming
fuelled by the expected continuation of good difficulties supply side disruptions due to
financial standing of enterprises, allowing political and non-political factors, financial
them to finance investment with their own scams, and cumbersome overseas
funds. employment process, etc.
9
Chapter-2
The Real Economy
Economic Growth Table 2.1 Sectoral GDP growth

(at FY06 constant prices: percent)
2.1 Bangladesh economy achieved
FY12 FY13 FY14 FY15P
reasonably satisfactory growth during the
FY15 in spite of the prolonged political 1. Agriculture 3.0 2.5 4.4 3.0
a) Agriculture and forestry 2.4 1.5 3.8 2.1
problems at home and slower growth in both i) Crops and horticulture 1.8 0.6 3.8 1.3
ii) Animal farming 2.7 2.7 2.8 3.1
developed and emerging markets abroad. iii) Forest and related services 6.0 5.0 5.0 5.1
b) Fishing 5.3 6.2 6.4 6.4
Provisional estimates of the Bangladesh 2. Industry 9.4 9.6 8.2 9.6
a) Mining and quarrying 6.9 9.4 4.7 7.5
Bureau of Statistics (BBS) indicates that real b) Manufacturing 10.0 10.3 8.8 10.3
i) Large and medium scale 10.8 10.7 9.3 10.2
GDP recorded a growth of 6.5 percent in ii) Small scale 6.6 8.8 6.3 10.7
FY15, which was higher than 6.1 percent c) Power, gas and water supply 10.6 9.0 4.5 7.0
d) Construction 8.4 8.0 8.1 8.6
recorded in FY14 (Table 2.1). Measured at 3. Services 6.6 5.5 5.6 5.8
a) Wholesale and retail trade, repair of motor
current market prices, the GDP of Bangladesh vehicles, motorcycles, and personal and
household goods 6.7 6.2 6.7 6.6
in FY15 was estimated at Taka 15136 billion b) Hotel and restaurants 6.4 6.5 6.7 6.9
c) Transport, storage and communication 9.2 6.3 6.1 6.0
which was about 12.7 percent higher than that d) Financial intermediations 14.8 9.1 7.3 8.8
of FY14. In FY15, per capita real GDP and i) Monetary intermediation (banks) 17.6 10.9 8.3 9.8
ii) Insurance 4.4 0.6 1.6 3.6
GNI estimated at Taka 52222 and Taka 55579 iii) Other financial intermediation 2.3 3.1 3.6 4.7
e) Real estate, renting and business activities 3.9 4.0 4.3 4.7
respectively. In the same year, per capita f) Public administration and defence 7.5 6.5 6.9 7.5
g) Education 7.8 6.3 7.3 7.6
nominal GDP and GNI estimated at Taka h) Health and social work 3.8 4.8 5.1 5.7
i) Community, social and personal services 3.3 3.3 3.3 3.4
95864 and Taka 102026 respectively. The Total GVA at constant basic price 6.7 6.1 6.2 6.5
GDP (at constant market price) 6.5 6.0 6.1 6.5
growth of per capita nominal GDP was the
P = Provisional.
same as in the previous year, but the growth Source: Bangladesh Bureau of Statistics.
of per capita real GDP was higher than that in
the previous year indicating fall in rate of
Chart 2.1 Bangladesh real GDP growth
inflation (Chart 2.1). 6.7
7
6.5
2.2 In absence of high agricultural growth, 6
Per capita GDP growth
6.3 5
the 6.5 percent GDP growth was mainly
GDP growth
6.1 4
contributed by the industry and services
3
sectors. The industry sector grew by 9.6 5.9
2
percent, followed by services sector (5.8 5.7 1
percent) while the agriculture sector grew by a 5.5 0
FY11 FY12 FY13 FY14 FY15
moderate rate of 3.0 percent. Out of the
GDP growth Per capita real GDP growth
overall GDP growth of 6.5 percent in FY15,
10
The Real Economy Chapter-2
3.1 percentage points was contributed by the Table 2.2 Sectoral GDP shares
services sector, followed by the industry (at FY06 constant prices: percent)
FY12 FY13 FY14 FY15P
sector (2.9 percentage points) and the
I. Agriculture 17.4 16.8 16.5 16.0
agriculture sector (0.5 percentage point). a) Agriculture and forestry 13.7 13.1 12.8 12.3
i) Crop and horticulture 10.0 9.5 9.3 8.8
Agriculture Sector ii) Animal farming 1.9 1.8 1.8 1.7
iii) Forest and related services 1.8 1.8 1.7 1.7
b) Fishing 3.7 3.7 3.7 3.7
2.3 The growth of agriculture sector
2. Industry 28.1 29.0 29.6 30.4
declined by 1.4 percentage points in FY15 a) Mining and quarrying 1.6 1.7 1.6 1.7
b) Manufacturing 18.3 19.0 19.5 20.2
from 4.4 percent in FY14. This was mainly i) Large and medium scale 14.9 15.5 16.0 16.5
due to fall in growth of crops and horticulture ii) Small scale 3.4 3.5 3.5 3.7
c) Power, gas and water supply 1.4 1.5 1.4 1.4
sub-sector. Moreover, this sector's share also d) Construction 6.8 6.9 7.0 7.2
decreased to 16.0 percent of total GDP in 3. Services 54.5 54.2 54.0 53.6
a) Wholesale and retail trade, repair
FY15 from 16.5 percent of total GDP in FY14. of motor vehicles, motorcycles and
personal and household goods 14.0 14.0 14.1 14.1
Within agriculture sector, crops and b) Hotel and restaurants 0.7 0.8 0.8 0.8
c) Transport, storage and 11.5 11.5 11.5 11.4
horticulture sub-sector registered a growth of
communication
1.3 percent in FY15 against 3.8 percent in d) Financial intermediations 3.2 3.3 3.3 3.4
i) Monetary intermediation (banks) 2.6 2.7 2.8 2.9
FY14. Forest and related services sub-sector ii) Insurance 0.4 0.4 0.4 0.4
registered a growth of 5.1 percent in FY15, iii) Other financial intermediation 0.2 0.2 0.2 0.2
e) Real estate, renting and 7.2 7.1 7.0 6.8
which was 5.0 percent in FY14. Animal business activities
farming sub-sector grew by 3.1 percent in f) Public administration and defence 3.4 3.4 3.4 3.4
g) Education 2.2 2.2 2.3 2.3
FY15 registering a 0.3 percentage point h) Health and social work 1.9 1.9 1.9 1.8
increase of growth rate from FY14. Fishing i) Community, social and 10.4 10.1 9.8 9.5
personal services
sub-sector grew by 6.4 percent in FY15 which Total GVA at constant basic price 100.0 100.0 100.0 100.0
was the same as in FY14. P = Provisional.
Source: Bangladesh Bureau of Statistics.
2.4 Overall output of food grains (Aus,
Aman, Boro and Wheat) increased by 0.4 Industry Sector
percent from 35.66 million metric tons (MMT) 2.5 The growth of the industry sector
in FY14 to 35.79 MMT in FY15. Amongst increased by 1.4 percentage points in FY15
other factors, up-scaled agricultural credits vis--vis FY14. Despite the political problems
played a role in this case. The production of spanned over the second half of the fiscal
Aus, a relatively minor crop of the year, did year, performance of all sub-sectors within
not change much from the previous year, industry sector picked up eventually to
which amounted 2.33 MMT in both years. register a 9.6 percent growth at the end.
Aman, the second largest crop of the year, Growth of mining and quarrying, and power,
increased by 1.3 percent from 13.02 MMT in gas and water supply sub-sectors increased
FY14 to 13.19 MMT in FY15. Boro, the largest substantially to 7.5 and 7.0 percent in FY15
crop of the year, amounted to be 18.94 MMT from 4.7 and 4.5 percent in FY14
in FY15. Wheat production increased by 2.3 respectively. Despite the initial bumps, the
percent from 1.30 MMT in FY14 to 1.33 MMT construction sub-sector grew by 8.6 percent in
in FY15. FY15 compared to 8.1 percent in FY14.
11
Chapter-2 The Real Economy
Manufacturing growth increased to 10.3 Table 2.3 GDP by expenditure groups

percent from 8.8 percent over the same
(at current market prices: billion Taka)
period as a result of better performance of the
Particulars FY12 FY13 FY14 FY15P
large & medium and small scale Domestic demand (1+2) 11294.8 12751.0 14308.5 16144.5
manufacturing subsectors. The sectors grew Consumption (1) 8312.5 9347.3 10468.6 11760.2
by 10.2 and 10.7 percent respectively in FY15 Private 7780.8 8733.9 9751.4 10936.2
compared to 9.3 and 6.3 percent respectively Government 531.7 613.4 717.2 824.0
in FY14. The large and medium scale Investment (2) 2982.2 3403.7 3839.9 4384.3
Private 2374.2 2607.5 2960.0 3340.1

manufacturing, and small scale manufacturing
Public 608.0 796.2 879.9 1044.2
sub-sectors contributed about 81.7 and 18.3
Resource balance (3-4) -821.7 -865.7 -878.1 -1297.5
percent respectively of the total output of the
Exports (3) 2127.5 2342.4 2551.6 2603.4
manufacturing sector. Production of other Imports (4) 2949.2 3208.1 3429.7 3900.9
transport equipments grew significantly Gross domestic expenditure 10473.0 11885.3 13430.5 14847.0
(122.47 percent) in FY15. Gross domestic product 10552.0 11989.2 13436.7 15136
Statistical discrepancy 79.1 104.0 6.3 289.0

Quantum Index of Industrial Production (QIP)
P = Provisional.
which has been estimated for computing Source: Bangladesh Bureau of Statistics.
value added of large and medium scale
industries showed a growth of 10.7 percent in Table 2.4 Domestic savings and investment
FY15 (Appendix-3, Table-VIII). Manufacture of (as percent of GDP)
computer, electronic and optical products, Particulars FY12 FY13 FY14 FY15P
food products, other non-metallic mineral Public
products, pharmaceuticals and medicinal Investment 5.8 6.6 6.6 6.9
chemical, electrical equipment and basic Domestic savings 1.4 1.5 1.5 1.6
Domestic savings-investment gap -4.4 -5.1 -5.1 -5.3
metal registered higher growth in FY15
Private
compared to FY14. The woven garments and
Investment 22.5 21.8 22.0 22.1
knitwear, country's two key export items, Domestic savings 19.9 20.6 20.6 20.7
showed 4.1 percent growth in FY15. However, Domestic savings-investment gap -2.6 -1.2 -1.4 -1.4
manufacturing of motor vehicles, trailers and Total

Investment 28.3 28.4 28.6 29.0
semi trailers, textile, beverages, leather and
Domestic savings 21.2 22.0 22.1 22.3
related products, chemicals and chemical Total savings-investment gap -7.1 -6.4 -6.5 -6.7
products and tobacco products experienced National Savings 29.9 30.5 29.2 29.1
negative growth in FY15.
P = Provisional.
Services Sector
2.6 The services sector registered a 5.8 motorcycles and personal and household
percent growth in FY15 which was slightly goods; and transport, storage and
higher than the preceding fiscal year. The communication sub-sectors. Wholesale and
growth of all sub-sectors of services sector retail trade, repair of motor vehicles,
was upward in FY15 except wholesale and motorcycles and personal and household
retail trade, repair of motor vehicles, goods; and transport, storage and
12
The Real Economy Chapter-2
communication sub-sectors grew by 6.6 and Chart 2.2 Domestic Savings

6.0 percent respectively in FY15 compared to 25
6.7 and 6.1 percent respectively in FY14. 20
Percent of GDP
Financial intermediations sub-sector 15
10
registered a growth of 8.8 percent in FY15
5
which was 7.3 percent in FY14. Besides,
0
public administration and defence, health and
FY09
FY10
FY11
FY12
FY13
FY14
FY15
social work, real estate, renting and business
activities, education, hotel and restaurants, Private savings Public savings
and community, social and personal services

sub-sectors grew by 7.5, 5.7, 4.7, 7.6, 6.9 and
Chart 2.3 Domestic Investment
3.4 percent respectively in FY15 compared
with 6.9, 5.1, 4.3, 7.3, 6.7 and 3.3 percent 25
respectively in FY14. 20
Percent of GDP
15
Sectoral Composition of GDP
10
2.7 The contribution of both industry and 5
services sector to the GDP has been 0

FY09
FY10
FY11
FY12
FY13
FY14
FY15
increasing gradually indicating an in-road of
Bangladesh's economy towards a modern
Private investment Public investment
developing economy. The percentage share
of the agriculture sector in GDP declined from
16.5 in FY14 to 16.0 in FY15. Similarly, the scale manufacturing. The share of mining and
share of services sector reduced to 53.6 quarrying and construction also increased
percent from 54.0 percent during the same slightly from 1.6 and 7.0 percent in FY14 to
period. Consequently, the share of the 1.7 and 7.2 percent in FY15 respectively. The
industry sector increased from 29.6 percent in share of power, gas and water supply sub-
FY14 to 30.5 percent in FY15. sector remained unchanged. Most of the sub-
sectors of the services sector (Wholesale and
2.8 The compositional change of GDP is well retail trade; repair of motor vehicles,
aligned with standard in patterns observed motorcycles and personal and household
elsewhere. The share of agriculture was goods; hotel and restaurants; public
decreasing mainly due to decline in relative administration and defence; and education)
share of the crops and horticulture sub-sector remained unchanged. However, the financial
(comprising of 55.3 percent in the overall intermediation services improved slightly. The
agriculture) which fell from 9.3 percent in FY14 share of the transport, storage and
to 8.8 percent in FY15 (Table 2.2). The communication; real estate, renting and
increased relative share of the industry sector business activities; health & social work; and
in FY15 (by 0.8 percentage point) was driven community, social and personal services sub-
by the higher share of large and medium sectors slightly declined in FY15 (Table 2.2).
13
Chapter-2 The Real Economy
GDP by Expenditure FY14. The GDS as percentage of GDP also

increased to 22.3 in FY15 from 22.1 in FY14
2.9 In FY15, expenditure based GDP was
(Table 2.4, Chart 2.2).
Taka 15136.0 billion, showing a nominal
increase of 12.7 percent over FY14 (Table The ratio of private savings to GDP increased
2.3). Gross Domestic Expenditure (GDE), a to 20.7 percent in FY15 from 20.6 percent in
measure of the sum of consumption and FY14. The ratio of public savings to GDP
investment expenditure of the private and increased to 1.6 percent in FY15 from 1.5
public sector and the resource balance of the percent in FY14. The ratio of Gross National
economy, stood at Taka 16144.5 billion at Savings (GNS) to GDP declined slightly to
current market prices in FY15, showing an 29.1 percent in FY15 from 29.2 percent in
increase of 12.8 percent over FY14. FY14. Net Factor Income (NFI) grew by 6.8
percent over the previous year. However, the
2.10 Total consumption expenditure net current transfer (NCT) declined by 8.0
accounted for 79.2 percent while investment percent in FY15 compared to FY14.
expenditure accounted for 29.5 percent and
resource balance (i.e. trade deficit) accounted 2.12 Investment as a percentage of GDP
for 8.7 percent of GDE in FY15. The increased to 29.0 in FY15 from 28.6 in FY14
(Table 2.4, Chart 2.3). The ratio of private
investment expenditure increased by 14.2
investment to GDP increased from 22.0 in
percent in nominal terms whereas
FY14 to 22.1 in FY15; the ratio of public
consumption expenditure increased by 12.3
investment to GDP increased to 6.9 in FY15
percent in FY15.
from 6.6 in FY14.
Savings and Investment
2.13 The domestic savings-investment gap
2.11 Domestic and national savings as a percentage of GDP increased from 6.5 in
increased moderately. Gross Domestic FY14 to 6.7 in FY15 (Table 2.4). The domestic
Savings (GDS) at current market prices grew savings-investment gap was met with the help
by 13.7 percent in FY15 from 12.3 percent in of the net factor income from abroad.
14
Chapter-3
Price and Inflation
Global Inflation Scenario Chart 3.1 National CPI inflation

(12-month average : base FY06=100)
3.1 Global inflation remained contained.
12
Headline inflation declined in advanced
10
economies, mostly reflecting the decline in oil
and other prices, while core inflation remained 8
Percent
stable. Similarly, lower oil and other prices 6
contributed to reductions in inflation in 4
emerging markets, with the notable exception 2
of countries suffering from sizable exchange 0

FY12 FY13 FY14 FY15
rate depreciation, such as Russia.
Consumer Prices in Bangladesh
3.2 Annual average CPI inflation (base: Table 3.1 Monthly inflation (%)
FY06=100) in Bangladesh declined in FY15. Months General Food Non-food
Jul 14 1.56 2.18 0.63
It stood at 6.40 percent in June 2015 against
Aug 14 1.30 1.83 0.50
the target of 6.50 percent set in the Monetary Sep 14 1.41 1.83 0.77
Policy Statement (January-June 2015) while it Oct 14 0.69 0.71 0.67
was 7.35 percent in FY14 (Table 3.2, Chart Nov 14 0.02 -0.19 0.36
3.1). Inflationary pressure started easing Dec 14 0.44 0.17 0.80

Jan 15 1.13 1.07 1.26
since June 2014 (7.35 percent) and continued
Feb 15 0.30 0.28 0.32
its decline through FY15 due to falling food Mar 15 0.27 0.38 0.10
inflation resulting from sufficient food supply. Apr 15 0.09 0.12 0.05
Lower fuel price, coupled with accommodative May 15 -1.30 -2.20 0.11
money growth rate and stable exchange rate Jun 15 0.19 0.03 0.43
contributed to decline in inflation rate. The Source: Bangladesh Bureau of Statistics (BBS).
twelve month point-to-point CPI inflation

mixed trend in FY15. The annual average
declined to 6.25 percent in June 2015 from
food inflation declined from 8.55 percent in
6.97 percent in June 2014.
July 2014 to 6.68 percent in June 2015. On
The annual average food inflation declined the other hand, the point-to-point food inflation
while point-to-point food inflation showed stood at 7.94 percent in July 2014 and
15
Chapter-3 Price and Inflation
gradually decreased to 6.07 percent in Table 3.2 Annual average CPI based inflation
(base:FY06=100)
January 2015. For the following few months, Group Weight FY12 FY13 FY14 FY15
the point-to-point food inflation kept rising until a. National level
General Index 100.00 170.19 181.73 195.08 207.58
April 2015 with an inflation rate of 6.48 (8.69) (6.78) (7.35) (6.40)
percent. Finally, in June 2015, the point-to- Food 56.18 183.65 193.24 209.79 223.80
(7.72) (5.22) (8.57) (6.68)
point food inflation stood at 6.32 percent. Non-food 43.82 152.94 166.97 176.22 186.79
Good harvests and improved supply chain (10.21) (9.17) (5.54) (5.99)
b. Rural
due to easing of political unrest together General index 100.00 173.26 183.90 196.90 209.10
(8.69) (6.14) (7.07) (6.20)
contributed to decrease in food inflation.
Food 61.41 183.62 192.14 207.72 221.02
(7.50) (4.64) (8.11) (6.40)
The annual average and point-to-point non- Non-food 38.59 156.77 170.79 179.69 190.13
food inflation also depicted mixed movement (10.96) (8.94) (5.21) (5.81)
c. Urban
throughout FY15. The annual average non- General Index 100.00 164.53 177.71 191.72 204.76
(8.70) (8.01) (7.89) (6.80)
food inflation declined from 5.41 percent in
Food 46.52 183.71 195.91 214.85 230.56
July 2014 to 5.34 percent in September 2014. (8.27) (6.64) (9.66) (7.32)
Non-food 53.48 147.84 161.88 171.61 182.32
It started increasing from the following month (9.16) (9.49) (6.01) (6.24)
and ended up 5.99 percent in June 2015. Figures in parentheses represent annual inflation
Source: Bangladesh Bureau of Statistics (BBS).
Similarly, the point-to-point non-food inflation
was characterised by ups and downs
throughout FY15. At the beginning of FY15, Chart 3.2 Monthly inflation
the point-to-point non-food inflation was 5.71 3
percent in July 2014, which increased to 6.15 2
percent in June 2015, while the highest rate 1
(6.48 percent) prevailed in December 2014 0

Percent
-1
(Table 3.5). It increased during FY15 mainly
-2
as a result of increase of prices of clothing
-3
and footwear; furniture furnishing; medical
Oct -14
Apr -15
Jun -15
Jul -14
May -15
Aug -14
Sep -14
Nov -14
Dec -14
Feb -15
Mar -15
Jan -15
care and health related expenses; transport

and communication and other non food items.
Core inflation (non-food, non-fuel) showed a

mixed behaviour throughout FY15 and 3.3 In FY15, inflation in the urban areas was
reached at 6.74 percent in June 2015 which higher than that in the rural areas. In rural
was 5.76 percent in August 2014. Monthly areas, average inflation was 6.20 percent
general, food and non-food inflation also while it was 6.80 percent in urban areas.
showed a mixed behaviour in FY15 (Table Annual average inflation in the rural areas
3.1, Chart 3.2). decreased to 6.20 percent in June 2015 from
16
Price and Inflation Chapter-3
7.07 percent in June 2014 (Table 3.2, Chart Table 3.3 Changes in international prices
of major commodities
3.3). In the same areas, the food inflation fell (percentages)
Commodity 2011 2012 2013 2014 2015(August)
to 6.40 percent in June 2015 from 8.11
Petroleum 35.8 2.7 -3.2 -8.3 -42.4
percent in June 2014 while non-food inflation Rice 6.0 5.2 -10.6 -17.8 -8.3
increased slightly to 5.81 percent from 5.21 Wheat 41.4 -0.9 -0.3 -8.8 -23.6
Palm oil 25.2 -12.7 -18.7 -3.2 -19.8
percent over the same period. Soybean oil 31.5 -5.3 -12.2 -19.6 -14.5
Cotton 49.3 -42.3 1.3 -8.1 -14.6
Sugar 25.6 -18.5 -17.2 -3.3 -25.0
3.4 Annual average inflation in the urban
Source: International Financial Statistics, September, 2015.
areas decreased to 6.80 percent in June 2015
from 7.89 percent in June 2014 (Table 3.2, Chart 3.3 Rural CPI inflation
Chart 3.4). In the same areas, the food (12-month average : base FY06=100)
inflation decreased to 7.32 percent from 9.66 12
percent but the non-food inflation increased to 10
6.24 percent from 6.01 percent over the same 8
period. 6
Percent
4
Total food-grain production in Bangladesh
2
increased in FY15. Total domestic food
0
production recorded as 36.06 million metric FY12 FY13 FY14 FY15
tons (MMT) in FY15 compared with 35.67 General Food Non-food
MMT in FY14. Total government procurement

of food-grain in FY15 was 1.68 MMT. Table 3.4 Inflation in SAARC and
other Asian countries#
The government undertook various measures Countries 2011 2012 2013 2014 2015 (July)
including open market sale of food-grain and 1. Bangladesh@ 8.8* 8.69 6.78 7.35 6.35
food for work programme to contain food 2. India 8.9 9.3 10.9 6.4 6.1 (June)
3. Pakistan 11.9 9.7 7.7 7.2 1.8
inflation in FY15.
4. Nepal 9.3 9.5 9.0 8.4 7.6
To reduce the hardship of poor households, 5. Bhutan* 8.8 10.9 7.0 8.2 4.7 (Feb.)
6. Sri Lanka 6.7 7.5 6.9 3.3 -0.2
the government distributed food grain through
7. Maldives 12.8 12.1 2.3 2.1 0.9
monetised and non-monetised channels Other Asian countries
among the poor and marginal households. 8. Thailand 3.8 3.0 2.2 1.9 -1.0
Total distribution by the government 9. Singapore 5.3 4.5 2.4 1.0 -0.4
10. Malaysia 3.2 1.7 2.1 3.1 3.3
amounted to be 1.84 MMT of food-grain
11. Indonesia 5.4 4.3 6.4 6.4 7.3
against the target of 2.74 million tons in FY15 12. Korea 4.0 2.2 1.3 1.3 0.7
through open market sales, fair price card, 13. Myanmer 5.0 1.5 5.5 5.5 -
and test relief and vulnerable group feeding # IFS, October, 2015 CPI (Base: 2000=100).
* (base: FY96=100)
channels under the Public Food Distribution @ Source: BBS, Consumer Price Index (Base: FY06=100) and figures
System (PFDS). relate to financial year (July-June).
17
Table 3.5 Annual average national level CPI by consumption basket sub-groups
(base:FY06=100)
Group/sub-group Weight FY13 FY14 FY15 % Change % Change

FY14 FY15
1 2 3 4 5 6 7
General index 100.00 181.73 195.08 207.58 7.35 6.41
1. Food, beverage and tobacco 56.18 193.24 209.79 223.8 8.56 6.68
2. Non-food of which 43.82 166.97 176.23 186.79 5.55 5.99
i) Clothing & footwear 6.84 179.66 194.77 209.45 8.41 7.54
ii) Gross rent, fuel & lighting 14.88 155.61 163.47 171.8 5.05 5.10
iii) Furniture, furnishing, household equipment & operation 4.73 195.33 206.14 214.44 5.53 4.03
iv) Medical care & health expenses 3.47 159.66 164.06 181.09 2.76 10.38
v) Transport and communications 5.80 159.34 167.2 181.78 4.93 8.72
vi) Recreation, entertainment, education & cultural services 4.28 157.23 164.38 168.02 4.55 2.21
vii) Miscellaneous goods and services 3.82 182.54 193.75 204.21 6.14 5.40
Bangladesh Bank adopted a cautious

Chart 3.4 Urban CPI inflation
Monetary Policy Stance (June 2015) with a (12-month average : base FY06=100)
view to bringing inflation down to an annual 12
6.50 percent in FY15. It also continued 10

Percent
encouraging commercial banks to provide 8
6
credit only for productive sectors and not for
4
speculative purposes.
2
0
3.5 Among the SAARC countries, Nepal
FY12 FY13 FY14 FY15
had the highest inflation of 7.6 percent
recorded in July 2015. Other countries in this
region like India (6.1 percent, June 2015), Table 3.6 Trends of wage rate indices
Bhutan (4.7 percent, February 2015) and (base: FY11=100)
FY12 FY13 FY14 FY15
Bangladesh (6.4 percent, July 2015) General 106.24 112.62 118.82 124.69
(6.24) (6.01) (5.50) (4.94)
experienced a moderately high inflation. On Agriculture 105.96 112.08 118.44 124.51
(5.96) (5.78) (5.68) (5.12)
the contrary, Thailand and Singapore
Agriculture 105.97 112.08 118.40 124.46
experienced deflation in FY15 (Table 3.4, (5.97) (5.76) (5.64) (5.12)
Fish 105.01 111.89 120.81 126.85
Chart 3.6). (5.01) (6.55) (7.97) (5.00)
Industry 106.92 113.43 119.07 124.38
(6.92) (6.08) (4.97) (4.47)
Wage Rate Trends Construction 107.33 114.70 119.93 124.84
(7.33) (6.87) (4.56) (4.09)
Production 106.03 111.53 121.86 127.28
3.6 Wage rate indices for all sectors of
(6.03) (5.19) (9.27) (4.44)
Bangladesh experienced lower growth in Services 106.23 113.63 120.16 126.15
(6.23) (6.96) (5.75) (4.98)
FY15 compared to FY14 (Table 3.6, Chart Figures in parentheses are annual percentage changes.
3.7). The growth of general wage rate (base:
18
Price and Inflation Chapter-3
FY11=100) declined to 4.94 percent in FY15 Chart 3.5 Changes in international

from 5.50 percent in FY14. Wages in commodity prices
100
industrial production sector recorded the
lowest growth rate of 4.47 percent in FY15.
Percentage Change
50
Near Term Inflation Outlook
0
3.7 The near-term outlook for overall global
commodity prices is projected to decline. Oil
- 50
prices are projected to decline consistent with
2011 2012 2013 2014 2015(August)
expanding oil supply and tepid demand. It is
projected to decline somewhat around USD
Cotton Petroleum Palm oil Rice
51.62 a barrel in 2015 and USD 50.36 a
barrel in 2016.
Chart 3.6 South Asian inflationary situation
World rice production is forecasted to
increase in 2015 mainly due to anticipated 14
12
favourable weather condition. International
10
trade in rice is anticipated to dip in 2015
8
Percent
driven mainly by falling demand by countries 6

in the Far East. Global wheat production is 4
also forecasted to come down in 2015. It is 2

0
expected that global markets are likely to face
2010 2011 2012 2013 2014
more stable situation in FY15. (June)
Bangladesh India Pakistan Sri Lanka Nepal

The FAO food price index averaged 171
points in April 2015, nearly 40.5 points, or
Table 3.7 Global inflationary situation
19.2 percent lower than April 2014 because of (percentage change)
sharp decline of dairy, cereals, sugar and 2013 2014 2015p 2016p
vegetable oil prices. The FAO forecasts that Advanced economies 1.4 1.4 0.3 1.2
United States 1.5 1.6 0.1 1.1
global food prices are expected to fall due to
Euro area 1.3 0.4 0.2 1.0
good harvest in the coming months. Global
Emerging & developing economies 5.8 5.1 5.6 5.1
rice prices are expected to remain stable at Developing Asia 4.8 3.5 3.0 3.2
least over 2015 due to good harvest owing to Bangladesh 7.5 7.0 6.4 6.6
favourable weather. India 10.0 5.9 5.4 5.5

Sri Lanka 6.9 3.3 1.7 3.4
According to World Economic Outlook (WEO), Pakistan 7.4 8.6 4.5 4.7
inflation is projected to decline to 0.3 percent P = Projection.

Source: World Economic Outlook, October 2015.
in 2015, and increase to 1.2 percent in 2016
19
in advanced economies. In emerging and Chart 3.7 Growth rate of wage index
developing economies, inflation is projected to (base: FY11=100)
come down to 5.6 percent in 2015, and then 10
continued declining to 5.1 percent in 2016
8
(Table 3.7).
Index
6
3.8 Bangladesh faces some challenges to 4
control inflation at the target level. 2

Implementation of the new pay scale may
0
increase the aggregate demand fuelling the FY12 FY13 FY14 FY15
increase of inflation. Historically, weather General Agriculture Industry
related risk factors may affect agriculture Services Construction Fishery
production. The accomplishment of the
objective to keep inflation at 6.20 percent production, which in turn depends on weather
crucially depends on domestic good food as well as absence of supply side disruption.
20
Chapter-4
Money and Credit
Stance of Monetary and Credit Policy Chart 4.1 Liquidity Management

Operations during FY15
4.1 Bangladesh Bank pursued a cautious 120 40
20
yet growth friendly monetary policy stance for 100 0
FY15. The objective of the monetary policy 80
- 20
billion Taka
- 40
billion Taka
was to attain the target growth as well as to 60 - 60
- 80
maintain price and macroeconomic stability. 40 - 100
- 120
Bangladesh Bank took the domestic - 140
20
economic development and global economic - 160
0 - 180
outlook into consideration while setting the Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
monetary growth targets. Bangladesh Bank
engaged the country's financial sector in Repo and LS (LHS) FX transactions (RHS) Reverse repo (RHS) BB bills (RHS)
promotion of inclusive and environmentally

sustainable financing of economic activities. Bangladesh achieved Ba3 (Moody's) and BB-
The objective of bringing down 12-month (Standard and Poor's) with stable outlook for
average CPI inflation to 6.5 percent attained the 6th consecutive years. Stable real GDP
in May 2015, further edging down to 6.4 growth and strong external balances helped
percent in June 2015. However, point-to-point Bangladesh to achieve BB- rating with stable
headline CPI inflation stood at 6.25 percent in outlook from Fitch Ratings for the first time.
June 2015. GDP growth registered 6.51 Besides these new attainments, consolidation
percent in FY15, which was substantially of macroeconomic stability, foreign exchange
higher than 6.06 percent growth in FY14, and reserve growth and poverty decline
within the range of 6.5,-6.8 percent of BB's maintained pace in FY15, setting the stage for
projections; although lower than the initial transition to a higher growth trajectory.
target mentioned in FY15 national budget.
Sustained GDP growth for several years at 4.2 Bangladesh Bank's monetary and
rates well above the global output growth financial policies provide proactive policy
rates enabled Bangladesh to cross two support for financing of all types of productive
important milestones in FY15. The first one is activities. The export sector is accessing low
the graduation to the status of lower middle cost foreign exchange financing from BB's
income country from the low income country USD 2.0 billion Export Development Fund
group, and the second one is the (EDF). Single borrower limit for garments
improvement in OECD Export credit eligibility accessories exporters has been enhanced
ranking to group 5, one notch below India but from USD 1 million to USD 2 million as well as
ahead of all other South Asian neighbours. import of raw cotton and other fibre from USD
21
Chapter-4 Money and Credit
10 million to USD 15 million under the facility Table 4.1 Money and credit situation
(billion Taka)
of EDF loan. Besides deferred import End June End June
payments under buyer's credit for terms not 14 15
Actual Programme Actual
exceeding six months has been enhanced 1. Net foreign assets 1552.9 1608.8 1874.3
(38.6) (3.6) (20.7)
from USD 500,000 to USD 1,000,000. As an 2. Net domestic assets (a+b) 5449.4 6548.9 5997.0
(11.0) (20.2) (10.0)
investment incentive, foreign investors has a) Domestic credit (i+ii) 6311.7 7410.7 6950.3
(11.6) (17.4) (10.1)
been allowed to source term loans from local i) Credit to public sector1/ 1235.3 1547.5 1204.3
(8.8) (25.3) -(2.5)
banks and access working capital as an ii) Credit to private sector 5076.4 5863.2 5746.0
(12.3) (15.5) (13.2)
interest free loan from their parent company. b) Other items (net) -862.3 -861.8 -953.4
Non exporter manufacturing undertakings are 3. Narrow money (i+ii) 1412.5 1603.2
(14.6) (13.5)
also being allowed access to low cost long i) Currency outside banks 769.1 879.4
(13.8) (14.3)
and short term external financing for import of ii) Demand deposits2/ 643.4 723.8
(15.4) (12.5)
capital equipment and production inputs. 4. Time deposits 5589.8 6268.0
(16.5) (12.1)
Banks and financial institutions are drawing 5. Broad money (1+2)or(3+4) 7002.3 8157.7 7871.2
(16.1) (16.5) (12.4)
on low cost refinance windows of BB against Figures in the parentheses indicate y-o-y percentage changes.
1/ "Govt. lending fund" is treated as deposit in calculating claims on Govt. (net).
their financing of MSME output initiatives and
2/ Demand deposits of monetary authority are excluded.
environmentally benign green projects. The
World Bank supported Investment Promotion
Chart 4.2 Components of broad money (M2)
& Financing Facility (IPFF) window of BB is
8000
providing low cost refinance against long term
7000
infrastructure sector lending. 6000
billion Taka
5000
In order to refinance Islamic banks and 4000
3000
financial institutions against financing to agro-
2000
processing industries, small entrepreneurs 1000
and renewable energy and environment 0
30 June 14
30 Sep 14
31 Dec 14
31 Mar 15
30 June 15
friendly initiatives an "Islamic Refinance Fund

Account" has been opened at Bangladesh
Bank. With a view to manage liquidity of Currency outside banks Demand deposits
Time deposits M2
Islamic banks, according to profit sharing ratio
3-month Islamic Investment Bond and 6- with particular emphasis on risk management,
month Islamic Investment Bond has been internal audit and internal controls,
issued since 1 January 2015. accountability and transparency.
In order to enhance the effectiveness of the Deposit and lending interest rates of banks
financial markets as transmission channels for and financial institutions have been coming
monetary policy, Bangladesh Bank's down in line with the decline in CPI inflation;
supervisory oversight on credit disbursement spreads between weighted average deposit
and loan recovery disciplines in banks and and lending interest rates of banks and
financial institutions has been strengthened financial institutions have also come down
22
Money and Credit Chapter-4
below five percentage points. Competitive Chart 4.3 Domestic credit and
lending interest rate setting behaviour has not its components
yet been fostered well in the local financial 7300
6800
market. Bangladesh Bank has resorted to 6300
5800
setting ceilings on lending interest rates in two 5300
4800
billion Taka
priority areas, viz., pre-shipment export credit 4300
3800
and agricultural credit. In the context of 3300
2800
general declining trend in interest rates, 2300
1800
Bangladesh Bank has revised the lending rate 1300
800
ceiling for agriculture downward from 13 to 11 300
percent. Bangladesh Bank has continued to June 14 Sep 14 Dec 14 Mar 15 June 15
pursue ways of fostering of competitive price Public sector Private sector Domestic credit
setting, rate setting attitudes and practices in

financial markets.
Chart 4.4 Programmes and actual developments
The monetary policy stance has also aimed at of M2 and RM in FY15
preserving country's external sector 1550 8500
competitiveness. In FY15, export growth 1500

8000
RM in billion Taka
M2 in billion Taka
slowed down to 3.39 percent for a number of 1450
1400 7500
domestic and external factors including weak
1350
demand in the European Union. Import 7000
1300
recovered from sluggish growth of the past 6500
1250
couple of years for pick up due mainly to
1200 6000
imports of capital machinery and production
Jun 14 Sep 14 Dec 14 Mar 15 Jun 15
inputs. Remittance maintained moderate
RM programme RM actual
growth of 7.65 percent. Thus, current account M2 programme M2 actual
balance of BOP turned from surplus to deficit.

The overall balance remained a surplus of Bangladesh Bank's initiatives for
USD 4.37 billion in FY15 less than USD 5.48 strengthening financial inclusion and
billion in FY14. diversification and environmentally
sustainable financing continued in FY15 to
Bangladesh Banks' foreign exchange extend outreach of financial services into
reserves reached at a new height of USD remaining pockets of exclusion in underserved
25.02 billion in June 2015. Bangladesh Bank areas and people. As such, initiatives have
bought USD 3.76 billion from the foreign been taken to bring third gender
exchange market during FY15 to protect entrepreneurs, under privileged
external competitiveness of Taka by easing entrepreneurs, physically challenged people
appreciation pressure. This policy stance and all tribal including Rakhain community
helped maintain stability in the exchange rate under SME network in order to reaching out
for the last two years. financial inclusion benefit to the marginalised
23
entrepreneurs. Policy has been taken to train Table 4.2 Reserve money position
at least 3 women under every branch area of (billion Taka)
End June End June
all banks and non banks institutions those did 14 15
not avail any loan from bank or non bank Actual Programme Actual
Net foreign assets1/@ 1400.2 - 1695.1
institutions. Moreover, at least one trained Net foreign assets2/@ 1352.5 1400.2 1677.1
woman under every branch area shall be Net domestic assets1/ -105.3 - -215.2
Net domestic assets2/ -57.7 99.9 -197.2
provided loan in cottage, micro or small Domestic credit 156.9 186.9 143.6
industry sectors. Mobile phone financial (-54.4) (19.1) (-8.4)
Credit to the public sector3/ 102.3 132.3 95.4
services grew with 28.64 million registered (-63.7) (29.3) (-6.7)
customer in June 2015. 15.32 million "no-fril Credit to deposit money banks4/ 54.6 54.6 48.2
(-13.1) (0.0) (-11.6)
accounts" were opened by the end of June Other items (net) -214.6 -87.0 -340.8
Reserve money 1294.8 1500.1 1479.9
2015. Bangladesh Bank has also set up a (15.4) (15.8) (14.3)
Taka 2 billion refinancing facility via micro Currency issued 854.9 992.6 981.5
(13.4) (16.1) (14.8)
finance institutions to provide small loans to Deposits of banks with BB5/ 440.0 507.5 498.4
the lower income rural households those who (19.5) (15.3) (13.3)
Money multiplier 5.41 5.44 5.32
set up '10 taka' accounts. @ Excluding foreign currency clearing account balance and offshore
bank account.
1/ Calculated from monetary survey using end of period exchange rates.
Bangladesh Bank's attention in support of
2/ Calculated using constant exchange rates of end June 2011.
capital market stability also continued in 3/ Govt. lending fund is treated as deposit in calculating net credit to Govt
4/ Considers only loans and advances to DMBs.
FY15. Bangladesh Bank has the statutory 5/ Excluding foreign currency clearing account balance and non-bank deposits.
responsibility of enforcing bank for compliance Note : Figures in the parentheses indicate y-o-y percentage changes.
of the legal limits on their capital market

Table 4.3 Income velocity of money
exposures. Further, Bangladesh Bank has
(billion Taka)
continued liquidity support for capital market GDP at Broad Money Income
current
transactions in volumes permissible within Year market prices
(M2) (end velocity of
June position) money
Bangladesh Bank monetary programmes. It
FY09 7050.72 2964.99 2.38
played an instrumental role in structuring the (-5.93)
refinancing programme supporting capital FY10 7975.39 3630.31 2.20
(-7.56)
market activities and continued to play FY11 9158.29 4405.20 2.08
(-5.45)
supportive role in capital market development FY12 10552.04 5171.10 2.04
(-1.92)
to the feasible within laws and regulations. FY13 11989.23 6035.06 1.99
(-2.45)
FY14 13436.74 7006.24 1.93
4.3 Broad Money (M2) grew by 12.4 (-3.02)
FY15 15136.00 7871.2 1.92
percent in FY15 against 16.5 percent targeted (-0.52)
growth under the programme and 16.1 Note: Figures in parentheses indicate percentage changes over
previous fiscal year.
percent actual growth in FY14. The monetary
programme vis--vis actual outcomes are growth in broad money (M2) in FY15.
presented in Table 4.1. Domestic credit growth from banking system
slowed down to 10.1 percent against the
The lower growth in domestic credit in the targeted growth of 17.4 percent for FY15 and
banking system contributed to slow down the the actual 11.6 percent growth in FY14.
24
Domestic credit growth declined due to lower Chart 4.5 Movement of GDP growth, M2
investment demand by the private sector for a growth, rate of inflation and
number of reasons. Credit to the public sector income velocity of money
25 3.0
declined significantly due mainly to higher net
Income velocity of money

(percentage per annum)
2.5
GDP, M2, Inflation

sale of saving certificates by government and 20
2.0
slower implementation of ADP. The growth in 15
1.5
public sector credit stood negative at 2.5 10
1.0
percent against the targeted 25.3 percent 5 0.5
growth under the programme in FY15 and 8.8
0 0.0
percent actual growth in FY14. However,
FY05
FY06
FY07
FY10
FY11
FY12
FY 13
FY 14
FY 15
FY08
FY09
private sector credit growth increased in FY15
GDP growth M2 growth
compared to previous year but remained Inflation (Avg.) Income velocity of money
lower against the targeted level. The growth in
private sector credit stood at 13.2 percent in
Table 4.4 Bank Credit*- FY15 quarterly positions
FY15 against the targeted growth of 15.5
(billion Taka)
percent and the actual growth of 12.3 percent Outstanding Advances Bills Total
as of
in FY14. As a result, net domestic assets
registered 10.0 percent growth in FY15 30 June 14 4854.00 193.49 5047.49
(96.17) (3.83)
compared to the targeted growth of 20.2
30 Sep 14 5020.61 185.27 5205.88
percent for FY15 and 11.0 percent actual (95.44) (3.56)
growth in FY14. 31 Dec 14 5273.56 176.86 5450.42
(96.76) (3.24)
On the other hand, growth in net foreign 31 Mar 15 5335.72 190.79 5526.51
assets (NFA) stood at 20.7 percent against (96.55) (3.45)

30 June15 5528.69 200.30 5728.98
the targeted 3.6 percent growth for FY15.
(96.50) (3.50)
Though net foreign assets increased against Figure in parentheses indicate percentage shares of total bank credit.
* Excluding foreign bills and inter bank credit.
the targeted level, but it was lower than 38.6
percent actual growth in FY14. However, in
consistent with the overall monetary
the pace of moderate remittance growth (7.65
projection. The weekly auctions of Govt.
percent) in the external sector, growth in net
treasury bills and bonds are usually influenced
foreign assets (NFA) declined owing to weak
the level of RM, while repo and reverse repo
export growth and strong demand in imports
operations are applied for smoothening the
of capital machinery and production inputs
money market.
which eventually caused the trade account
deficit in FY15. Trends of broad money and its 4.5 In line with the projected broad money
components are shown in chart 4.2. growth, the monetary programme set at 15.8
percent growth of RM for FY15 but the actual
Reserve Money Developments
growth was 14.3 percent. The lower than
4.4 Reserve money (RM) has been used as projected growth of RM during the year was
an operating target to modulate liquidity due mainly to the substantially lower level of
25
net domestic assets of BB compared to the Table 4.5 Bank deposits*- FY15
programme level. Net domestic assets stood quarterly positions
negative at Taka 197.2 billion against the (billion Taka)
Balances Demand Time Govt. Total
programme level of Taka 99.9 billion. Domestic as of deposits deposits deposits deposits
credit of BB registered negative 8.4 percent 30 June 14 643.44 5589.78 392.18 6625.40
growth associated with its components; public
30 Sep 14 620.25 5752.39 387.26 6759.90
sector credit recorded negative 6.7 percent
growth compared to 29.3 percent growth 31 Dec 14 656.36 5932.16 456.97 7045.49
targeted under the programme due to lower 31 Mar 15 642.02 6045.65 446.85 7134.52
than expected growth of government

30 June 15 723.84 6268.00 471.17 7463.01
borrowing from banking system. Government
*Excluding inter bank and restricted deposits.
borrowing from banking system declined due
mainly to substantial increase in non-bank
Table: 4.6 weighted average interest
borrowing from net sale of NSD certificates
rates of scheduled banks
during FY15. Credit to the deposit money
as of end June (in %)
banks stood at Taka 48.2 billion in FY15 Items
FY10 FY11 FY12 FY13 FY14 FY15
against the targeted amount of Taka 54.6 Deposit rate 5.96 7.27 8.15 8.54 7.79 6.80
billion as banks had sufficient liquidity to meet Lending rate 11.23 12.42 13.75 13.67 13.10 11.67
the required demand. On the other hand, net Spread 5.27 5.15 5.60 5.13 5.31 4.87
foreign assets of BB, however, substantially

increased by Taka 324.6 billion and stood at Chart 4.6 Weighted average interest
Taka 1677.1 billion against the actual level of rates of scheduled banks
Taka 1352.5 billion in FY14 (Table 4.2). 15
12
4.6 Money multiplier decreased to 5.32 in
Percentage
FY15 as compared to 5.41 in FY14. Reserve- 9
deposit ratio increased to 0.085 in FY15 from 6
0.084 in FY14 and currency-deposit ratio also 3

increased to 0.1258 in FY15 as compared to
0
0.1233 in FY14. Net changes of both reserve- FY10 FY11 FY12 FY13 FY14 FY15
deposit ratio and currency-deposit ratio led to

Deposit rate Lending rate
decrease in money multiplier. Both money
multiplier and reserve money growth explain
the growth in broad money. Movement of Income Velocity of Money
domestic credit and its components in FY15
4.7 The income velocity of money
are shown in Chart 4.3.
decreased by 0.52 percent to 1.92 in FY15
Actual development of M2 and RM against from 1.93 in FY14 (Table 4.3). It was declined
their respective programme path is shown in by 3.02 percent in FY14. Income velocity of
Chart 4.4. money was on a declining trend
26
over the past several years indicating percent in FY15 to Taka 723.84 billion against
increased speed of transactions as a result of 15.44 percent decrease in FY14. Government
among other factors, rapid commercial bank deposits increased by Taka 78.99 billion or
branch expansion and financial inclusion 20.14 percent to Taka 471.17 billion in FY15
drives in the financial system. Movement of against 5.28 percent increase in FY14.
GDP growth, M2 growth, inflation and income Quarterly position of bank deposits in FY15 is
velocity of money during FY05-FY15 are presented at Table 4.5.
shown in Chart 4.5.
Credit/Deposit Ratio
Bank Credit
4.10 The credit/deposit ratio of the
4.8 Outstanding bank credit (excluding
scheduled banks, excluding the specialised
foreign bills and inter-bank items) during FY15
banks was 0.77 at the end of June 2015. It
rose by Taka 681.49 billion or 13.50 percent to
was 0.76 at the end of June 2014. Increasing
Taka 5728.98 billion as against an increase of
credit to deposit ratio in FY15 indicates credit
12.61 percent in FY14. The rise in the bank
growth is higher than the deposit growth.
credit during FY15 was driven by both the
increase in bills and advances. Scheduled Banks' Borrowing from
Bangladesh Bank
Advances increased by Taka 674.69 billion or
13.90 percent in FY15 as against an increase 4.11 Scheduled banks' borrowings from the
of 13.33 percent during FY14. Bills purchased Bangladesh Bank decreased by Taka 7.03
and discounted increased by Taka 6.81 billion
billion or 12.72 percent to Taka 48.24 billion at
or 3.52 percent in FY15 as compared to the
the end of June 2015 against the decrease of
decrease of 2.77 percent in FY14. The
41.46 percent at the end of June 2014.
quarterly position of bank credit and its
components is presented at Table 4.4. Balances of Scheduled Banks with the BB
and their Cash in Tills
Bank Deposits
4.12 Balances of scheduled banks with the
4.9 Bank deposits (excluding inter-bank
BB increased by Taka 58.41 billion or 13.28
items) increased by Taka 837.61 billion or
percent to Taka 498.39 billion at the end of
12.64 percent to Taka 7463.01 billion during
FY15 against 15.65 percent increase in FY14. June 2015 compared to the increase by 19.55
The rise in total bank deposits was percent to Taka 439.98 billion at the end of
contributed by all kinds of deposits. Time June 2014. Cash in tills of scheduled banks
deposits increased by Taka 678.22 billion or increased by Taka 16.36 billion or 19.08
12.13 percent and stood at Taka 6268.00 percent to Taka 102.13 billion at the end of
billion in FY15 against growth of 16.48 June 2015 against the increase of 9.69
percent during FY14. Demand deposits percent to Taka 85.77 billion as of end of June
increased by Taka 80.4 billion or 12.50 2014.
27
Cash Reserve Requirement (CRR) percent. This has been effective from 1
February, 2014.
4.13 The Cash Reserve Requirement (CRR)
for the scheduled banks with the Bangladesh Bank Rate
Bank remained unchanged at 6.50 percent of
4.15 The bank rate remained unchanged
their total demand and time liabilities for
at 5.0 percent in FY15. This rate has been in
implementing the objectives of Monetary
effect from 6 November 2003.
Policy. It may be noted that banks are
required to maintain CRR at the rate of 6.50 Interest Rates on Deposits and Lending
percent on average on bi-weekly basis
4.16 The weighted average interest rates on
provided that the CRR would not be less than
deposits increased during FY10-FY13 (Table
6.00 percent in any day with effect from 24
4.6) and then started decreasing from FY14
June 2014.
and reached at 6.80 percent in FY15.
Statutory Liquidity Ratio (SLR) Similarly, the weighted average interest rates
on lending increased during the period of
4.14 According to the amendment of FY10 to FY12 and started declining thereafter
subsection (2) under section 33 of Bank and reached at 11.67 percent in FY15. Though
Company Act, 1991, banks should have policy rates remained unchanged, lending
maintained statutory liquidity ratio separately rates declined due to lower cost of funds for
as follows, (a) for the conventional banks, the banks, lower demand for credit as well as
statutory liquid assets inside Bangladesh increasing competition from overseas lenders
which also includes excess reserves with whose lending rates are in single digit. The
Bangladesh Bank shall not be less than 13.0 spreads between lending rates and deposit
percent of their total demand and time rates were above 5 percent from FY10 to
liabilities, and (b) for the shariah based Islami FY14 which decreased to 4.87 percent in
banks, this rate shall not be less than 5.5 FY15 from 5.31 percent in FY14.
28
Chapter-5
Banking Sector Performance, Regulation and Bank Supervision
5.1 The world financial system became fraud internal controls, etc. Monitoring of
susceptible to escalate vulnerability and investment in stock market by the scheduled
instability in the recent past. Yet the banking banks has been stringent. Risk Management
sector of Bangladesh underwent a moderate Committee at the board level has been made
level of resilience in FY15. With a view to mandatory to ensure proper risk management
maintaining a sound, efficient and stable practice in the banks. Presently, the banks are
financial system, Bangladesh Bank (BB) has being rated for their overall risk management
initiated a number of policy measures giving performance. Focus has also been given on
augmented emphasis on (i) risk management Corporate Social Responsibility (CSR) and
and corporate governance in the banks, (ii) green banking activities and a distinguished
periodic review of stability of the individual department has been working to monitor the
bank as well as the whole banking system, (iii) initiatives being undertaken by banks. BB is
exercise of stress testing, (iv) inclusion of shifting from a compliance-based approach to
underserved productive economic sectors a forward-looking risk-based approach in
and population segments in financial system, regulation and supervision. Basel-III, the
(v) monitoring of fraud-forgeries and revised regulatory capital framework, has
strengthening internal control and (vi) been implemented to improve the resilience of
compliance through self assessment of anti- individual banking institutions during the
Table 5.1 Banking systems structure (billion Taka)

2013 2014
Bank Percent of Percent of
types Number Number Total industry Deposits Percent of Number Number Total industry Deposits Percent of
of banks of branches assets assets deposits of banks of branches assets assets deposits
SCBs 4 3520 2108.5 26.4 1631.2 26.0 5 3553 2517.1 27.5 1952.1 28.0
DFIs 4 1494 454.8 5.7 343.0 5.5 3 1500 333.8 3.7 237.6 3.4
PCBs 39 3602 4948.2 61.8 3939.3 62.8 39 3917 5787.1 63.3 4449.4 63.9
FCBs 9 69 488.7 6.1 359.5 5.7 9 70 505.0 5.5 326.0 4.7
Total 56 8685 8000.2 100 6273.0 100 56 9040 9143.0 100 6965.1 100
Note: Banks prepare their balance sheet on calendar year basis, and are obliged to submit their audited balance sheet at the end of every
calendar year. That is why banks' performance-related figures are stated in calendar year basis.
periods of stress, while addressing system- for measuring liquidity under Basel-III to
wide risks that arise across the banking ensure stronger and more targeted liquidity
sector. Two new tools namely the Liquidity management of banks. A Basel-III Compliance
Coverage Ratio (LCR) and Net Stable Unit has been established by each bank as
Funding Ratio (NSFR) have been introduced per instruction of BB, and steps have been
29
Chapter-5 Banking Sector Performance, Regulation and Bank Supervision
Chart 5.1 Aggregate industry assets (Dec, 2013) Chart 5.2 Aggregate industry liabilities (Dec, 2013)
(billion Taka) Loans & (billion Taka)
Deposits
Advances
6157.0
4718.2
77.0%
59.0%
Other
Govt. bills assets Capital & Other
& bond Deposit 1129.5
Cash in tills Reserve liability
1570.7 with BB 14.1%
102.7 651.9 1191.3
19.6% 479.1
1.3% 8.1% 14.9%
6.0%
Aggregate industry assets (Dec, 2014) Aggregate industry liabilities (Dec, 2014)
(billion Taka) Loans & (billion Taka)
Advances Deposits
5147.2 6965.1
56.3% 76.2%
Other
Govt. bills Assets
& bond Deposit Capital & Other liability
1668.4
1663.6 with BB Cash in tills Reserve 1436.7
18.2%
18.2% 572.8 91.1 741.3 15.7%
6.3% 1.0% 8.1%
taken to increase board awareness through remained unchanged at 56 (Appendix 4,

arranging meetings with the boards of non- Table I). Structure of the banking sector with
compliant banks. breakdown by type of banks is shown in Table
5.1.
A. Banking Sector Performance
5.3 In 2014, the SCBs held 27.5 percent of
5.2 The banking sector of Bangladesh the total industry assets against 26.4 percent
comprises four categories of scheduled in 2013. PCBs' share in total assets was
banks- State-owned Commercial Banks showing persistent trend and it increased
(SCBs), State-owned Development Financial slightly from 61.8 percent in 2013 to 63.3
Institutions (DFIs), Private Commercial Banks percent in 2014. The FCBs held 5.5 percent
(PCBs) and Foreign Commercial Banks of the industry assets in 2014, showing a
(FCBs). Recently, BASIC bank has become decrease by 0.6 percentage points over the
an SCB instead of DFI. The scheduled banks previous year. The DFIs' share of assets
decreased to 3.7 percent in 2014 from 5.7
had a total number of 9040 branches as of
percent in 2013 as one bank of this group was
December 2014 which increased from 8685 of
categorised as SCB.
2013 mainly due to opening of new branches
during the year. At the end of June 2015, the 5.4 Total deposits of the banks in 2014
total number of bank branches increased increased to Taka 6965.1 billion from Taka
further to 9131 with total number of banks 6273.0 billion in 2013, showing an overall
30
Banking Sector Performance, Regulation and Bank Supervision Chapter-5
increase by 11.0 percent. The SCBs' share in

Table 5.2 Capital to risk weighted assets
deposits increased slightly from 26.0 percent ratio by type of banks
in 2013 to 28.0 percent in 2014. PCBs' (percent)
Bank End
June
deposits in 2014 amounted to Taka 4449.4 types 2007 2008 2009 2010 2011 2012 2013 2014
2015
billion or 63.9 percent of the total industry SCBs 7.9 6.9 9.0 8.9 11.7 8.1 10.8 8.3 4.9
DFIs -5.5 -5.3 0.4 -7.3 -4.5 -7.8 -9.7 -17.3 -18.1
deposit against Taka 3939.3 billion or 62.8
PCBs 10.6 11.4 12.1 10.1 11.5 11.4 12.6 12.5 11.8
percent in 2013. FCBs' deposits in 2014 FCBs 22.7 24.0 28.1 15.6 21.0 20.6 20.2 22.6 24.1
decreased by 9.3 percent to Taka 326.0 Total 9.6 10.1 11.6 9.3 11.4 10.5 11.5 11.3 10.3
billion from Taka 359.5 billion in 2013. The

DFIs' deposits decreased by 30.7 percent to Chart 5.3 Aggregate capital
adequacy position
Taka 237.6 billion in 2014 from Taka 343.0
billion in 2013. 7000 15
6000
12
A.1. Aggregate Balance Sheet billion Taka 5000
4000 9
Percent
3000 6
5.5 Total industry assets in 2014 showed an
2000
overall increase of 14.3 percent over 2013. 1000
3
During this period, the SCBs' assets 0 0

2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
increased by 19.4 percent and those of the
PCBs' increased by 17.0 percent. Loans and Capital RWA Capital/RWA
advances of Taka 5147.2 billion constituted
the most significant portion (56.3 percent) of protection of depositors and other creditors
the sector's total assets of Taka 9143.0 billion. from the potential losses that a bank might
Cash in hand including foreign currencies was incur. It helps absorbing all possible financial
Taka 91.1 billion; deposits with BB was Taka risks related to credit, market, operation,
572.8 billion; other assets was Taka 1668.4 interest rate, liquidity, reputation, settlement,
billion and investment in government bills & strategy, environmental and climate change,
bonds was Taka 1663.6 billion (Chart 5.1). etc. Under Basel-II, banks in Bangladesh are
instructed to maintain the Minimum Capital
5.6 Deposits continued to be the main
Requirement (MCR) at 10.0 percent of the
sources of funds of the banking industry and
Risk Weighted Assets (RWA) or Taka 4.0
constituted 76.2 percent (Taka 6965.1 billion)
billion, whichever is higher. Under the
of total liability in 2014. Capital and reserves
Supervisory Review Process (SRP), banks
of the banks were Taka 741.3 billion (8.1 are instructed to maintain a level of
percent) in 2014 compared to Taka 651.9 "adequate" capital which is higher than the
billion (8.1 percent) in 2013 (Chart 5.2). minimum required capital and sufficient to
A.2. Capital Adequacy cover for all possible risks in their business.
This higher level of capital for the banks is
5.7 Capital adequacy ratio (CAR) focuses on usually determined and finalised through
the total position of banks' capital and the SRP-SREP (Supervisory Review Evaluation
31
Process, the central bank's assessment) Chart 5.4 Aggregate position of

dialogue. The amount of capital was Taka NPLs to total loans
717.5 billion at the end of December 2014. 6000 15
5000 12
5.8 On 31 December 2014, the SCBs, 4000
billion Taka
9
Percent
DFIs, PCBs and FCBs maintained CAR of 3000
6
8.3, -17.3, 12.5 and 22.6 percent respectively 2000
1000 3
as a group. But individually, two SCBs
0 0
(Sonali, BASIC), two PCBs (BCBL, ICB) and
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
two DFIs (BKB, RAKUB) did not maintain the
Total loans NPLs NPL ratio
minimum required CAR due to the increase in
classified loans. The CAR of the banking
Table 5.3 NPL ratios by type of banks
industry as a whole was 11.3 percent at end
(percent)
of December 2014 as against 11.5 percent at Bank End
2007 2008 2009 2010 2011 2012 2013 2014 June
types 2015
the end of 2013. Implementation of revised
SCBs 29.9 25.4 21.4 15.7 11.3 23.9 19.8 22.2 21.9
policy on loans was the main reason of the
DFIs 28.6 25.5 25.9 24.2 24.6 26.8 26.8 32.8 25.5
increase in CAR in 2013 and 2014. The CAR
of the industry was 10.3 percent at end of PCBs 5.0 4.4 3.9 3.2 2.9 4.6 4.5 5.0 5.7
June 2015. FCBs 1.4 1.9 2.3 3.0 3.0 3.5 5.5 7.3 8.2
Total 13.2 10.8 9.2 7.3 6.1 10.0 8.9 10.0 9.7
A.3. Asset Quality
5.9 Loans and advances are the major Table 5.3 (a) Ratio of net NPL to total
loans by type of banks
components of the asset composition of all
commercial banks. The high concentration Bank End
types 2007 2008 2009 2010 2011 2012 2013 2014 June
2015
of loans and advances increases the
SCBs 12.9 5.9 1.9 1.9 -0.3 12.8 1.7 6.1 9.4
vulnerability of assets to credit risk.
DFIs 19.0 17.0 18.3 16.0 17.0 20.4 19.7 25.5 9.2
5.10 The most important indicator to PCBs 1.4 0.9 0.5 0.0 0.2 0.9 0.6 0.8 1.1
identify the asset quality in the loan portfolio is FCBs -1.9 -2.0 -2.3 -1.7 -1.8 -0.9 -0.4 -0.9 -0.4
the ratio of gross non-performing loans Total 5.1 2.8 1.7 1.3 0.7 4.4 2.0 2.7 2.8
(NPLs) to total loans and net NPLs to net total

5.11 The ratio of NPL to total loans of all
loans. At the end of December 2014, PCBs
the banks showed an overall declining trend
had the lowest and DFIs had the highest ratio
from its peak (34.9 percent) in 2000 up to
of gross NPLs to total loans. PCBs' gross
NPLs to total loans ratio was 5.0 percent, 2011 (6.1 percent). But the ratio increased in
whereas that of SCBs, FCBs and DFIs were 2012 (10.0 percent), decreased again in 2013
22.2, 7.3 and 32.8 percent respectively in (8.9 percent), then increased again (9.7
2014 (Table 5.3). The gross NPL ratios to percent) in 2014. The decline in NPLs to total
total loans for the SCBs, PCBs, FCBs and loans ratio in recent years till 2011 (Table 5.3)
DFIs were recorded as 21.9, 5.7, 8.2 and 25.5 can be attributed partly to some progress in
percent respectively at end of June 2015. recovery of long outstanding loans and partly
32
to write-off of loans classified as 'bad' or 'loss'.

Table 5.3 (b) Amount of NPLs
But it went up again in 2012 and 2014 due to
(billion Taka)
new loan classification policy and some End
Bank
June
scams in the banking industry. types 2007 2008 2009 2010 2011 2012 2013 2014 2015
SCBs 137.9 127.6 117.5 107.6 91.7 215.2 166.1 227.6 224.0
5.12 The SCBs and DFIs continued to have DFIs 37.2 37.3 42.1 49.7 56.5 73.3 83.6 72.6 58.3
high level of NPLs due mainly to poor PCBs 49.2 57.0 61.7 64.3 72.0 130.4 143.1 184.3 223.5
appraisal, inadequate follow-up and FCBs 1.9 2.9 3.5 5.5 6.3 8.5 13.0 17.1 19.4
supervision of the loans disbursed. Total 226.2 224.8 224.8 227.1 226.5 427.3 405.8 501.6 525.2
Furthermore, these banks were reluctant to

write-off the historically accumulated bad Table 5.4 Required provision and provision
maintained -all banks
loans because of poor quality of underlying (billion Taka)
collaterals. Recovery of NPLs, however, End
All banks 2007 2008 2009 2010 2011 2012 2013 2014 June
witnessed some signs of improvement has 2015
Amount of
mainly because of the steps taken with regard NPLs 226.2 224.8 224.8 227.1 226.4 427.3 405.8 501.6 525.2
Required
to internal restructuring of these banks to Provision 127.2 136.1 134.8 149.2 148.2 242.4 252.4 289.6 300.4
strengthen their loan recovery mechanism, Provision
maintained 97.1 126.2 137.9 142.3 152.7 189.8 249.8 281.6 275.6
and write-off measures initiated in recent Excess(+)/
-30.1 -9.9 3.1 -6.9 4.6 -52.6 -2.6 -7.9 -24.8
years. shortfall(-)
Provision maintenance
ratio (%) 76.3 92.7 102.3 95.4 103.0 78.3 99.0 97.2 91.7
5.13 Table 5.3 (a) and Chart 5.4 show that
in 2014, the ratio of net NPLs (net of
Chart 5.4 (a) Aggregate position of NNPL to
provisions and interest suspense) to net total total loans (net of provision)
loans (net of provisions and interest
6000 8
suspense) was 2.7 percent for the banking 5000
6
sector. But it was 25.5 percent for DFIs. DFIs'
billion Taka
4000
nonperforming portfolios were still high after 3000 4 Percent

2000
adjustment of actual provision and interest 2
1000
suspense, whereas SCBs, FCBs, and PCBs
0 0
had excess provision against their NPLs. The
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
net NPLs to net total loan ratios were 6.1, 0.8,

Total loans (net of provision) Net NPLs NNPL ratio
and -0.9 percent for the SCBs, PCBs and
FCBs respectively at the end of December
2007 to Taka 227.6 billion in 2014. The PCBs
2014. The ratios were 9.4, 9.2, 1.1 and -0.4
recorded a total increase of Taka 135.1 billion
percent for SCBs, DFIs, PCBs and FCBs
in their NPL accounts, which stood at Taka
respectively at the end of June 2015.
184.3 billion in 2014 against Taka 49.2 billion
5.14. Table 5.3(b) shows the amount of in 2007. The amount of NPLs of the DFIs
NPLs of the four types of banks from 2000 to increased to Taka 72.6 billion in 2014 from
2015 (end of June). The amount of NPLs of Taka 37.2 billion in 2007. The amount of
the SCBs increased from Taka 137.9 billion in NPLs of the FCBs increased from Taka 1.9
33
billion in 2007 to Taka 17.1 billion in 2014. Chart 5.5 Comparative position of
The amount of NPLs of SCBs, DFIs, PCBs NPLs by type of banks
250
and FCBs stood at Taka 224.0, 58.3, 223.5
200
and 19.4 billion respectively at the end of
150
billion Taka
June 2015.
100
5.15 Table 5.4 shows the aggregate 50
amount of NPLs, the required loan loss 0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
provision and the actual provision maintained
by the banks from 2007 to end of June 2015. SCBS PCBs DFIs FCBs
Table 5.4 and Chart 5.6 show that in
aggregate, the banks continuously failed to Chart 5.6 Provision adequacy position
maintain the required level of provision of all banks
600 125
against their NPLs from 2007 to 2014 except 500 105
the year 2009 and 2011 when the banking 400
billion Taka
85
Percent
sector was able to maintain more of the 300
65
200
required provisions. Banks maintained 76.3 45
100
percent of the required provisions in 2007 0 25
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
which increased thereafter to 103.0 percent in
2011, then declined to 99.0 percent in 2013 Amount of NPLs Provision maintained
Provision maintenance ratio
and 91.7 percent in June 2015.
Table 5.5 Comparative position of
The main reason for the shortfall in provision
provision adequacy
was the inability of some SCBs, DFIs and (billon Taka)
PCBs including those in the problem bank Year Items SCBs DFIs PCBs FCBs
Required provision 107.8 38.3 94.8 11.6
category, due to inadequate profits and 2013 Provision maintained 122.3 17.4 97.8 12.3
Provision maintenance ratio (%) 113.5 45.5 103.2 106.0
provision transfer for write-offs. Notably, the Required provision 128.6 37.1 108.7 15.3
2014 Provision maintained 135.3 14.7 115.4 16.2
FCBs were in a much better position as they Provision maintenance ratio (%) 105.2 39.6 106.2 105.9
were able to make adequate provisions. A 2015
Provision maintained 96.7 31.2 130.6 17.2
June
comparative position of loan loss provisions Provision maintenance ratio (%) 76.6 100 103.2 106.2
as of end 2013, 2014 and 2015 (end June) is

shown in Table 5.5. uniform guidelines for write-offs were
introduced in 2003. According to the policy,
5.16 37 out of 39 PCBs were able to
banks may, at any time, write off bad/loss
maintain the required provision at the end of
loans. The loans classified as bad/loss for the
December 2014, but the remaining two failed
last 5 years or more with 100 percent
due to their poor asset portfolios and earning
provisions embarked are written-off. The total
levels.
amount of written-off bad debts from June
5.17 To correct an unnecessarily and 2008 to June 2015 in different bank
artificially inflated size of the balance sheet, categories is given in Table 5.6.
34
A.4. Management Soundness Table 5.6 Writing-off bad debts in different

bank categories
5.18 It is difficult to draw any conclusion (billion Taka)
regarding management soundness based on Bank 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June
types 08 09 10 11 12 13 14 15
quantitative indicators as characteristics of a SCBs 48.4 64.5 70.5 82.4 72.9 107.2 154.8 210.3
good management are rather qualitative in DFIs 31.0 31.8 31.8 32.0 24.5 32.6 34.2 5.6
nature. Nevertheless, the total expenditure to PCBs 49.4 54.7 69.6 77.1 64.9 109.7 127.7 155.5
total income, operating expenses to total
FCBs 1.7 2.0 2.1 2.4 2.6 3.7 4.4 5.1
expenses, earnings and operating expenses
Total 130.5 153.0 174.0 193.9 164.9 253.3 321.1 376.5
per employee, and interest rate spread are
generally used to portray management
soundness. Technical competence and Table 5.7 Expenditure-income ratio by
leadership of mid and senior level type of banks
(percent)
management, compliance to plan and
Bank 2015
respond to changing circumstances, etc. are types 2007 2008 2009 2010 2011 2012 2013 2014 June
also taken into consideration in evaluating the SCBs 100.0 89.6 75.6 80.7 62.7 73.2 84.1 84.1 85.9
quality of management. DFIs 107.7 103.7 112.1 87.8 88.6 91.2 94.8 99.5 120.4
PCBs 88.8 88.4 72.6 67.6 71.7 76.0 77.9 75.8 75.5
5.19 As evident from Table 5.7, in 2014,
FCBs 72.9 75.8 59.0 64.7 47.3 49.6 50.4 46.8 49.6
the expenditure-income (EI) ratio of the DFIs
was the highest among bank clusters. The Total 90.4 87.9 72.6 70.8 68.6 74.0 77.8 76.1 78.3
EI ratio of the SCBs was 84.1 percent

the second highest, which was mainly
Chart 5.7 Aggregate position of income
attributable to high administrative and and expenditure - all banks
operating expenses. The EI ratio of DFIs
1000 95
increased from 94.8 percent in 2013 to 99.5 90
800
percent in 2014. The EI ratio of PCBs and
billion Taka
85
600 80 Percent
FCBs declined to 75.8 and 46.8 percent
400 75
respectively compared to the previous year. 70
200
At end of June 2015, the EI ratio of SCBs, 65
0 60
DFIs, and FCBs increased to 85.9, 120.4, and
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
49.6 percent respectively and remained

almost unchanged for PCBs. Total expenses Total income EI ratio
A.5. Earnings and Profitability

5.21 Earnings as measured by ROA and
5.20 There are various indicators of ROE differ greatly within the industry. Table
earnings and profitability, but the most 5.8 shows ROA and ROE by type of banks.
representative and widely used one is Return Analysis of these indicators reveals that the
on Assets (ROA) which is supplemented by ROA of the SCBs was less than the industry
Return on Equity (ROE) and Net Interest average. The ROA of SCBs was gradually
Margin (NIM). increasing up to 2011, but it dropped down to
35
Table 5.8 Profitability ratios by type of banks

(percent)
Return on assets (ROA) Return on equity (ROE)
Bank
types 2007 2008 2009 2010 2011 2012 2013 2014
2015 2007 2008 2009 2010 2011 2012 2013 2014
2015
June June
SCBs 0.0 0.7 1.0 1.1 1.3 -0.6 0.6 -0.6 -0.6 0.0 22.5 26.2 18.4 19.7 -11.9 10.9 -13.5 -22.5
DFIs -0.3 -0.6 0.4 0.2 0.1 0.1 -0.4 -0.7 -1.5 -3.4 -6.9 -171.7 -3.2 -0.9 -1.1 -5.8 -6.0 -8.2
PCBs 1.3 1.4 1.6 2.1 1.6 0.9 1.0 1.0 0.9 16.7 16.4 21.0 20.9 15.7 10.2 9.8 10.3 9.7
FCBs 3.1 2.9 3.2 2.9 3.2 3.3 3.0 3.4 3.1 20.4 17.8 22.4 17.0 16.6 17.3 16.9 17.7 15.7
Total 0.9 1.2 1.4 1.8 1.5 0.6 0.9 0.6 0.5 13.8 15.6 21.7 21.0 17.0 8.2 11.0 8.1 6.6
negative (-0.6 percent) in 2012 due to a huge Chart 5.8 Aggregate profitability-all banks
net loss. In 2013, it increased and became 24
positive but eventually turned into negative
18
(-0.6 percent) at the end of 2014. The DFIs' Percent
situation is not getting better due to persistent 12
operating losses incurred by BKB and 6
RAKUB. The ROA of DFIs' deteriorated more, 0

scoring negative (-0.7 percent) in 2014. PCBs'
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
ROA showed a consistently strong position up
ROA ROE
to 2010, but it was in a decreasing trend
during 2011 to 2014 due to the decrease of
Table 5.9 Net interest income by
net profit. Though FCBs' ROA was type of bank
continuously strong, it decreased slightly in (billion Taka)
Bank types 2007 2008 2009 2010 2011 2012 2013 2014 2015
2013, increased in 2014 and dropped again in June
June 2015. SCBs 7.4 7.9 12.1 19.8 34.3 14.9 -5.4 39.7 19.4
DFIs 1.4 1.9 1.9 6.2 4.9 4.7 3.8 2.1 1.9
5.22 ROE of SCBs showed negative in
PCBs 36.1 48.5 56.7 82.8 91.4 114.7 118.2 205.8 105.0
2014. It dropped from 10.9 percent in 2013 to
negative 13.5 percent in 2014 due to huge FCBs 9.9 12.6 10.7 13.0 16.1 19.6 15.8 26.6 14.1
loss incurred by BASIC Bank and further Total 54.8 70.9 81.5 121.9 146.7 153.8 132.3 274.2 140.3
declined to negative 22.5 percent in June
2015. DFIs' ROE was negative 6.0 percent in stood at Taka 274.2 billion from Taka 132.3
2014 compared to negative 5.8 percent in billion in 2013. After falling down to Taka 5.4
2013. ROE of PCBs increased to 10.3 percent billion (negative) in 2013, SCBs were able to
in 2014 from 9.8 percent in 2013 and regain positive NII at Taka 39.7 billion in
decreased again to 9.7 percent in June 2015. 2014. Major portion of the industry's NII
The ROE of FCBs stood at 17.7 percent in
comes from PCBs. Their contribution was
2014 which was 16.9 percent in 2013 and fell
75.1 percent of the banking industry in 2014.
to 15.7 percent in June 2015.
PCBs showed an increasing trend from 2007
5.23 Aggregate net interest income (NII) to 2014 whereas NII of DFIs and FCBs were
of the industry in 2014 increased sharply and fluctuating moderately.
36
Table 5.10 Liquidity ratio by type of banks

(percent)
Liquid assets Excess liquidity
Bank
types 2007 2008 2009 2010 2011 2012 2013 2014
2015 2007 2008 2009 2010 2011 2012 2013 2014
2015
June June
SCBs 24.9 32.9 25.1 27.2 31.3 29.2 44.3 42.0 39.3 6.9 14.9 17.6 8.2 12.3 10.2 25.3 23.9 26.4
DFIs 14.2 13.7 9.6 21.3 6.9 12.0 15.3 6.6 0.0 5.6 4.9 7.1 2.3 1.3 1.0 4.2 6.6 0.0
PCBs 22.2 20.7 18.2 21.5 23.5 26.3 28.0 28.2 20.8 6.4 4.7 5.3 4.6 6.6 9.5 11.3 11.0 11.9
FCBs 29.2 31.3 31.8 32.1 34.1 37.5 46.2 56.9 51.1 11.2 13.3 21.8 13.2 15.3 18.7 27.4 37.6 38.9
Total 23.2 24.8 20.6 23.0 25.4 27.1 32.5 32.7 26.8 6.9 8.4 9.0 6.0 8.4 9.9 15.4 15.7 16.9
5.24 SCBs were able to increase their net Chart 5.9 Aggregate NII of the industry
interest income (NII) by reducing their cost of (billion Taka)
1000 300
Interest income & expense

funds during 2007 to 2011. In 2012, the NII of
250
Net interest income

800
SCBs dropped and alarming situation 200
600
occurred in 2013 due to higher interest 150
400
expenses which grew faster than interest 100
200 50
earnings. Sonali Bank Limited experienced a
0 0
sharp fall of net interest income (NII) of Taka
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
10.5 billion. The NII of the PCBs was
Interest income Interest exp. Net interest spread
significantly high during 2007 to 2014. Overall
industry NII showed a continuously upward
Chart 5.10 Aggregate position of
trend from 2007 to 2014 except 2013 due to
excess liquidity
the lackluster performance of SCBs. The trend 35
30
of NII indicates that the interest spreads of
25
PCBs and FCBs were higher than that of 20
Percent
SCBs and DFIs. 15

10
5
A.6. Liquidity
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
5.25 Currently, the scheduled commercial

banks have to maintain a CRR averaging 6.5 Liquidity maintained Excess liquidity
percent daily on bi-weekly basis against

Average Total Demand and Time Liabilities percent of their total time and demand
(ATDTL) of the 2nd preceding month, with an liabilities. The specialised banks/DFIs are
obligation to maintain daily minimum 6 exempted from maintenance of SLR, but
percent cash against the same ATDTL held they have to maintain the CRR at the stated
by the bank. The current rate of Statutory rate. The banks maintain CRR in cash
Liquidity Reserve (SLR) for conventional with BB. However, they are allowed to
banks is 13 percent of time and demand hold government approved securities
liabilities. In case of Islamic Shariah-based (unencumbered portion) for maintenance of
commercial banks, the rate of SLR is 5.5 the SLR.
37
5.26 Table 5.10 shows that the FCBs had included as well. Under this rating system,
the highest liquidity ratios followed by the banking companies are assigned two sets of
SCBs in 2014. There was an overall steady ratings- (i) performance ratings, based on six
trend in the percentage of liquid assets in total individual ratings that address six components
assets of the banks during the last year of CAMELS (capital, assets, management,
although the ratio for FCBs had an increasing earnings, liquidity and sensitivity to market
trend. risk) and (ii) an overall composite rating,
based on a comprehensive assessment of the
A.7. CAMELS Rating
overall condition of the banks. Both the
5.27 CAMELS rating is a supervisory tool to ratings are expressed by using a numerical
identify banks with problems and require scale of "1" to "5" in ascending order of
increased supervision. The previous CAMELS supervisory concern, "1" representing the best
rating guideline has been reviewed by the rating, while "5" indicating the worst. Any bank
Department of Off-site Supervision with a rated "4" or "5", i.e., 'Marginal' or
view to adapting international best practices, 'Unsatisfactory' under the composite CAMELS
upgrading with modern banking activities and rating is generally identified as a problem
assessing the banks' soundness more
bank and their activities are closely monitored
accurately. The updated CAMELS rating
by the BB.
guideline has been followed since December
2013. 5.28 BB has introduced the Early Warning
System (EWS) of supervision from March
The revised CAMELS rating guideline has
2005 to address the difficulties faced by the
brought not only major changes in ratios or
banks in any of the areas of CAMELS. Any
indicators but also modifications in the
bank found to have difficulty in any areas of
qualitative evaluation questionnaire. Basel-III
operation, is brought under the early warning
principles related to capital adequacy have
been considered, and some related issues category and monitored very closely to help
have been included while reviewing the improving its performance. Presently, no
guideline. Along with emphasising best quality banks are monitored under EWS.
capital, investments in the capital market, the
5.29 No banks were qualified for CAMELS
amount of off-balance sheet items in
"1" or "Strong" in 2014; the rating of 39 banks
comparison to the capital of the banks, large
was "2" or "Satisfactory"; rating of 10 banks
loan exposures to capital, etc. are considered
was "3" or "Fair"; five banks were rated "4" or
to calculate capital adequacy. Herfindahl-
"Marginal" and two banks received "5" or
Hirschman Index (HHI) has been incorporated
"Unsatisfactory" rating.
in the updated CAMELS rating guideline to
analyse loan portfolio concentration, as a A.8. Operations of Banks in Urban and
complement to percentages of classified Rural Areas
loans and provisioning in the evaluation of
asset quality. The disbursed loan amount to 5.30 The number of rural branches stood
risk-associated different sectors has been at 5150.0 (57.0 percent of total branches) at
38
Table 5.11 Comparative position of the Islamic banking sector (as of end December 2014)
(billion Taka)
Dual banking@ Islamic banking All banking
Islamic banks (Conventional+ Islamic) sector sector
Particulars
2014 2013 2014 2013 2014 2013 2014 2013
1 2 3 4=2+3 5
Number of banks 8 8 16 16 24 24 56 56
Deposits 1349.7 1117.9 67.6 61.0 1417.3 1178.9 6965.1 6273.0
Credits 1137.6 951.3 57.7 52.5 1195.4 1003.7 5147.2 4638.7
Credit deposit ratio 84.3 85.1 85.4 68.1 84.3 85.2 73.9 73.9
Liquidity: excess(+)/shortfall(-) 127.5 91.2 0.1 3.1 128.2 94.3 1142.2 955.8
@ Conventional banks which have Islamic banking branches do not maintain SLR individually.
The head offices of the respective banks maintain a combined SLR and liquidity position.
the end of December 2014 (Appendix 4, Table the total banking system. A brief picture of the
XIII). The number of branches in urban areas performance of Islamic banks is given in Table
increased to 3890 (43.0 percent of total 5.11. Total deposits of the Islamic banks and
branches) during the same period. Total Islamic banking branches of the conventional
deposits of rural branches increased to Taka banks stood at Taka 1417.3 billion at the end
1326.0 billion (19.1 percent of total deposits) of December 2014 which accounted for 20.3
at the end of December 2014 and the amount percent of total deposits. Total credit of the
of urban deposits increased to Taka 5605.2 Islamic banks and the Islamic banking
billion (80.9 percent of total deposits) at the branches of the conventional banks stood at
end of December 2014. The amount of Taka 1195.4 billion at the end of December
advances in rural and urban areas increased 2014 which accounted for 22.2 percent of
to Taka 505.1 billion (10.0 percent of total total credit of the banking system of the
advances) and Taka 4571.2 billion (90.0 country.
percent of total advances) respectively as on
30 December 2014. B. Legal Framework and Prudential
Regulations
A.9. Islamic Banking
B.1. Risk Based Capital Adequacy (RBCA)
5.31 Islamic banking system has been for Banks
introduced in Bangladesh since 1983. In
FY15, out of 56 banks in Bangladesh, eight 5.32 BB has introduced the Risk Based
PCBs operated as full-fledged Islamic banks Capital Adequacy (RBCA) framework for
and 16 conventional banks (including three banks from January 2010 as regulatory
FCBs) were involved in Islamic banking compliance. Moreover, BB reviewed the
through Islamic banking branches. The minimum regulatory CAR and MCR of the
Islamic banks have continued to show strong banks in 2010 through revising the existing
growth since its inception, as reflected by the RBCA policy and banks' past capital
increased market share of the Islamic banking adequacy reporting. Banks are required to
in terms of assets, financing and deposits of maintain the CAR at greater than or equal to
39
10 percent of Risk Weighted Assets (RWA) RWA i.e. Tier-2 capital can be admitted
from July 2011. According to Pillar-1 of Basel- maximum up to 4.0 percent of the total
II, RWA of banks is calculated against credit RWA or 88.9 percent of CET-1,
risk, market risk and operational risk. Banks whichever is higher.
are instructed to submit their capital adequacy
statement at the end of each quarter to BB. iv. In addition to minimum CRAR, Capital
BB is now on the move to implement the Conservation Buffer (CCB) of 2.5 percent
Supervisory Review Process (SRP) of RBCA of the total RWA is being introduced
framework. The key principle of the SRP is which will be maintained in the form of
that banks have a process for assessing CET-1.
overall capital adequacy in relation to their
risk profile and a strategy for maintaining their 5.33 The Supervisory Review Evaluation
capital at an adequate level. Banks are Process (SREP) of BB includes dialogue
required to form an SRP team, where the Risk between BB and the bank's SRP team,
Management Unit is an integral part, and to followed by findings/evaluation of the bank's
develop a process document called Internal ICAAP. During the SRP-SREP dialogue, BB
Capital Adequacy Assessment Process reviews and determines any additional capital
(ICAAP) for assessing their overall risk profile. that would be required for banks on the basis
of quantitative as well as qualitative judgment.
BB has also declared the roadmap and action
The first SREP dialogue was initiated in 2011.
plan of the phase-in arrangements for Basel-
Afterwards, to facilitate the dialogue, BB
III implementation. These instructions will be
prepared a revised evaluation process
adopted in a phased manner and the initial
document in May 2013. Under the process
phase is already being implemented from
document, BB provided guidance to calculate
January 2015. Full implementation is
expected to be completed by December 2019. required capital against residual risk, credit
concentration risk, interest rate risk, liquidity
Under the new capital adequacy framework, risk, reputational risk, settlement risk,
all banks will be required to maintain the strategic risk, appraisal of core risk
following ratios on an ongoing basis: management practice, environmental &
i. Common Equity Tier-1 (CET1) of at least climate change risk and other material risks in
4.5 percent of the total RWA. a specified format and submit the same by the
banks to BB. Information of banks' ICAAP is
ii. Tier-1 capital will be at least 6.0 percent counter checked with the information
of the total RWA which means that available from both on-site inspection and off-
additional Tier-1 capital can be admitted site supervisory departments of BB. During
maximum up to 1.5 percent of the total the SRP-SREP dialogue, if a bank fails to
RWA or 33.3 percent of CET-1,
produce their own ICAAP backed by proper
whichever is higher.
evidence and rigorous review regarding risk
iii. Minimum Capital to Risk-weighted Asset management, the SREP team of BB applies
Ratio (CRAR) of 10 percent of the total their prudence and the available information
40
from the inspection departments in C. Supervision of Banks

determining the level of adequate capital. The
5.36 With a view to promoting and
process document further revised in May
maintaining soundness, solvency and
2014. On the basis of the revised process systematic stability of the financial sector as
document and return format, all (56) banks well as protecting the interest of depositors,
have submitted their ICAAP report based on BB carries out two types of supervision
31 December 2013 and one to one meeting namely (i) off-site supervision and (ii) on-site
with BRPD and SRP team of 40 banks have supervision. Department of Off-site
already been completed by June 2015. Supervision (DOS) is vigilant to conduct off-
site supervision on banks. Recently DOS has
B.2 Loan Classification and Loan-Loss
made an innovation regarding banking
Provisions
supervision.
5.34 BB changed its policies on loan
C.1. Off-site Monitoring of Banks
classification and loan-loss provisions in
FY13. BB also introduced and clarified the 5.37 Off-site monitoring continued as a
difference between a "defaulted loan", which necessary compliment to on-site inspection in
is a legal concept granting the bank the right FY15, with its various tools and procedures
to take certain actions against the borrower, for intensive and rapid analysis.
and a "classified loan", which is an accounting Banking Supervision Specialists (BSSs)
concept that implies a certain required level of
5.38 In order to strengthen and intensify
provisioning for expected losses.
current banking supervision, BB has recently
B.3. Corporate Governance in Banks formed six Banking Supervision Specialist
Sections in the Department of Off-site
5.35 BB has taken several measures in the
Supervision. Each section is headed by a
recent past to put in place good corporate
Banking Supervision Specialist (BSS), at the
governance in banks. These include a "fit and
Deputy General Manager level. Banking
proper" test for appointment of chief executive
Supervision Specialist emphasises more on
officers of PCBs, specifying the constitution of
analytical works. BSSs work as early signal
audit committee of the board, enhanced
providers of the banks they are assigned to.
disclosure requirements, etc. In continuation
They maintain extensive familiarity with
of the above reforms, the roles and functions condition, performance, risks, corporate
of the board and management have been governance and corporate structure of
redefined and clarified with a view to portfolio banks. They collect executive
specifying the powers of the management and summary reports of comprehensive
restricting the intervention of directors in day- inspections carried out by Departments of
to-day management of the bank. In this Banking Inspection and take actions
connection, related clauses of Bank Company accordingly. They maintain regular co-
Act 1991 have already been amended. ordination with inspection departments to get
41
update on recent supervisory developments. reviewed under the MoUs of FY15.

Junior Banking Supervision Specialists Preparation of MoUs for BKB and RAKUB for
monitor treasury functions, capital adequacy, FY16 is currently under process.
ADR, etc. of portfolio banks. They prepare
Risk Management Activities of Banks
Diagnostic Review Report (DRR) on audited
financial statements and Quick Review Report 5.39 BB has issued six core risk
(QRR) at the required frequency which focus management guidelines, risk based capital
on major risks existing in the banks and adequacy guideline and stress testing
provide possible solutions to problems. They guideline to ensure robustness, efficiency
also examine the meeting minutes of the and effectiveness of risk management
Board of Directors and Executive/Audit systems for the banking sector. On 15
Committee of the banks to detect the February 2012, BB issued another guideline
called Risk Management Guideline for banks.
irregularities and violation of banking laws,
This guideline promotes an integrated, bank-
circulars, etc. and accordingly, advise the
wide approach to risk management which will
banks to regularise the same so that major
facilitate banks in adopting contemporary
financial indicators as well as the internal
methods to identify, measure, monitor and
control systems of the banks become regular
control risks throughout their institutions.
and can achieve shock-resilient capacity.
5.40 Each scheduled bank was instructed
BSSs monitor the progress of Memorandum
to establish an independent Risk
of Understanding (MoU) with the SCBs and
Management Unit (RMU) in June 2009 for
specialised banks and report immediately to
better risk management practices. Banks
the concern senior management. BASIC Bank
were also instructed to prepare a Risk
Ltd. and Bangladesh Development Bank Ltd.
Management Paper (RMP) containing the
(BDBL) were categorised as SCBs in
analysis of all types of existing and probable
December 2014 and May 2015 respectively.
risks that might occur in future, place the
Monitoring of SCBs (except BDBL) under same in their regular monthly meeting of the
MoU is going on. To enhance the standard of RMU and submit the RMP along with the
credit management and internal control decisions of the meetings to the Department
system, a special inspection on internal of Off-site Supervision. Recently, BB has
control & compliance system of four state- introduced a new reporting format in the name
owned commercial banks (Sonali Bank Ltd., of Comprehensive Risk Management Report
Janata Bank Ltd., Agrani Bank Ltd. and Rupali (CRMR) for banks in place of the previous
Bank Ltd.) is being conducted by Bangladesh format (RMP). To make the risk management
Bank. Meanwhile, Government has injected activities more effective, various types of
Taka 0.71 billion and Taka 0.79 billion to contemporary risk issues and a questionnaire
Sonali Bank Ltd. and BASIC Bank Ltd. (related to risk management structure, credit
respectively in December 2014 as policies & procedures, evaluation process of
recapitalisation. On the other hand, BKB and credit proposals, post sanction process, follow
RAKUB are also being monitored and up & monitoring of loans, operation level risk
42
verifications, liquidity risk, etc.) are included in 5.43 Banks are now bound to submit a self-
the new format. assessment report on internal control
systems. The objective of this self-
5.41 Banks have been instructed to
assessment process is to keep the
establish Risk Management Division (RMD) in
operational risk at a minimum level by
place of Risk Management Unit and to
strengthening the internal control and
appoint a Chief Risk Officer (CRO) from a
compliance system of a bank. In this regard,
senior management position (at least from the
BB has formulated a reporting format with 53
Deputy Managing Director level) to give more
questionnaires on anti-fraud internal controls
emphasis on risk management practices. BB
and a statement of fraud and forgeries that
has instructed the banks to form a risk
have taken place during a period along with
management committee whose members will
the action taken against those incidences. BB
be nominated by the board of directors from is analysing these reports on quarterly basis
themselves and the company secretary of the and providing proper instructions to the
bank will be the secretary of the Risk banks. The information provided in that report
Management Committee. Based on the RMP, is sent to the on-site supervision departments
DOS regularly evaluates the risk management for verification through on-site inspection also.
activities of each bank and provides
constructive recommendations to improve The details of on-site supervision are given
their conditions. Banks have to execute all the below:
recommendations and submit their C.2. On-site Inspection of Banks

compliance reports within a specified time
frame. 5.44 As part of bank's statutory function,
currently seven departments of BB namely
5.42 A risk rating procedure has been
Department of Banking Inspection-1 (DBI-1),
developed to quantify all possible risks based Department of Banking Inspection-2 (DBI-2),
on available information in the CRMR, Department of Banking Inspection-3 (DBI-3),
minutes of RMD and board risk management Department of Banking Inspection-4 (DBI-4),
committee meetings, compliance status of Department of Foreign Exchange Inspection
previous quarters submitted by banks and (DFEI), Financial Integrity and Customer
other sources. This risk rating is done on half Services Department and Bangladesh
yearly basis and carries 15 percent weight in Financial Intelligence Unit (BFIU) are
the management component of CAMELS conducting inspection activities. These seven
rating. Therefore, a bank's risk management departments conduct on-site inspection on
practices will have a significant effect on its SCBs, DFIs, PCBs (including banks under
CAMELS rating. According to the rating of Islamic Shariah), FCBs and other institutions
December 2014, out of 56 scheduled banks, including Investment Corporation of
23 banks were rated as low risk, 25 as Bangladesh (ICB) and money changers.
moderate and the rest eight as high risk These departments conduct different types of
category bank. inspection which may be summarised in three
43
major categories like (i) comprehensive/ and internal control & compliance) issued by
regular/ traditional inspection; (ii) risk based/ Bangladesh Bank. Head/Country offices of
system check inspection, and (iii) special/ the bank as well as one branch of each bank
surprise inspection. have been taken under the purview of the
core risk inspection. In terms of core risk
5.45 The overall performance of the banks inspection, a total of 191 branches including
(such as capital adequacy, asset quality, head office of one bank were inspected. The
liquidity, earnings, management competence, banks are directed to sit in a tri-partite
etc.) is evaluated in a comprehensive meeting with their Management Committee
inspection. Based on their performance, (MANCOM), inspectors of Bangladesh Bank
banks are rated from "1" to "5" grades in and external auditors before finalisation of the
ascending order. The on-site inspection annual financial statements of the banks. DBI-
departments also monitor implementation of 1 has arranged 11 in house training sessions
the suggestions or recommendations made in in four working days.
the inspection reports. Risk based inspection
5.48 During FY15, DBI-2 conducted
is conducted to examine the compliance of
comprehensive inspection on 928 bank
the core risk management guidelines. Special
branches including seven head offices, 293
inspections are conducted to investigate
big branches and 628 small branches. At the
complaints received from the depositors,
same time, a total number of 69 special
public or institutions.
inspections were conducted on SCBs and
5.46 Commercial banks having CAMELS DFIs including one head office and 14 risk
rating between "3" and "5" are inspected based inspections including six head offices
every year. Banks rated "1" or "2" are of the banks. The department also conducted
inspected once in every two years. Based on comprehensive inspection on five branches
the findings about provisions, income and and the Head office of ICB.
expenditure entries, banks will be asked to 5.49 During FY15, DBI-3 conducted a
correct their final accounts. This system has total of 726 comprehensive inspections on
been adopted to enhance the effectiveness of banks including four head offices, 92 big
on-site inspection and reduce the time gap branches, 630 small branches and 182 SME
between on-site and off-site supervision. service centres, SME/agriculture branches
5.47 During FY15, DBI-1 conducted (including inspection on some of the branches
of different banks involved in SME activities).
inspection on 1288 branches of 28 banks
At the same time, a total number of 192
including head offices. At the same time, core
special inspections were conducted on two
risk inspections were conducted on 28 banks
banks (including SME) and 60 risk-based
under the jurisdiction of DBI-1 to review the
inspections on five banks.
progress of implementation of the core risk
guidelines (asset-liability management, credit 5.50 During FY15, DBI-4 conducted 237
risk management, information system security inspections on banks' head offices and
44
Box 5.1
Liquidity Management by Islamic Banks in Bangladesh
Liquidity management is a fundamental component in the safe and sound management of all
financial institutions including islamic banks. Customer's confidence mostly depends on how
efficiently a bank handle liquidity crisis. For this, a planned way of safety, liquidity and return
framework is necessary to manage the overall liquidity of a bank. Islamic banks are committed to
conduct all banking and investment activities on the basis of Islamic Sharia'h. In Bangladesh, Islamic
banks are allowed to maintain their Statutory Liquidity Requirement (SLR) at a concessional rate
compared with the conventional banks in the absence of enough Sharia'h-compliant SLR eligible
instruments in the market place. At present, Islamic banks have to maintain 6.5 percent as CRR with
Bangladesh Bank and 5.5 percent as SLR of their total time and demand liabilities prescribed by
Bangladesh Bank. The conventional commercial banks having Islamic bank branches/windows shall
maintain SLR/CRR for its Islamic branches/windows at the same rate through maintaining a separate
Current Account with Bangladesh Bank.
Islamic banks in Bangladesh have been facing excess liquidity problem since long as they do not
invest in Government Treasury Bills and Bonds because of interest bearing nature of those monetary
instruments. Considering the excess liquidity problem of the Islamic banks, Government of
Bangladesh introduced 'Bangladesh Government Islamic Investment Bond (BGIIB)' in 2004 with the
objectives to develop a sound foundation for the Islamic bond market and also to provide a space to
convert excess liquidity into investment through BGIIB. Islamic banks' investment in BGIIB was
showing upward trend during last three years as they had no other alternative to invest their surplus
liquidity (Table 1). Recently, the BGIIB has been made more short-term in tenor-three months. On the
other hand, in case of liquidity crisis, the Islamic banks/branches may overcome the crisis by availing
of investment facilities from Islamic Bond Fund against lien of their over purchased Islamic Bonds,
introducing Repo system for the Islamic Bonds, opening reciprocal Mudaraba current accounts
maintaining with each other. However, to meet the liquidity crisis, if any, of the Islamic branches of
the conventional commercial banks, they may collect fund from sources which will comply with
Islamic Sharia'h.
Table 1 : All Islamic Banks' Investment, Borrowing and Profit Rate of BGIIB (Islamic Bond)
June 2013 June 2014 June 2015
Investment (billion Taka) 9681.4 15051.2 21316.5

Borrowing (billion Taka) 15906.0 6785.0 5110.0
Profit rate
Investment 4.6 3.4 1.0
Borrowing (weighted average) 5.0 4.6 4.5
Source: Securities Department, Motijheel Office, Bangladesh Bank.
45
branches. Within this timeline, the department for spotting the early warning signs of internal
conducted core risk inspections in 20 and external fraud at banks and NBFIs,
branches and 20 head offices of banks under investigating frauds and making criminal
the jurisdiction of DBI-4 to review the referrals when necessary. This department is
implementation advancements of core risk also continuing its efforts to promote security,
management guidelines as well as to evaluate efficiency, effectiveness, transparency and
and monitor risk management systems and to risk management of the information and
control environment of the banks. During the communication technology (ICT) structures of
period, DBI-4 also carried out comprehensive banks and NBFIs.
inspection in 119 branches and 20 head
5.53 During FY15, the department
offices of banks. DBI-4 conducted 58 special
received a total of 14,920 complaints through
inspections on 37 branches and 20 head
the dedicated hot line numbers, emails and
offices of banks. During the financial year all
traditional letters. The department is working
banks listed in the local stock exchange were
to investigate and resolve the complain within
inspected. For the first time, DBI-4 conducted
the shortest possible time. The rate of
SRP inspections on 20 head offices and 20
compliance resolved has been increased
branches of banks. 20 banks were also
notably.
inspected before finalisation of their annual
financial statements at close of business on The department conducted 127 special
31 December 2014. inspections on banks and financial institutions
operating in Bangladesh. Apart from the
5.51 DFEI conducts inspection on foreign
Customer Service Division of Head Office, the
trade financing, treasury functions and foreign
CIPCs were established in 10 offices of
exchange risk management of banks, foreign
Bangladesh Bank to deal with the complaints
exchange transactions of banks and money
changers. In FY15, the department conducted received from the bank customers of their
a total of 483 comprehensive inspections on respective areas.
banks including 11 head offices and 483 5.54 A number of activities on AML/CFT
authorised dealer branches. The department for the banking sector were taken during
also conducted 45 inspections on foreign FY15. BFIU has issued circulars for the
exchange risk management, 85 special scheduled banks and financial institutions for
inspections, 115 inspections on money proper compliance of the instructions
changers and a good number of special regarding prevention of Money Laundering
inspections on foreign trade and foreign (ML) & Terrorist Financing (TF); circulated
exchange related irregularities. money laundering and terrorist financing risk
assessment guidelines for banking sector to
5.52 Customers' Interests Protection assess the associated risk of ML/TF of the
Centre (CIPC) was reconstituted as a respective banks and started to use the
department named Financial Integrity and national ID card database of Election
Customer Services Department (FICSD) on Commission (EC), database of Credit
26 July 2012. FICSD is acting as a watchdog Information Bureau (CIB), Bangladesh
46
Automated Clearing House (BACH) and Dash impact of possible changes in economic
Board of Bangladesh Bank in its analysis environment on the financial system. The
process. BFIU has been receiving CTR and Financial Projection Model (FPM) has been
STR from all scheduled banks through goAML implemented with the technical assistance of
software since January 2014. In FY15, this the World Bank. Inter-bank Transaction Matrix
department conducted system check (ITM) tool has been introduced and is used to
inspections under core risk programme in 57 observe liquidity management of banks and
head offices and 44 branches of 56 banks NBFIs. This matrix will help to find out the
and carried out special inspection in 19 institutions which may potentially face any
branches of 12 banks to examine whether crisis and give early warning signals for
banks are submitting STR/CTRs properly and safeguarding financial institutions.
regularly. It also carried out some other
special inspections in one head office and 24 5.57 The department has developed the
branches of 17 banks for further analysis of framework for identifying and dealing with the
some STRs and in two head offices and 45 Domestic Systemically Important Banks
branches of 22 banks to look into the (DSIB) in its jurisdiction due to the underlying
allegation/complaints received from different assumption that the impact of the failure of
media, individuals and other organisations. In DSIBs will be significantly greater than that of
order to create awareness among bank a non-systemic institution. The formulation
officials, BB has encouraged the banks to and implementation plan of Counter-cyclical
conduct a number of training programmes for Capital Buffer (CCB) in the time of crisis is
their officials on AML/CFT in 56 districts and under process to resist the pro-cyclicality of
provided its support to make the programme financial system. The department has
successful. Separate annual conferences for prepared the bank intervention and resolution
Chief Anti-Money Laundering Compliance framework, comprising a Bank Intervention
Officer (CAMLCO) of banks, financial Resolution Plan (BIRP) and a contingency
institutions and capital market intermediaries plan to have more effective tools, information
were held during the year. in order to enable the orderly resolution of
C.3 Financial Stability and Macro banks without any resort to taxpayers' fund.
prudential Supervision 5.58 The Department has prepared the
5.55 The Financial Stability Department Lender of Last Resort (LOLR) framework
(FSD) has been working actively to documents and corporate 'watch list'.
strengthen the macro prudential framework of Development of a "Coordinated Supervision
the country. Since inception, this department Framework" is under process.
has published Financial Stability Report
D. Banking Sector Infrastructure for
(annual and quarterly) to evaluate overall
Financial Stability and Risk Management
financial stability which will give
comprehensive analysis of the major trends. D.1. Deposit Insurance Scheme
5.56 The department primarily has 5.59 The Deposit Insurance Scheme (DIS)
designed macro stress tests to quantify the is introduced to minimise or eliminate the risk
47
of loss of depositors' funds with banks that Table 5.12 The recent position of DITF
subsequently fail. The direct rationale for Unaudited figure Premium
Particulars
(as on 30 June 2013) rate*
deposit insurance is customer protection. The
Total fund 4.05 billion Taka -
indirect rationale for deposit insurance is that Total investment 3.90 billion Taka -
Covered deposit of total 27.54% -
it reduces the risk of a systemic crisis insurable deposit
involving, for example, panic withdrawals of Insurable deposit to total 81.20%
D&T liabilities
deposits from sound banks and breakdown of Fully insured deposit 87.98% -
Sound bank categories - 0.08%
the payments system. From a global point of Early warning bank categories - 0.09%
view, deposit insurance provides many Problem bank categories - 0.10%
benefits and over the long term, appears to be * Effective from 2013
an essential component of a viable modern

5.62 To enhance the effectiveness of
banking system.
market discipline, BB has adopted a system
5.60 In Bangladesh, DIS was first of risk based deposit insurance premium rates
introduced in August 1984, in terms of "The applicable for all the banks effective from the
Bank Deposit Insurance Ordinance 1984", period of January-June 2007. Very recently
which was repealed by "The Bank Deposit the premium rate has been increased, with
Insurance Act 2000" in July 2000. DIS in effect from the period of January-June 2013.
Bangladesh is now being administered by the Along with the scheduled banks, BB has also
said Act. In accordance with the Act, taken the initiative to bring the NBFIs under
Bangladesh Bank (BB) is authorised to
the coverage of DIS, an initiative which is now
administer a fund called the Deposit
under the consideration of the Ministry of
Insurance Trust Fund (DITF) for providing
Finance (MoF).
limited protection (Taka 0.10 million) to a
small depositor in case of winding up of any 5.63 The effectiveness of DIS in reducing
bank. The Board of Directors of BB acts as systemic risk will surely increase if the public
the Trustee Board for DITF. The DITF is now become well aware of its existence and
being administered and managed under the scope. With this in mind, BB has already
guidance of the Trustee Board. In addition, issued a circular regarding public awareness
Bangladesh Bank is a member of the about DIS and more information and updates
International Association of Deposit Insurers are available in the Bangladesh Bank website
(IADI). so that the general public can be informed
5.61 In accordance with "The Bank Deposit about the benefits and capabilities of the DIS.
Insurance Act 2000," the main function of D.2. Activities of Credit Information Bureau
DITF is collecting premium from all scheduled
banks on a half yearly basis (end of June and 5.64 The Credit Information Bureau (CIB)
December) and investing the proceeds in was set up in BB on 18 August 1992 with the
Government securities. The income derived objective of minimising the extent of potential
from such investments is also credited to the default loans. The CIB has been providing its
DITF account for further investment. online services since 19 July 2011. The online
48
system of CIB developed by an Italian reduce huge cost which is incurred by

company CRIF is playing an important role to maintaining the existing online system.
maintain a risk free lending procedure in
5.65 The CIB database consists of detailed
banking industry. With the adoption of highly
credit information in respect of borrowers, co-
sophisticated ICT facilities, the performance
borrowers and guarantors. CIB database
of the CIB services has been improved includes credit information of borrowers
significantly in terms of efficiency and quality. having outstanding amount of Taka 50000 &
It has also reduced the time and physical above and classified credit card information
movement for the banks/NBFIs to submit having outstanding amount of Taka 10000
credit information and CIB report generation and above. Total number of borrowers
process which ultimately makes the loan increased by 6.0 percent to 905112 at the end
processing faster. The system has gone of June 2015 as compared to 853851 at the
through a major change over the last year same month of the previous year. The number
aiming at developing a new CIB online of classified borrowers in Banks and NBFIs
solution. The new CIB online solution will increased by 7.15 percent during June 2015
eliminate the vendor dependency as well as over June 2014.
49
Chapter-6
Sustainable Banking
6.1 Sustainable banking is a banking while BB has been proactively guiding the
approach that creates long-term resilient and banks and NBFIs for diverse sustainable
sustainable economic, social and banking initiatives since 2011. In such aspect,
environmental value by having a 'green', green banking initiatives of BB broadly
'responsible' and 'inclusive' strategy and categorised into the following aspects: policy
taking into consideration the every dimension
initiatives, monitoring of green banking
of how a business operates in the
activities of banks and NBFIs, refinance
environmental, social and economic
support from BB in diverse green products/
environment. It also formulates strategies to
sectors, and BB's own initiatives for
build a company that fosters longevity,
environmental management.
resilience and sustainability of economy,
society, environment and itself through A.1. Policy Initiatives
transparency and efficient utilisation of
resources. The main objective of sustainable 6.3 In January 2011, guidelines on
banking is economic benefit and social benefit Environmental Risk Management (ERM) was
which turn into financial stability as well as issued to all banks and NBFIs which was first
social stability. Bangladesh Bank (BB) has policy instruction of BB regarding green
been integrating 'sustainability' into core banking. Policy guidelines for green banking
banking practices through green banking, was issued to the scheduled banks in
corporate social responsibility, financial
February 2011. Policy guidelines for green
inclusion and financial education. These
banking was issued to NBFIs in August 2013
society and environment oriented banking
and to the new banks (scheduled in 2013) in
practices gradually create the concept of
September 2013. BB aligned the phase out
sustainable banking. Thus BB has been
plan to implementing policy guidelines for all
pursuing policy and instructions in all possible
areas of sustainable banking for banks and banks in December 2013. It issued a circular
Non-Bank Financial Institutions (NBFIs) to in September 2014 to expedite the ongoing
sustainable banking activities. Sustainable initiatives of banks and NBFIs at faster pace
banking mainly focuses on three broad for sustaining the environment compatible to
categories named green banking, corporate climate change risk, minimum target of direct
social responsibility and financial inclusion. green finance as certain percentage of total
funded loan to be disbursed/ invested in each
A. Green Banking
year effective from January 2015 onwards.
6.2 Bangladesh Bank has set examples for For banks scheduled before 2013, target will
others by pioneering green banking initiatives be 5 percent of the total disbursement/
50
Sustainable Banking Chapter-6
investment of funded loan in 2015. For new

Table 6.1 Green finance in different
banks scheduled in 2013 and NBFIs, target products: FY15 (million Taka)
will be 3 percent and 4 percent respectively of
Category of
SCBs DFIs PCBs FCBs NBFIs Total
the total disbursement/ investment of funded green finance
loan in 2015. This target will be 5 percent of Renewable energy 107.4 5.8 2284.2 554.5 6249.3 9201.3
Energy efficiency 92.0 0.0 1400.7 0.0 81.7 1574.4
the total loan disbursement /investment from Solid waste
January 2016 onwards for all banks and management 14.9 0.0 2112.7 0.0 0.0 2127.6
Liquid waste
NBFIs. management 22.0 0.0 1755.5 52.5 202.0 2032.0
Alternative energy 17.3 0.0 0.0 0.0 0.0 17.3
A.2. Green Finance Fire burnt brick 1797.3 34.0 5292.3 0.0 59.0 7182.5
Non fire block brick 0.0 0.0 20.5 0.0 0.0 20.5
6.4 A total amount of Taka 465.9 billion Recycling &

recyclable product 0.0 8.9 2376.8 26.8 124.3 2536.8
was disbursed during FY15 by 46 banks Green industry 420.0 0.0 831.1 2638.3 80.0 3969.5
involved in green finance. The relative Safety and security
of factory 0.0 0.0 236.4 1.5 24.7 262.6
contributions of different institutions were as Others 596.3 37.4 3788.4 0.0 43.2 4465.2
follows; PCBs (78.6 percent) followed by Total 3067.2 86.1 20098.6 32733.6 6864.2 33389.7
FCBs (15.4 percent), NBFIs (5.1 percent), Source: Sustainable Finance Department, BB.
SCBs (0.9 percent) and DFIs (0.1 percent).

Product-wise and direct & indirect green Table 6.2 Direct and indirect green finance: FY15
finance by banks are given in Table 6.1 and (million Taka)
Table 6.2 respectively. Direct Indirect Total Sector
Type of
green green green wise
banks/NBFIs
finance finance finance contribution
A.3. Environmental Risk Management (ERM)
SCBs 3067.2 910.6 3977.7 0.9
DFIs 86.1 263.0 349.0 0.1
6.5 Environmental risk management taken
PCBs 20098.6 346134.7 366233.2 78.6
into account in disbursing credit. A
FCBs 3273.6 68240.7 71514.3 15.4
environmental risk rating is estimated and a NBFIs 8320.7 15493.0 23813.6 5.1
threshold level is applied in taking a decision Total 34846.0 431041.9 465887.9 100.0
to disburse loan following the guidelines on Source: Sustainable Finance Department, BB.
ERM for banks and NBFIs. ERR is applicable

for the projects as well as the credit facility that Table 6.3 Environmental risk rating of
fall above the threshold limit. All banks banks and NBFIs: FY15
conducted environmental risk rating in FY15.
No. of No. of Amount
Type of No. of
The number of projects applicable for banks/
projects rated disbursed in
applicable projects projects rated projects
Environmental Due Diligence (EDD) during the NBFIs
for EDD rated financed (million Taka)
year was 55881. Total amount of Taka 1500.1 SCBs 2224 1804 1718 28896.8
billion disbursed in 39613 rated projects out of DFIs 225 225 225 3824.3
47926 rated projects in FY15 (Table 6.3). PCBs 47316 40575 33897 1281527.1
FCBs 3765 2855 1375 109230.5

A.4. Climate Risk Fund and Green Marketing
NBFIs 2351 2467 2398 76578.3
Total 55881 47926 39613 1500057.0

6.6 In FY15 total amount utilised from
Source: Sustainable Finance Department, BB.
climate risk fund by 22 banks and for green
51
Chapter-6 Sustainable Banking
marketing by 29 banks were Taka 564.3 Table 6.4 Disbursement trend of BB refinance
million and Taka 168.7 million respectively. scheme for green products
For the NBFIs, total amount disbursed from (million Taka)
climate risk fund was Taka 4.3 million and Green product category FY11 FY12 FY13 FY14 FY15
Bio gas 50.2 133.2 113.6 212.8 83.3
total expenditure for green marketing was
Solar home system 59.4 10.5 40.2 32.2 87.5
Taka 4.9 million in FY15. Solar irrigation pump 12.4 8.4 0.0 17.9 26.5
Effluent treatment plant 10.8 22.2 57.4 10.0 0.0
A.5. Online Banking and Energy Efficiency HHK technology in brick kiln 0.0 55.0 172.2 59.0 47.0
Solar assembly plant 0.0 248.8 122.7 49.6 148.1
6.7 55 banks out of 56 banks had online Vermicompost 0.0 0.0 0.0 0.0 1.1
branches at the end of FY15 whereas the Total 132.8 478.1 506.1 381.5 393.5
number was 54 at the end of FY14. Online Source: Sustoinable Finance Department, BB.
branches were 51.9 percent of total branches

at the end of FY14 which stood at 68.1 Chart 6.1 Shares of green products in
refinancing: FY15
percent at end of FY15. Green banking policy
Vermicompost
encourages the banks to establish branches 0% Biogas plant
21%
powered by solar energy. Following the
Solar
principle of green banking, the number of assembly
branches powered by solar energy was 315 at plant Solar
38% irrigation
the end of FY14 which stood at 416 at the end pump
22%
of FY15.
HHK technology Solar home
A.6. BB's in House Environmental in brick sector system
12% Effluent treatment 7%
Management plant 0%
6.8 BB installed solar power system on its

rooftop for energy efficiency and chiller based upload and Enterprise Data Warehouse
central air conditioning system for reducing (EDW) system. Bangladesh Automated
CFC emission. BB initiated the process to Cheque Processing System (BACPS),
measure the carbon footprint of its own. E- Bangladesh Electronic Fund Transfer Network
recruitment, documentation management (BEFTN), Online Credit Information Bureau
system, leave management system, online and Enterprise Resources Planning (ERP)
salary and account statement, personal file have been started in operation. Bangladesh
update system, online office orders, electronic Bank has also started e-procurement.
pass for visitors and many have been
A.7. BB's Refinance Schemes for Green
introduced through BB intranet. All the
Products/Sectors
departments of BB's head office and its nine
branch offices have already been brought 6.9 To promote renewable energy and
under a computer network (LAN/WAN), environment friendly financial activity of
connecting more than 3500 PCs. BB has Bangladesh, BB formulated a Revolving
introduced open data initiative for all through Refinance Scheme from its own source
its interactive website which is updated at all amounting Taka 2.0 billion in 2009. Refinance
time. Most of the regulatory reporting from facilities are extended to the Participating
banks and NBFIs are collected through web Financial Institutions (PFIs) in this purpose. To
52
avail refinance facility till 30 June 2015, 37 Table 6.5 Expenditure details of the BB
banks and 15 NBFIs signed participation disaster management & corporate
agreement with BB. Initially only five products social responsibility fund
(million Taka)
were eligible for refinance. BB increased the
Sectors Amount
green product lines under the scheme to 47 in
Education 22.2
FY15. BB segregated these products into 11
Health 6.0
categories which are: renewable energy,
Environment 3.2
energy efficiency, solid waste management, Human resources development/ capacity building 7.5
liquid waste management, alternative energy, Financial inclusion/ women empowerment 9.4
fire burnt brick, non fire block brick, recycling Others 3.0
Total 51.3
& recyclable product, green industry, ensuring
safety and work environment of factories and
miscellaneous. The cumulative refinanced was established in BB financed by Asian
amounts of the scheme up to June 2015 Development Bank (ADB) in 2012. In this
stood at Taka 1909.2 million. Total disbursement process, total amount of loan
disbursement of refinance scheme for green from ADB was about USD 50.0 million or
products through BB increased by 3.1 percent equivalent Taka. It has two parts: Part-A: USD
to Taka 393.5 million in FY15 which was Taka 30.0 million (approximately)/equivalent Taka
381.5 million in FY14. Product-wise total will be provided for conversion of Fixed
disbursement for green products under Chimney Kiln (FCK) to Improved Zigzag Kiln
refinance scheme increased in FY15 except and Part-B: about USD 20.0 million/
effluent treatment plant. The disbursement equivalent Taka for establishment of new
trend of this fund is given in Table 6.4 and Vertical Shaft Brick Kiln (VSBK), Hybrid
Chart 6.1. In September 2014, BB introduced Hoffman Kiln (HHK) and Tunnel Kiln. On
a refinance scheme funded by liquidity of lending facilities are extended to the PFIs in
Shariah based banks and NBFIs in excess of this purpose. Till 30 June 2015, 35 banks and
their requirement which will be explicitly 18 NBFIs signed participation agreement with
utilised for direct green finance of the said BB. Up to December 2014, USD 4.6 million
banks and NBFIs. These banks and NBFIs was disbursed under this project. During April-
can utilise this fund for financing in the 47 June 2015 period, total USD 2.74 million was
products identified under BB refinance disbursed under this project. In FY15, the
scheme. cumulative disbursement was USD 7.4
million.
A.8. ADB Supported 'Financing Brick Kiln
Efficiency Improvement Project' B. Corporate Social Responsibility
6.10 To improve the efficiency of the brick 6.11 A new indicative guideline for allocation
kiln through efficient use of technology and and end use monitoring of CSR engagements
energy including reducing Green House Gas of the financial sector was issued by BB on 22
(GHG) and Suspended Particulate Matter December 2014. The guideline clearly states
(SPM) on lending facilities namely "Financing the administrative setup, budgetary allocation,
Brick Kiln Efficiency Improvement Project", expected range/coverage of CSR activities
53
and end use monitoring process of CSR Chart 6.2 Sector-wise CSR expenditure
expenditures and activities. of banks: FY15
Humanitarian Environment
B.1. BB's Own CSR Activities & disaster 3.5%
relief Cultural welfare
23.5% 8.3%
6.12 BB sanctioned Taka 51.3 million
Infrastructural
(contribution from BB profit + bank interest) in development
Health 05%
FY15 from the 'Bangladesh Bank Disaster 21.8%
Income
Management & Corporate Social Responsibility generating
activities
Fund' which was Taka 50.2 million in F14 for 0.1%
Education Others
different projects addressing health, 34.4% 7.9%
education, environment and human resources
development/ capacity building, financial
inclusion and women empowerment, etc. Chart 6.3 Sector-wise CSR expenditure
of NBFIs: FY15
Total disbursed amount from this fund is
Education
reported as Table 6.5. Others 11.6%
27.7%
Health
B.2. CSR Activities of Banks and NBFIs 7.4%
6.13 CSR activities of banks' and NBFIs' Infrastructural

development Humanitarian &
are concentrated on i) financial inclusion of 0.01% disaster relief
22.7%
less privileged population segments and
Cultural
underserved economic sectors, ii) promotion welfare Environment
of health, education and cultural/recreational 24.8% 5.8%
activities for advancement and well-being of

underprivileged population segments, iii) Table 6.6 CSR expenditure of banks
promotion of environment friendly projects, iv) and NBFIs
(million Taka)
adoption of energy efficient, carbon footprint
Banks NBFIs
reducing internal processes and practices in Sectors
FY15
Sectoral
FY15
Sectoral
share share
own offices and establishments are in Education 1845.2 34.4 5.1 11.6
progress. Total amount of CSR expenditure Health 1165.3 21.8 3.3 7.4
by Banks and NBFIs in FY15 was Taka Humanitarian & disaster relief 1257.2 23.5 10.0 22.7
5400.7 million. The sector-wise expenditure Environment 189.6 3.5 2.6 5.8
Cultural welfare 445.0 8.3 11.0 24.8
scenario of banks and NBFs in FY15 are
Infrastructural development 27.0 0.5 0.01 0.01
stated in Table 6.6.
Income generating activities 4.0 0.1 0.0 0.0
Others 423.2 7.9 12.2 27.7
6.14 Banks continued to maintain major
Total 5356.5 100 44.2 100
share in education, health and humanitarian &
disaster relief. Education, health, humanitarian
& disaster relief contributed to 34.5, 21.8 and As infrastructural development in
23.5 percent respectively of the total CSR underprivileged area and income generating
activities. Expenditure on cultural welfare activities for poor are relatively new concept,
which includes sports and art & culture was banks expenditure in those areas was not
8.3 percent and on environment 3.5 percent. significant. Notable specific share of
54
expenditure in CSR programmes of banks in Table 6.7 Total No. of NFAs for farmers
FY15 are shown in Chart 6.2. and other than farmers as of
June 2015
6.15 NBFIs reported direct CSR expenditure
SCBs DFIs PCBs FCBs Total
of Taka 44.2 million in FY15. NBFIs also
Farmers 4130114 3973815 486947 0 8590876
concentrated more in the cultural welfare 24.8 Beneficiaries under social
percent, humanitarian & disaster relief 22.7 safety net programme 2725389 802400 20 0 3527809
Freedom fighters 156661 2709 377 0 159747
percent and other sector 27.7 percent. Small life insurance policy
Education, health and environment got less holder (Taka 100 A/C) 30153 6085 1570 0 37808
National service programme 3436 11431 914 0 15781
priority as they spent on these sector 11.6, Hardcore poor 1159726 735194 10703 0 1905623
7.4 and 5.8 percent in FY15. NBFIs also City corporation cleaning
workers 9703 0 9 0 9712
concentrated less on infrastructural
Distressed rehabilitation 28608 1 0 0 28609
development in underprivileged area and Food & livelihood security 16036 344 23 0 16403
Physically challenged persons 61006 22861 30 0 83897
income generating activities for poor.
RMG workers 30267 563 168767 210 199807
Sectoral shares of CSR expenditure by NBFIs LSBPC-Shoe & Leather Worker 41 32 3767 0 3840
in FY15 are stated in Chart 6.3. Others 709064 26136 1746 0 736946
Total 9060204 5581571 674873 210 15316858
Source: Financial Inclusion Department, BB.
C. Financial Inclusion
6.16 BB has taken various significant Table 6.8 Total outstanding balance of
initiatives to provide access to financial NFAs for farmers and other
than farmers as of June 2015
services to financially excluded people. In (million Taka)
particular, it has extended formal banking SCBs DFIs PCBs FCBs Total
services to less privileged people in urban Farmers 308.3 423.7 987.0 0.0 1719.0
Beneficiaries under social
and rural areas. BB has identified the target
safety net programme 973.3 1119.7 12.0 0.0 2105.0
group of people (farmers, hardcore poor, Freedom fighters 296.6 1.8 1.7 0.0 300.1
beneficiary under the social security Small life insurance policy
holder (Taka 100 A/C) 45.1 26.9 6.9 0.0 78.9
programme, freedom fighters, small life National service programme 50.7 11.6 1.1 0.0 63.4
insurance policy holder, city corporation Hardcore poor 283.5 584.1 1026.3 0.0 1893.9
City corporation cleaning
cleaning workers, food & livelihood security workers 2.0 0.0 0.2 0.0 2.2
programme, national service programme, Distressed rehabilitation 1.9 0.0 0.0 0.0 1.9
Food & livelihood security 7.7 0.1 0.0 0.0 7.8
physically challenged persons, distressed Physically challenged persons 29.3 22.7 0.1 0.0 52.1
rehabilitation, RMG workers, street working RMG workers 486.4 3.6 727.1 0.2 1217.3
LSBPC-Shoe & Leather Worker 0.0 0.0 14.2 0.0 14.2
children and school students) and advised
Others 504.7 9.6 2.9 0.0 517.2
banks for opening No-Frill Accounts (NFAs). Total 2989.5 2203.8 2779.5 0.2 7973.0
C. 1. NFAs for Farmers and other than
Farmers NFAs other than farmer's account. BB has also
provided instruction to all banks to open NFAs
6.17 BB instructed the SCBs and DFIs to for readymade garment workers and workers
open NFAs for farmers in January 2010. Up to of small footwear & leather product industries.
FY15 BB has gradually issued instructions to In FY15 all banks were instructed to open
these banks for opening nine categories of NFAs for physically challenged persons.
55
6.18 As of end of June 2015, sector-wise Table 6.9 School banking account and
distribution of NFAs showed that SCBs, DFIs, outstanding as of end June 2015
PCBs and FCBs had opened 8590876
Type of banks Number of accounts Outstanding (million Taka)
farmer's account, followed by beneficiaries
under social safety net programme (3527809 SCBs 206856 337.4
DFIs 139780 207.3
accounts), freedom fighters (159747
PCBs 556233 6320.9
accounts), small life insurance policy holder
FCBs 1224 14.3
Taka 100 account (37808 accounts), national Total 904652 6879.9
service programme (15781 accounts), Source: Financial Inclusion Department, BB.
hardcore poor (1905623 accounts), city
corporation cleaning workers (9712 comprehensive guideline in October 2013.
accounts), distressed rehabilitation (28609 Under this guideline, any school student of 6-
accounts), food & livelihood security (16403 18 years age can open school banking
account through parents or legal guardian by
accounts), physically challenged persons
depositing a minimum of Taka 100. Total
(83897 accounts), RMG workers (199807
outstanding balance of school banking stood
accounts), and others Taka 10 account
at Taka 6879.9 million against 904652
(736946 accounts). The total number of all
accounts at the end of June 2015. The update
categories of accounts stood at 15316858.
status as of June 2015 of school banking is
Total outstanding balance of NFAs of all type
reported in Table 6.9.
of banks for farmers against this accounts
stood at Taka 1719 million, whereas the total C.3. Banking for Working/Street Children
balance of all categories of account reached
at Taka 7973.0 million. Total number of NFAs 6.20 After introducing various types of
banking services for farmers and some other
and outstanding balance for farmers and non-
underprivileged people, BB advised all
farmers as of end of June 2015 are reported
scheduled banks to bring street children
in Table 6.7 and 6.8.
under institutional financial support on 9
C.2. School Banking March 2014 through opening custodial
account with NGOs by Taka 10 as minimum
6.19 In order to broaden and deepen the opening balance and no service charge/fee
financial inclusion through including the for working/street children. These initiatives
students under the age of 18, BB advised the would help street children to develop their
scheduled banks to introduce school banking savings habits and eventually help them step
activities in 2010. Since then, banks have towards better future. Concerned NGOs will
started to provide banking services to be fully responsible for the operation of the
students through savings account and deposit children accounts and the well-being of the
scheme. The main objective of school account holders. Till June 2015, 12 banks
banking is to promote savings behaviour signed bi-lateral agreement with different
among school goers and to orientate them registered NGOs for offering the services. The
with banking literacy and modern banking progress statement of working/street children
technology. To enhance the school banking programme of banks as of June 2015 is
activities of the banks, BB issued a reported in Table 6.10.
56
C.4. Agent Banking Table 6.10 Working/street children account

and outstanding as of end June 2015
6.21 Bangladesh Bank issued agent banking
guidelines in December 2013 for the banks Name of Banks Name of listed NGO
Number Total
of accounts (million Taka)
with a view to safety, security and soundness
Rupali Bank Ltd Manab Sheba &
of the proposed alternative delivery channel Samajik Unnayan
for banking services for non-privileged, Sangostha, SUF 900 0.61
Agrani Bank Ltd. Uddipon 300 0.03
underserved population and the poor segment
Bangladesh
of the society, especially from geographically Krishi Bank Uddipon 135 0.16
remote location. Agent banking has opened Pubali Bank Ltd Oporajayo Bangla,
doorway to provide banking services through BRAC, Nari Maytri 511 0.72
City Bank Ltd Prodipon 131 0.10
an outlet by banks where branch
One Bank Ltd Shajeda Foundation 224 0.11
establishment is extremely difficult or not Marcantile Bank Ltd Oporajayo Bangladesh 113 0.06
feasible. To facilitate the agent banking Bank Asia Ltd Prodipon 123 0.16
Mutual Trust Bank Ltd Assistance for Slum
activities, a guidance note for approval and
Dwellers (ASD) 34 0.00
operation of agent banking activities of banks National Bank Ltd Community Participation
was issued in June 2014. Till June 2015, nine and Development (CPD) 19 0.01
banks got approval from BB for agent banking Al-Arafah Islami Assistance for Slum
Bank Ltd Dwellers (ASD) 38 0.00
services and four banks started operation. Till
Trust Bank Ltd. Manab Sheba & Samajik
June 2015, number of agents stood at 107 Unnayan Sangostha 253 0.04
and number of outlets was 118. Total 2781 2.00

C.5. BB Refinance Scheme for Taka 10
Account Holders
development of Bangladesh. Gross remittance
6.22 With a view to bring the financially earning increased by 7.7 percent to USD
deprived grass root population under formal 15316.9 million in FY15 compared to USD
financial services and to gear up the banking
14228.3 million in FY14. In order to document
activities of Taka 10 accounts, BB constructed
the remittance senders, BB has taken an
a Revolving Fefinance Fund in May 2014. The
initiative to collect the information of NRBs and
size of fund is Taka 2.0 billion. Highest limit of
maintain that in a dynamic, interactive and
refinance facility is Taka 50000 under this
online database. Any NRB can open an
scheme and participating banks will be
provided interest subsidy under certain account in this database through BB website
conditions. To avail refinance facility, till 30 and upload his/her information. This database
June 2015, 31 banks signed participation will play as a communication platform for BB
agreement with Bangladesh Bank and and NRBs as well. For Bangladesh Bank, this
disbursed amounts stood at Taka 65.5 million database helps to promote and uphold
in FY15. investment information arranged for NRBs by
government and to create awareness on
C.6. NRB Database
proper remittance channel & method and
6.23 Foreign remittance sent by NRBs has important financial or economic moves of
significant contribution to the economic government in which NRBs can participate.
57
Box 6.1
Financial Literacy and Bangladesh Bank's Initiatives
Financial literacy can benefit anyone, regardless of age, income or background; create demand for
financial products and services by accelerating financial inclusion; ensure consumer protection by
applying transparency. Everyone associated with the financial system needs to be financially literate.
This includes all users of financial services i.e. children, financially excluded resource-poor, the lower
and middle income groups or the high net worth individuals and also the providers of services. But to
start with, BB will remain focused on children up to the age of 18 years and vulnerable adults.
Bangladesh Bank's Initiatives
A webpage has been developed and linked with Bangladesh Bank website (http://finedu.bb.org.bd).
This includes the basic financial literacy topics, financial calculator, financial games, etc. The key
objective is to make financially literate school going children as well as adults. It is also used for
creating awareness among people regarding savings, advances and other financial services. Two
visuals and ten audio commercials are made and are being broadcasted through TV and radio
channels. Posters and advertisements on financial literacy are being published on news papers.
Financial literacy campaign among school going children are being conducted throughout the country.
Guidelines for Banks on Financial Literacy
In the aftermath of the global financial crisis, financial education issues have reached a momentum and
financial literacy has gained international recognition as a critical life skill for individuals. In this respect,
many countries are developing national financial education strategies and guidelines for different
sectors. Bangladesh Bank has also started by preparing a guideline on financial literacy for banks
containing instructions for: i) designating focal point/contact person in each bank for financial literacy
issues; ii) developing descriptions of bank's products and services in simple language; iii) interest
calculator; iv) cautionary notices about fraudulent activities; iv) separate tab for children (up to 18 year
age) including school banking account, financial games, stories on banking concept, etc; and v) a page
containing FAQs and option for query & complaints.
To promote financial literacy, the Financial Inclusion Department (FID) of BB is taking steps to
mainstream financial literacy in our education system by including a chapter regarding financial literacy
into the text book, which may start from grade-3 and onwards. It will enable teachers to teach financial
responsibility through fun and experiential learning. To introduce as well as to enhance financial literacy
among mass people - slogans, jingles, pictures, symbols about financial literacy may be printed on
ATMs, bill-boards, opposite side of check books, deposit slips and various publications of banks.
They can submit complaint, query or feedback owned exchange houses were awarded for
through this database. They also use this highest remittance and investment in bonds.
database to link between themselves and
C.7. Financial Education
search other NRBs according to country,
profession, etc. 359 NRBs were registered till 6.24 Bangladesh Bank has taken various
June 2015 in the NRB Database of BB. To initiatives to bring the larger portion of
recognise and encourage the contribution of financially excluded population under formal
NRBs towards sending remittance through financial services. BB has developed a web-
banking channel, BB has introduced link titled "Financial Literacy" in BB webpage to
"Bangladesh Bank Remittance Award" in each undertake diverse financial education initiatives
year. In 2014, 31 individuals and two NRBs from FY14 in a rigorous manner (Box 6.1).
58
Chapter-7
Performance, Regulation and Supervision of NBFIs
7.1 Non Bank Financial Institutions (NBFIs)

Table 7.1 Structure of NBFIs
are playing a crucial role by providing
additional financial services that cannot be 2009 2010 2011 2012 2013 2014 2015*
always provided by the banks. The NBFIs, No. of NBFIs 29 29 31 31 31 31 32
with more multifaceted products and services Government- owned 1 1 2 3 3 3 3
Joint-venture 8 8 8 10 10 10 10
have taken their place in the competitive
Private 20 20 20 18 18 18 19
financial market to satisfy the changing New branches 20 20 53 8 7 7 15
demands of customers. NBFIs also play an Total branches 88 108 161 169 176 183 198
important role in the capital market as well as *As on 30 June 2015.

Source: Department of Financial Institutions and Markets.
in real estate sector of Bangladesh. Like the
banks, most of the NBFIs have separate billion in 2014 from Taka 436.3 billion in 2013.
subsidiaries to operate merchant banking At the end of June 2015, assets of NBFIs
activities. NBFIs are supervised by increased to Taka 563.8 billion.
Bangladesh Bank following a risk-based A.2. Investment
supervisory system.
7.5 NBFIs are investing in different sectors
7.2 NBFIs have been given license and of the economy, but their investments are
regulated under the Financial Institution Act, mostly concentrated in industrial sector.
1993. At present, the minimum paid up capital Sector wise composition of NBFIs' investment
for NBFIs is Taka 1.0 billion as per the at the end of June 2015 was as follows:
Financial Institution Regulation, 1994. NBFIs' industry 44.9 percent, real estate 17.4
business line is narrow in comparison with percent, margin loan 3.2 percent, trade and
banks in Bangladesh. NBFIs are allowed to commerce 16.0 percent, merchant banking
take term deposit for three months from 2 4.0 percent, agriculture 1.7 percent and
December 2013. others 12.9 percent (Chart 7.1).
7.3 Presently, out of 32 NBFIs, 3 are 7.6 NBFIs are allowed to invest in the
Government-owned, 10 are joint venture and capital market to the extent indicated in the
the rest 19 are locally private-owned. Financial Institution Act, 1993. In 2014, all
Meanwhile, the branch network increased to NBFIs' total investment in capital market was
198 as on 30 June 2015. The Structure of Taka 18.4 billion compared to Taka 10.7
NBFIs is shown in Table 7.1. billion in 2013. Investment in capital market
accounted for 3.5 percent of the total assets
A. 1. Assets
of all NBFIs. At the end of June 2015, NBFIs
7.4 The asset of NBFIs increased total investment in capital market stood at
substantially by 18.6 percent to Taka 517.6 Taka 14.8 billion.
59
Chapter-7 Performance, Regulation and Supervision of NBFIs
A.3. Deposits Chart 7.1 Investment pattern of NBFIs

as of 31 June 2015
7.7 Total deposits of the NBFIs in 2014 Others
12.9%
rose to Taka 245.7 billion (58.1 percent of Industry
Agriculture 44.9%
total liabilities) from Taka 198.3 billion (56.6 1.7%
percent of total liabilities) in 2013 showing an Merchant

banking
overall increase of 23.9 percent. At the end of 4.0%
June 2015, total deposit of NBFIs increased Trade and

commerce
to Taka 271.8 billion. 16.0%
Margin
A. 4. Other Liabilities and Equity loan Real
3.2% estate
17.4%
7.8 The aggregate liability of the industry
increased to Taka 423.1 billion in 2014 from Chart 7.2 Assets, liabilities and their
Taka 350.4 billion in 2013, while equity ratios of NBFIs
600 86
increased to Taka 94.4 billion from Taka 85.9 85
500
billion during the same period showing an 84
400 83
overall increase by 20.7 and 9.9 percent
billion taka
300 82
Percent
respectively. At the end of June 2015, 200 81
80
aggregate liability and equity increased to 100 79
Taka 465.5 and 98.3 billion respectively. 0 78
2015*
2008
2009
2010
2011
2012
2013
2014
A. 5. Bond and Securitisation Activity
Total assets Total liabilities
Liability-asset ratio
7.9 The bond market in Bangladesh is yet *As on 30 June 2015.
to be modernised. There are few players with
a limited number of instruments. NBFIs play a Table 7.2 Assets, liabilities and deposits
significant role for the development of bond of NBFIs
(billion Taka)
market through issuing zero coupon bonds 2009 2010 2011 2012 2013 2014 2015*
and asset-backed securitised bonds. By Total assets 193.8 251.5 288.4 333.9 436.3 517.6 563.8
taking NOC from BB, Taka 1.5 billion non- Total liabilities 164.4 206.8 235.7 274.3 350.4 423.1 465.5
convertible zero coupon bonds were issued Liabilities-assets ratio 84.8 82.2 81.7 82.2 80.3 81.7 82.6
Total deposit 80.8 94.4 112.6 145.4 198.3 245.7 271.8
by IDLC Finance Limited and Taka 3.0 billion Deposit as % of
by Lanka Bangla Finance Limited as of June total liabilities 49.2 45.7 47.8 53.0 56.6 58.1 58.4
2015. It can be mentioned here that an NOC *As on 30 June 2015.

Source: Department of Financial Institutions and Markets, BB.
has recently been issued from BB to IDLC
Finance Limited for "IDLC Infrastructure and six crucial dimensions. The six indicators
SME Zero Coupon Bond" amounting to Taka used in the rating system are capital
5.0 billion. adequacy, asset quality, management
efficiency, earnings, liquidity and sensitivity to
B. Performance and Rating of NBFIs
market risk.
7.10 Like banks, the performance of NBFIs
B. 1. Capital Adequacy
is evaluated through the CAMELS rating
which involves analysis and evaluation of the 7.11 Capital adequacy focuses on the total
60
Performance, Regulation and Supervision of NBFIs Chapter-7
position of NBFIs' capital and protects the

Table 7.3 Total loan/lease and classified
depositors from the potential shocks of losses
loan/leases
that a NBFI might incur. It helps absorb major (billion Taka)
financial risks related to credit, market, interest 2009 2010 2011 2012 2013 2014 2015*
rate, etc. NBFIs in Bangladesh have been

Loan/lease 116.7 178.1 209.7 252.1 273.6 372.8 409.2
instructed under the Basel Accord to maintain
Classified loan/lease 7.3 10.5 10.3 13.7 16.8 19.7 31.6
capital adequacy ratio (CAR) of not less than
Classified loan/ lease
10.0 percent with at least 5.0 percent in core as % of total 6.3 5.9 4.9 5.4 6.1 5.3 7.7
capital. At the end of June 2015, out of 32 *As on 30 June 2015.
NBFIs, one NBFI is yet to come under this Source: Department of Financial Institutions and Markets, BB.
operation, two were evaluated as "1 or

Strong", 18 were "2 or Satisfactory", 10 were Chart 7.3 NBFIs total, classified loan/lease
and their ratios
"3 or Fair" and the remaining one was "4 or 450 9
400 8
Marginal" in the capital adequacy component 350 7
300 6
of the CAMELS rating.
billion Taka
250 5
Percent
200 4
B. 2. Asset Quality 150 3
100 2
50 1
7.12 The most important indicator intends 0 0
to identify problems with asset quality in the 2008 2009 2010 2011 2012 2013 2014 2015*
loan portfolio is the ratio of gross non- Loan/lease Classified loan/lease

performing loan/lease to total loan/lease. At Classified loan/lease as % of total loan/ease
the end of June 2015, the NPL for NBFIs was * As on 30 June 2015.
7.7 percent. In the total asset composition of

NBFIs, two were evaluated as "1 or Strong",
all NBFIs, the concentration of loans, lease
18 were "2 or Satisfactory", eight were "3 or
and advances was 72.6 percent. At the end of
Fair" and three were "4 or Marginal" in the
June 2015, out of 32 NBFIs, seven were
evaluated as "2 or Satisfactory", 14 were "3 or management capacity component of the
Fair" and 10 were "4 or Marginal" in the asset CAMELS rating (The remaining one NBFI is
quality component of the CAMELS rating (The yet to come under this operation).
remaining one NBFI is yet to come under this B. 4. Earnings and Profitability
operation).
7.14 Earnings and profitability of an NBFI
B. 3. Management Efficiency reflects its efficiency in managing resources
7.13 Sound management is the most and its long term sustainability. Among various
important prerequisite for the growth of any measures of earnings and profitability, the
NBFI. The total expenditure to total income, best and widely used indicator is the return on
operating expenses to total expenses, assets. (ROA) which is supplemented by
earnings and operating expenses per return on equity (ROE). ROA and ROE of all
employee and interest rate spread are the NBFIs in June 2015 were 1.3 and 7.6
generally used to gauge management respectively. At the end of June 2015, out of
efficiency. At the end of June 2015, out of 32 32 NBFIs, two were evaluated as "1 or
61
Strong", 17 were "2 or Satisfactory", 11 were Table 7.4 Profitability of NBFIs

(percent)
"3 or Fair" and one was "4 or Marginal" in the
earnings and profitability component of the 2008 2009 2010 2011 2012 2013 2014 2015*
CAMELS rating (The remaining one NBFI is Return on equity (ROE) 12.9 20.9 24.4 11.7 10.4 7.5 9.9 7.6
Return on asset (ROA) 2.1 3.2 4.3 2.1 1.9 1.5 1.8 1.3
yet to come under this operation).
*As on 30 June, 2015 (Annualised).
Source: Department of Financial Institutions and Markets, BB.
B.5. Liquidity
7.15 NBFIs are allowed to mobilise term risk arises from non-trading positions and
deposit only. At present, term liabilities are their sensitivity to changes in interest rates. At
subject to a statutory liquidity requirement the end of June 2015, out of 32 NBFIs, six
(SLR) of 5.0 percent inclusive of average 2.5 were evaluated as "2 or Satisfactory", 18 were
percent (at least 2.0 percent in each day) "3 or Fair" and seven were "4 or Marginal" in
the sensitivity to market risk component of the
cash reserve ratio (CRR) on bi-weekly basis.
CAMELS rating (The remaining one NBFI is
The SLR for the NBFIs operating without
yet to come under this operation).
taking term deposit is 2.5 percent. The
Infrastructure Development Company Limited B. 7. Composite CAMELS Rating
(IDCOL) established by the Government of
7.17 As of June 2015, out of 32 NBFIs, the
Bangladesh is exempted from maintaining the
composite CAMELS rating one was evaluated
SLR. At the end of June 2015, out of 32
"1 or Strong", 14 were "2 or Satisfactory", 15
NBFIs, 20 were evaluated as "2 or
were "3 or Fair" and one was "4 or Marginal"
Satisfactory", nine were "3 or Fair" and two
(The remaining one NBFI is yet to come
were "4 or Marginal" in the liquidity position
under this operation).
component of the CAMELS rating (The
remaining one NBFI is yet to come under this C. Legal Reform and Prudential
operation). Regulations
B. 6. Sensitivity to Market Risk 7.18 As part of the ongoing efforts to

strengthen the NBFIs through the adoption of
7.16 The sensitivity to market risk reflects policies aimed at both improving the financial
the degree to which changes in interest rates strength as well as bringing about greater
or equity prices can adversely affect an transparency in their operations, some legal
NBFI's asset-liability position, earnings and and regulatory policy measures continued in
capital. When evaluating this sensitivity FY15.
component, consideration should be given to
C. 1. Capital Adequacy and Progress of
management's ability to identify, measure,
BASEL Accord Implementation in NBFIs
and control market risk via the implementation
of effective core risk management system. 7.19 Basel-II has been implemented in the
Vulnerability of the NBFI in a stressed NBFIs since 1 January 2012. Prudential
situation from either an interest rate or equity guidelines on capital adequacy and market
price shock (or both) should be taken under discipline (CAMD) has been issued to
consideration to evaluate sensitivity. For promote international best practices and to
many NBFIs, the primary source of market make the capital of NBFIs more risk-based as
62
Performance, Regulation and Supervision of NBFIs Chapter-7
well as more shock resilient. NBFIs have to 1, 5, 20, 50 and 100 percent provision
follow the guidelines as statutory compliance. respectively. At the end of June 2015, the
In this regard, a high-level Steering total outstanding of loan/lease was Taka
Committee (SC) headed by a Deputy 409.2 billion of which NPL was Taka 31.6
Governor of BB comprising NBFIs' Chief billion (7.7 percent).
Executive Officers has been formed for
working on policy decisions. Furthermore, a C. 4. Loan Rescheduling Policy
Working Group (WG) headed by an Executive 7.22 Rescheduling of loan/lease is allowed
Director of BB has been assisting the SC in under the policy of receipt of down payment.
decision-making. Basel Implementation Cell The minimum receipt of a down payment for
(BIC) under DFIM has been formed to assist reschedule is 15, 30 and 50 percent of
and carry out the instructions of SC and WG overdue or 10, 20, 30 percent of outstanding,
on Basel accord implementation. whichever is lower for 1st, 2nd and thereafter
C. 2. Corporate Governance in NBFIs instances of restructuring respectively.
7.20 BB has taken some policy measures C. 5. Core Risk Management

in order to put in place good corporate
7.23 Guidelines on five core risk areas,
governance in NBFIs. BB has specified clearly
namely, credit risk management, internal
the authority responsibility and functions of the
control and compliance, asset-liability
Board of Directors, Executive Committees,
management, prevention of money laundering
Audit Committees, Management and Chief
and terrorist financing and information and
Executive Officer of NBFIs. In addition, BB has
communication technology (ICT) security have
defined duties, responsibilities and
been issued for NBFIs. NBFIs have
organogram of the audit committee and
customised their guidelines in monitoring and
arrangement of the meeting. The number of
minimising these risks in the light of the
Directors in the Board is ranged from 9 to 11.
guideline provided by Bangladesh Bank.
The Board sets and approves the
vision/mission, annual strategic planning, key C. 6. Stress Testing
performance indicators, core risk management
guidelines, etc. Chief Executive Officer is 7.24 NBFIs have been conducting stress
responsible to conduct day to day functions testing on quarterly basis since 2010. A new
and materialisation of the strategic business financial position indicator, insolvency ratio
plan. (IR), artificial intelligence to auto-generate
recommended action plan, rating scale of 1 to
C. 3. Asset Classification and Provisioning 5, zonal positioning (Green, Yellow & Red)
7.21 NBFIs are required to maintain through weighted average resilience-
provision for expected losses on loans, weighted insolvency ratio (WAR-WIR) matrix
advances, leases, investments on an aging have been included in the revised guideline
analysis. Aging analysis of overdue loan/ for NBFIs. As per the new guideline, NBFIs
lease classifies them to standards, special carry out stress testing on quarterly basis i.e.
mention accounts, sub-standards, doubtful at the end of March, June, September and
and bad/losses, requiring the NBFIs to keep December. As of June 2015, out of 31 NBFIs
63
four were in Green Zone, 13 were in Yellow cope up with changing environment. This also
Zone and the other 14 were in the Red Zone. helps promotion of sound risk management
system and brings discipline in launching new
D. Consumer Protection Regulations
products and services.
D. 1. Schedule of Charges
E. Cost of Funds Index for NBFIs
7.25 BB has rationalised the charges of
7.27 NBFIs are regularly submitting their
some services to ensure the interest of
monthly statements of base rate and cost of
depositors/investors/customers and advised
funds to BB as per guideline published in
all NBFIs to display the complete schedule of
2013. On the basis of these statements, BB
charges in suitable places in their branches
prepares an aggregate cost of funds index,
and head offices so that the current and
uploads that in the BB website and updates it
potential clients can easily see them. They
in its website on a monthly basis. It can be
are also instructed to post the same mentioned that base rate is the minimum
information in their websites. BB monitors this interest rate below which it is not viable for an
issue and NBFIs are required to submit semi- NBFI to lend in the market. As there was no
annual statements in this regard. No specific guideline before December 2013, the
charge/commission like commitment fee, NBFIs calculated the interest rate in different
supervision fee and cheque dishonour fee can ways from their own perspective. Some
be charged. NBFIs provided loan using floating interest
D. 2. Guidelines on Products and Services rate. In that case, they imposed the rate
of Financial Institutions in Bangladesh based on the deviation among their own cost
of funds. As a result, their efficiency or
7.26 Along with the banks, the financial inefficiency to manage the liquidity directly
institutions with their customised products and affected the clients. The cost of funds index is
services have emerged as the competitive used as an acceptable reference rate. The
financial intermediaries to meet the growing base rate system facilitates the interest rate
and changing demands of customers. The determining process and ensures more
'Guidelines on Products and Services of transparency and accountability in the NBFIs.
Financial Institutions in Bangladesh" has It is used in different countries including India,
outlined the different characteristics of Nepal and Bhutan. In Bangladesh, for the first
existing and new products. These guidelines time, this base rate system for NBFIs has
protect clients' interest as well as provide been initiated to introduce cost of fund index
greater flexibility to financial institutions to in the system.
64
Chapter-8
Financial Markets
8.1 Bangladesh Bank continued its effort to

develop a well-functioning financial market Table 8.1 Volume of trade and weighted average
interest rates in call money market
and maintaining its stability during FY15.
Volume of Weighted Volume of Weighted
Money Market trade average trade average
Periods (billion Taka) interest (billion Taka) interest
rates (%) rates (%)
Call Money Market FY15 FY14 FY15
July 1640.98 7.44 1166.50 6.68
8.2 The banks including financial institutions August 1066.39 8.11 1255.90 6.52
maintained steady path in terms of interest Sept. 1654.45 7.42 1569.31 6.86
Oct. 1532.19 7.78 1354.42 8.41
rate throughout the year. BB provided repo, Nov. 1620.51 7.03 1381.52 7.77
special repo and liquidity support facility (LSF) Dec. 1565.09 7.11 1164.82 7.93
Jan. 1497.71 7.17 1242.59 8.57
to the primary dealers (PDs) and non-PD Feb. 1477.28 7.08 1164.49 8.21
banks against the eligible holding of treasury March 1403.11 7.16 1030.09 7.66
April 1362.92 7.35 859.14 7.57
bills and bonds. BB's prudential policy May 1015.98 6.50 846.34 6.41
measures resulted stable weighted average June 1408.72 6.25 953.3 5.79
Average 1437.11 7.20 1165.70 7.37
interest rate in the call money market ranging
Source: Debt Management Department, Bangladesh Bank.
from 5.8 percent to 8.6 percent during FY15
(Table 8.1 and Chart 8.1.). During the same
Chart 8.1 Call money rate
year the average volume of trade in the call
10.5
money market decreased by Taka 271.41
Weighted average interest rates
billion which was 18.9 percent lower than that 8.5
in FY14. Both the volume of transaction and 6.5

the weighted average interest rate in the call
4.5
money market remained within the
2.5
reasonable band with a declining trend in the
4th quarter of the year. 0.5
May
Aug
Sep
Nov
Dec
Feb
Mar
Oct
Jan
Apr
Jun
Jul
Repo Auctions - FY15

FY14 FY15
8.3 A repo deal is one where Primary

to maintain their very short term exposure.
Dealers (PDs) and non-PDs make a contract
The rate of interest for repo, special repo and
to borrow money usually overnight at a pre- Liquidity Support Facility (LSF) remained
determined policy rate of BB against the unchanged at 7.25 percent, 10.25 percent and
collateral face value of government treasury 7.25 percent respectively for 1-2 day tenor in
bills and bonds. The repo injects money in the FY15. Special repo rate is higher due to
system and provides banks necessary funds particular need of liquidity of the banks. In this
65
Chapter-8 Financial Markets
Table 8.2 Repo auctions-FY15

Total No. of Bids received Bids accepted
auctions held Tenor Interest rate of the
Face value Face value
during the year No. of bids No. of bids accepted bids (%)
(billion Taka) (billion Taka)
1-Day/2-Day 2304 3487.13 2304 3484.53 7.25-10.25

182 3-Day/7-Day 679 1110.07 679 1108.87 7.25-10.25
Total 2983 4597.20 2983 4593.40 7.25-10.25*
* Overall interest rates of different tenors.

Source: Monetary Policy Department, Bangladesh Bank.
regard, banks apply for funds late hour annum in FY15, which was 7.25-10.75 percent
usually after 2.0 PM in a business day. BB per annum in the previous year too.
keeps this window open for the banks to
Reverse Repo Auctions - FY15
maintain the liquidity at a desired level and to
maintain a cautious stance of monetary policy. 8.5 In the operation of reverse repo deal,
money is moped up from the banks to BB. In
It, therefore, encourages borrowing from the case of reverse repo, BB does not provide
market first with a view to maintaining its any collateral to the banks. It applies the
lender of last resort (LOLR) stance. In FY15, reverse repo to maintain intended level of
the banks were provided a reasonable liquidity in the market and to keep up reserve
amount of repo funds through daily repo money and money multiplier on track. A total
auctions. of 229 daily reverse repo auctions were held
in FY15. In all 1027 bids of 1-2 day and 273
8.4 A total of 182 repo auctions (including
bids of 3-7 day tenors for a total of Taka
special repo and LSF auctions) were held
5477.62 billion were received and all the bids
during FY15. In all 2983 bids for Taka 4597.20
were accepted. During FY14, bids for 2444.36
billion were received of which Taka 4593.40
billion were received and all the bids were
billion were accepted. During FY14 a total accepted. The interest rate against the
2102 bids for Taka 4352.95 billion were accepted bids was 5.25 percent per annum
received, of which Taka 4258.33 billion were during FY15 (Table 8.3).
accepted. The volume of accepted bids
increased by 7.87 percent during the FY15 Bangladesh Bank Bill
(Table 8.2). The range of interest rate against 8.6 Operations of Bangladesh Bank Bill
the accepted bids was 7.25-10.25 percent per continued in FY15 as a tool of Open Market
Table 8.3 Reverse repo auctions-FY15
Total no. of Bids received Bids accepted

auctions held Tenor Interest rate of the
Face value Face value
during the year No. of bids No. of bids accepted bids (%)
(billion Taka) (billion Taka)
1-Day/2 Day 1027 4380.24 1027 4380.24 5.25

229 3-Day/7 Day 273 1097.38 273 1097.38 5.25
Total 1300 5477.62 1300 5477.62 5.25*
* Overall rates of different tenors.
66
Financial Markets Chapter-8
Table 8.4 Auctions of Bangladesh Bank Bill - FY15

Bids offered Bids accepted Outstanding bills Weighted average yield
Tenor of bills as of end June, 15 (WAR) range* (%)
No. Face value (billion Taka) No. Face value (billion Taka) (billion Taka)
FY14 FY15
30-Day 194 168.63 194 168.63 14.43 5.30-7.70 5.24-6.00
Total 194 168.63 194 168.63 14.43 5.30-7.70 5.24-6.00
* Range of the weighted average annual yield of the accepted bids.

Operation (OMO) to sterilise and maintain government treasury bills and bonds.
liquidity of the banking system effectively. According to the revised auction procedure
With a view to maintain stable interest rate 12 PD banks will accept 60 percent and 25
and exchange rate position, BB prudently non PD banks will accept 40 percent of the
applies this instrument as and when required. unsubscribed amount of auction considering
The results of Bangladesh Bank bill auctions their total demand and time liabilities (TDTL).
in FY15 are shown at Table 8.4. Among 60 percent of the notified amount, 50
percent will be distributed among 12 PD
Government Securities Market
banks according to TDTL and rest 50 percent
Government Treasury Bills Auctions will be distributed equally. In addition to the 12
8.7 Treasury bills and bonds are short- PDs, eight new banks are also now acting as
term and long term obligations issued by PD assuming fixed underwriting obligation.
Bangladesh Bank on behalf of the 8.8 Weekly auctions of 91-day, 182-day
government of Bangladesh. These are the and 364-day treasury bills were also
indirect monetary instruments that the BB continued as main instruments for debt
uses mainly for debt management purposes. management of the Government during the
The securities are issued through an auction year under report. The results of these
process where the allotments are awarded to treasury bills auctions in FY15 are
the bids which fill the notified issue amount summarised in Table 8.5. The auctions of 91-
ranging from the lowest to highest yield. Pro- day, 182-day and 364-day's tenor bills were
rata partial allotments are made for bids at the under-subscribed. Subsequently, devolvement
cut-off-yield. The objectives of issuing these amount to PDs and non PDs/ Bangladesh
securities are two-fold. The first is to provide a Bank decreased as compared to FY14. The
mechanism for financing government deficit weighted average yield of most of the treasury
and secondly managing excess liquidity bills decreased during FY15.
prevailing in the market. In FY15, among 15
Primary Dealers (PDs), three non banks 8.9 Depending on the liquidity conditions
financial institutions did not act as PD. 12 PDs in the money market, the weighted average
acted as underwriters and market makers with yields of treasury bills of different maturities
commitments to bid in auctions. Effective from varied within modest ranges. The yields for
August 2012 BB introduces new underwriting various tenors as of end of June 2015
obligations and mandatory allocation for 12 depicted somewhat a minimum range than
PD banks and 25 non PD banks in auction of the yields as of end of June 2014.
67
Table 8.5 Auctions of Government Treasury Bills - FY15

Bids offered Bids accepted Outstanding bills Weighted average yield
Tenor of bills as of end June 15 (WAR) range* (%)
No. Face value (billion Taka) No. Face value (billion Taka) (billion Taka) FY14 FY15
91-Day 1527 778.47 487 346.33 78.13 6.82-8.68 5.37-7.77
182-Day 1074 412.01 432 166.40 79.00 7.43-10.24 6.31-8.08
364-Day 999 410.65 381 161.12 173.83 7.68-10.60 6.53-8.31
Devolvement to BB/PDs and non PDs 68.10
Total 3600 1601.13 1300 741.95 330.96 6.82-10.60 5.37-8.31
8.10 During FY15, a total of 3600 bids

Chart 8.2 Weighted average yield of
amounting to Taka 1601.13 billion were
BGTB in FY15
received, of which 1300 bids amounting to 12.5
Taka 741.95 billion (including Taka 68.10 12.0
11.5
billion as devolved amount) were accepted. 11.0
The weighted average yield-to-maturity 10.5
Percent
10.0
against the accepted bids ranged from 5.37 to 9.5
8.31 percent. In FY14, a total of 3784 bids 9.0
8.5
amounting to Taka 1755.84 billion were 8.0
Jul-14
Aug -14
Sep -14
Oct -14
Dec -14
Aprl -15
Jan -15
Jun -15
Feb -15
Mar -15
Nov-14
May -15
received, of which Taka 865.77 billion was
accepted.
2-Year 5-Year 10-Year
Bangladesh Government Treasury Bonds 15-Year 20-Year
(BGTBs) Auctions
8.11 Treasury Bonds, bearing half yearly for trade (HFT). HTM securities amortised at
interest coupons with tenors of 2-year, 5-year, the end of the year to converge face value and
10-year, 15-year and 20-year are auctioned in HFT securities values are amortised weekly
every month following preannounced auction following marking to market method. These
calendar prepared by BB and Ministry of bills and bonds are eligible for secondary
Finance considering liquidity and trading. 46 auctions of these instruments were
macroeconomic indicators. In order to held in FY15. A total of 1586 bids for Taka
improve liquidity and assets- liabilities 414.81 billion were received and 480 bids for
matching, auction of 2-year BGTB has been Taka 170.26 billion were accepted, of which
started auction as new instrument since 28 Taka 20.87 billion was devolved on BB/PDs
May 2013. The BGTB auction committee and non PDs. The amount of outstanding
determined cut-off coupon rate which is used
bonds increased by 12.32 percent from Taka
for bond pricing. The lowest yield rate bidders
1026.27 billion at the end of June 2014 to
are needed to deposit premium amount to the
Taka 1152.73 billion at the end of June 2015.
BB in view of face value. Banks are eligible to
use government treasury bills and BGTBs for 8.12 The weighted average yield-to-maturity
statutory liquidity requirement (SLR) purpose for the treasury bonds ranged from 8.3594
in the form of held to maturity (HTM) and held percent to 12.0938 percent in FY15. The
68
Table 8.6 Auctions of Bangladesh Government Treasury Bonds - FY15

Bids offered Bids accepted Outstanding bonds as of
Tenor of bonds Face value Face value end June, 15 Yield range *(%)
Number Number
(billion Taka) (billion Taka) (billion Taka)
2-Year 300 85.35 88 34.99 97.06 8.3594-8.8896

5-Year 378 116.71 151 49.40 324.20 9.3801-9.9871
10-Year 440 131.70 141 40.28 440.44 10.7128-11.5898
15-Year 225 41.27 44 12.82 157.16 11.4000-11.8700
20-Year 243 39.78 56 11.90 133.87 11.8608-12.0938
Total 1586 414.81 480 170.26 1152.73 8.3594-12.0938@

@ Weighted average annual yield of treasury bonds of different terms.
weighted average yield of treasury bonds Table 8.7 Bangladesh Government Islamic
decreased during the period (Table 8.6). The Investment Bond
(billion Taka)
movements of the weighted average yield-to- Particulars FY13 FY14 FY15
maturity of all the treasury bonds are depicted i. Sale 107.13 121.34 135.84
ii. Financing 67.78 24.37 25.40
in the chart 8.2.
iii. Net outstanding 39.35 96.97 110.44
8.13 It is mentionable that in FY14, bids for Source: Motijheel Office, Bangladesh Bank.
a total of Taka 461.87 billion were received

and Taka 221.50 billion was accepted of Table 8.8 Disbursement & recovery of
which Taka 46.43 billion was devolved on industrial term loans of banks
and financial institutions
BB/PDs and non PDs. The overall weighted (billion Taka)
average yield-to-maturity ranged from 8.5206 Particulars FY14 FY15 % Change
percent to 12.4800 percent in FY14. Disbursement 423.1 597.8 41.3
Recovery 418.0 475.4 13.7
Bangladesh Government Islamic Outstanding (end June) 841.1 1073.2 27.6
Investment Bond (Islamic Bond) Source: SME and Special Programmes Department, BB.
8.14 Government issues bond as guarantee

Islamic Investment Bond (Islamic Bond) were
against the pool of funds formed by the
introduced in FY05. It may be noted that 3-
Islamic banks and individuals in order to
month Bangladesh Government Islamic
develop money market in Islamic banking
Investment Bond has been introduced since 1
sector. Virtually government does not borrow January 2015. This Government Bond is
money from this sector. The return of the being operated in accordance with the rules of
bonds depends on profit or loss in line with Islamic Shariah. As per the rules, Bangladeshi
the Islamic Shariah, savings rate and related institutions, individuals and non-resident
factors reflected in the balance sheet of the Bangladeshis who agree to share profit or
Islamic bank. The operations of 6-month, 1- loss in accordance to Islami Shariah may buy
year and 2-year Bangladesh Government this bond. As of end of June 2015, the total
69
sale against this bond amounted to Taka capitalisation declined to Taka 4047.29 billion
135.84 billion while balance of total amount of and Taka 2973.47 billion respectively at the
financing stood at Taka 25.40 billion and the end of April 2015 from Taka 4864.96 billion
net outstanding against the bond stood at Taka and Taka 3259.25 billion in December 2014.
110.44 billion. As of end of June 2014, the total However, the market became stable at the
sale against this bond was Taka 121.34 billion end of FY15 as a result of some effective
while the balance of total financing of Taka measures taken on the capital market.
24.37 billion and the net outstanding of Taka Bangladesh Bank proactively played a role to
96.97 billion. The overall transaction of this stabilise the capital market since the major
bond is summarised in Table 8.7. debacle of 2010.
Capital Market 8.18 DSE launched the new trading system

X-stream INET Matching Engine and DSE
Investment Financing in Bangladesh
FlexTP Order Management System (OMS) on
8.15 The dominance of term loans in 11 December 2014. It inaugurated the
investment financing implies low equity stake Demonstration Programme of New Book
and risk exposure of the owners, with Building Software and Data Transmission
disproportionately high incidence of risk on Software for New Public Issue Application
the lending banks and financial institutions, Processes on 12 March 2015. DSE became
including liquidity risk arising from the funding an Affiliated Member of the World Federation
of these long-term loans with typically shorter- of Exchanges (WFE) on 3 March 2015. Dhaka
term deposits. Stock Exchange (Listing) Regulations, 2015
was approved by the Bangladesh Securities
8.16 The amount of industrial term loans
and Exchange Commission on 30 June 2015
disbursed by banks and financial institutions
and the gazette was published on 12 July
stood at Taka 597.8 billion (Table 8.8), many-
2015. Market lot of shares have been
fold higher than the amount of Taka 7.3 billion
converted to same number, 1 (one) for all
raised by new capital issues through private
listed companies in DSE from various market
placements and public offerings in the capital
lots on 11 December 2014. So, now investors
market in FY15. This indicates an
can buy or sell any number of shares in the
overwhelming preference of bank finance in
secondary market of DSE & CSE.
industrial investment financing.
Capital Market Activities in FY15
8.17 The DSE broad index and the market
capitalisation of Dhaka Stock Exchange Primary Issuance
Limited (DSE) were quite stable during July
8.19 21 companies raised new equity of
2014 to February 2015.
Taka 7.3 billion in the capital market in FY15,
The market behaviour was hampered during higher than Taka of 6.6 billion raised by 12
the second and third quarter of FY15 for a companies in FY14. Of the new equity
short period of time due to political unrest in issued, Taka 1.7 billion rose through private
the country. The DSEX and the market placements and Taka 5.6 billion raised
70
through public placements. In FY14, equity Chart 8.3 Trends in market behaviour of DSE
issued through private and public placements 4000 5500
3500 5000
were Taka 2.4 billion and Taka 4.2 billion 4500
3000 4000
respectively. 2500 3500
DSEX
billion Taka
2000 3000
2500
8.20 The volume of public offerings in FY15 1500 2000
1000 1500
was oversubscribed more than two times 1000
500 500
0 0
indicating a shortage of new securities in the
Oct -14
Jan-15
Jun-15
Jul -14
Feb-15
Mar-15
Aug-14
Sep-14
Dec-14
Apr-15
May-15
Nov-14
primary market. Bonus shares worth of Taka
26.6 billion were issued by 130 companies
Market Capitalisation Turnover
against retained profits in FY15. This was DSEX
lower than Taka 31.1 billion issued by 137

Table 8.9 Dhaka Stock Exchange (DSE) activities
companies in FY14. On the other hand, right
shares worth of Taka 6.0 billion were issued Particulars
End June
FY13 FY14 FY15
by five companies in FY15 which was higher
No. of listed securities* 525 536 555
than Taka 4.3 billion issued by six companies Issued equity and debt*
in FY14. (billion Taka) 983.6 1032.1 1092.0
Equity through private placement
Secondary Market Activities & IPOs (billion Taka) 12.2 6.6 7.3
Market capitalisation
8.21 As a percent of total market (billion Taka) 2530.2 2943.2 3247.3
Turnover in value
capitalisation, the manufacturing sector (billion Taka) 857.1 1125.4 1123.5
dominated the secondary market with 40.70 Turnover in volume
(no. in billion) 21.6 24.3 26.6
percent share, followed by the services and
General Index / DSE
miscellaneous sector (36.08 percent), Broad Index (DSEX)@ 4104.7 4480.5 4583.1
financial sector (23.0 percent) and corporate * = including companies, mutual funds, debentures and Government Treasury Bonds.
@ = DSE introduced the benchmark DSE broad index (DSEX) designed &
bonds (0.02 percent) at the end of FY15. In developed by S&P Dow Jones from 28 January 2013. DSE general index has
been phase out from the market on 1 August 2013.
the DSE, market capitalisation inclusive of Source: Dhaka Stock Exchange.
new issues increased by 10.3 percent to Taka

3247.3 billion or 21.5 percent of GDP (at Table 8.10 Chittagong Stock Exchange (CSE) activities
current market price) at the end of FY15 from
End June
Taka 2943.2 billion at the end of FY14 (Chart Particulars
FY13 FY14 FY15
8.3). In the CSE, it increased by 13.2 percent No. of listed securities* 266 276 292
Issued equity and debt*
to Taka 2588.1 billion or 17.1 percent of GDP
(billion Taka) 428.6 470.7 529.8
at the end of FY15. However, the amount of Market capitalisation
turnovers in the secondary market decreased (billion Taka) 1919.9 2286.7 2588.1
Turnover in value
by 0.2 and 5.6 percent respectively in DSE (billion Taka) 102.0 102.2 96.5
and CSE in FY14. DSE broad index (DSEX) Turnover in volume
and CSE all-share price index also increased (no. in billion) 2.8 2.7 2.7
All-share Price Index 12738.2 13766.2 14097.2
by 2.3 and 2.4 percent to 4583.1 and 14097.2
* = including companies, mutual funds and debentures.
respectively in FY15 (Table 8.9 and 8.10). Source: Chittagong Stock Exchange.
71
Non-resident Portfolio Investment turnover worth Taka 119.8 billion in FY15

which was 9.8 percent of total turnover of both
8.22 Gross investment inflow in shares
DSE and CSE. The parent ICB itself sold unit
and securities of the stock exchanges by non-
certificates amounting Taka 1.9 billion against
residents through Non-resident Investor Taka
repurchase of unit certificates amounting Taka
Account (NITA) increased to Taka 47.8 billion
0.3 billion in FY15. ICB received deposits of
in FY15 from Taka 41.3 billion in FY14. Gross
Taka 0.9 billion and approved loans of Taka
investment outflow as repatriation of sale
11.6 billion in investment accounts of
proceeds also increased to Taka 28.6 billion in
investors in FY15. Total commitments for
FY15 from Taka 14.5 billion in FY14. From
investment made by the ICB in FY15 stood at
the beginning (April 1992) to June 2015, the
Taka 28.5 billion of which investment in equity
gross investment inflow stood at Taka 176.5
was Taka 0.5 billion and purchase of
billion against gross outflow as repatriation of
debentures was Taka 0.1 billion. The total
sale proceeds of Taka 116.7 billion.
amount of commitments was Taka 28.8 billion
Activities of the Investment Corporation of in FY14.
Bangladesh
Scheduled Banks Investments in Capital
8.23 The Investment Corporation of Market Securities
Bangladesh (ICB) has been established with
the aim of accelerating the pace of 8.24 Holdings of capital market assets
industrialisation and developing a well (equities, debenture) excluding investment on
organised & vibrant capital market particularly Bangladesh Government Islamic Investment
securities market in Bangladesh. ICB's capital Bond (BGIIB) by scheduled banks stood at
market development programme activities Taka 202.1 billion as of end of June 2015 as
have been expanded through the formation against Taka 169.0 billion as of end of June
and operation of the three subsidiaries of ICB 2014. Outstanding advances of scheduled
namely the ICB Capital Management Ltd. banks against shares and securities
(ICML), the ICB Asset Management Company amounted to Taka 30.4 billion as of end of
Ltd. (IAMCL) and the ICB Securities Trading June 2015, which was Taka 30.7 billion as of
Company Ltd. (ISTCL). During FY15, total end of June 2014.
investment made against the investors' Measures Supporting Capital Market
accounts stood at Taka 8.0 billion while Development
deposit stood at Taka 0.6 billion. The IAMCL
emerged as one of the fast expanding asset 8.25 The Securities and Exchange
management company of the country. Up to Commission (SEC) undertook several
end June 2015, the company floated 10 measures to protect investor's interest and
closed-end and five open-end mutual funds. strengthen the capital market during FY15.
Besides, the company floated various regular Some important measurers are as follows:
and special types of mutual funds. The net
156 market intermediary institutions have
investment in portfolios of 15 mutual funds of
been given registration certificates (with
the company stood at Taka 34.9 billion and
renew).
the market value stood at Taka 27.3 billion.
The ISTCL emerged as the largest An order was issued regarding maintaining
stockbroker in the country handling total of provision against the unrecovered
72
losses due to revaluation in the portfolios Table 8.11 Advances of scheduled banks by
of stock broker/stock dealer and merchant economic purposes (billion Taka)
bankers on 12 January 2015. End June

Sector
FY14 FY15P % change
Ten percent gain tax on profit from the 1. Agriculture, forestry
investment in capital market by foreign and fishing 259.5 398.1 53.4
2. Industry 793.9 959.3 20.8
institutions and non-resident Bangladeshi 3. Working capital
has been withdrawn. financing 859.7 1018.6 18.5
4. Construction 407.3 440.4 8.1
The rate of source income tax as 5.Transport &
communication 53.1 41.2 -22.4
brokerage commission on the traded value 6. Trade 1849.2 1961.3 6.1
of buying and selling shares has been 7. Others 473 725.4 53.4
Grand Total 4695.7 5544.3 18.1
reduced to 0.05 percent from 0.10 percent.
Source: Statistics Department, Bangladesh Bank. P = Provisional
A report has been finalised in order to

develop the risk management regarding Chart 8.4 Sectoral shares of total
Risk Based Supervision and Risk Based advances: FY15
Capital of market intermediaries. Others Agriculture,
13% foresty and
fishing
With a view to ensuring more transparency 7%
Trade
of the audit activities of the enlisted 36%
Industry
17%
companies, a guideline has been
Working
formulated to include in the panel of capital
Transport financing
auditors. and 18%
communication Construction
8.26 The measures declared in the national 1% 8%
budget of FY16 in support of further
development of the capital market include: companies to Taka 25 thousand instead of
With a view to attract more companies in existing provision of Taka 20 thousand by
the capital market for its continual any company.
expansion and strengthening, government Withdrawal of the existing provision of 10
has proposed to decrease tax rate from percent deduction at source on income
42.5 percent to 40.0 percent for publicly from share market by any company or
traded banks, insurance and financial partnership firm.
institutions.
It is proposed to withdraw the provision of
At the same time, the government has also deducting the tax at source at the rate of 5
proposed to decrease tax rate from 27.5 percent on the interest of Treasury Bond
percent to 25.0 percent for publicly traded and Treasury Bill at the time of purchasing
companies. the same under section 51 for the
Government has proposed to fix the development of Bond Market.
threshold of tax exemption of dividend Besides, under section 46B, tax holiday in
income distributed only by listed some cases has been extended up to
73
Table 8.12 Industrial term loans of banks and financial institutions

(billion Taka)
Overdue as % of
Disbursement Recovery Outstanding Overdue
outstanding
Lender
FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 FY15
SCBs 13.9 30.8 29.6 23.0 194.7 225.6 31.6 37.5 16.2 16.6
PCBs 325.2 462.9 316.1 357.7 593.6 774.0 50.5 68.5 8.5 8.9
Foreign banks 12.8 16.3 14.8 18.8 21.9 17.8 1.7 2.3 7.8 13.2
Specialised banks/DFIs* 13.2 10.5 9.0 23.8 53.9 49.8 17.2 27.9 31.9 56.0
(BDBL, BKB, RAKUB, BASIC)
Financial institutions 58.0 77.3 48.5 52.1 139.8 164.3 8.2 12.0 5.9 7.3
Total 423.1 597.8 418.0 475.4 1003.9 1231.4 109.2 148.2 10.9 12.0
* BDBL & BASIC are categorised as SCBs in FY15.
Source: SME and Special Programmes Department, Bangladesh Bank.
June 2019 and [para 33, Part-A, Sixth Chart 8.5 Industrial term loans of banks
Schedule], tax exemption applicable to and financial institutions: FY15
1000
ICT company has been extended from
June 2019 to June 2024. 800
billion Taka
600
Credit Market
400
Advances of Scheduled Banks by
200
Economic Purposes
0
SCBs PCBs FCBs SBs Fis
8.27 Most of the advances of scheduled
Disbursement Recovery Outstanding
banks by economic purposes showed an
upward trend during FY15 (Table 8.11). Total
advances of scheduled banks by economic the trade sector played the main role (36.0
purposes stood at Taka 5544.3 billion at the percent) followed by working capital financing
end of June 2015 which was 18.1 percent sector (18.0 percent), advances for industry
higher than the total advances of Taka 4695.7 sector (17.0 percent), construction sector (8.0
billion at the end of June 2014. In recent percent), agriculture, fishing and forestry
years, significant changes have been taken sector (7.0 percent), transport and
place in the trends in total bank advances communication sector (1.0 percent) and other
classified by economic purposes. Of the total sectors (13.0 percent) in FY15. Sector-wise
advances, agriculture, fishing and forestry contribution of total advances is reported in
sector increased significantly (53.4 percent) Chart 8.4.
followed by industry sector (20.8 percent),
Industrial Term Loans of Banks and
working capital financing sector (18.5
Financial Institutions
percent), construction sector (8.1 percent),
trade sector (6.1 percent), and other sector 8.28 Disbursement of industrial term loans
(53.4 percent), while advances to transports by banks and financial institutions increased
and communication sector decreased by 22.4 by 41.3 percent to Taka 597.8 billion.
percent in FY15 compared to FY14. Sector- However, the recoveries increased by 13.7
wise contribution of total advances shows that percent to Taka 475.4 billion in FY15. The
74
outstanding loans showed a positive growth of based Technical Assistance (TA) project
22.7 percent and stood at Taka 1231.4 billion which is formed to supplement the resource of
as of end of June 2015. However, the the Bangladesh financial markets to provide
overdue loan increased by 35.7 percent in long term finance for infrastructure and other
FY15 and it as a percent of outstanding loan investment projects and to promote the role of
increased to 12.0 as of end of June 2015 private sector entrepreneurs in the
(Table 8.12). development of capital projects, specially
infrastructure. The project with two phases
8.29 Private commercial banks (PCBs) had
has been implemented so far by BB. Under
the major shares (62.9 percent) of the total
IPFF, Government approved private
Taka 1231.4 billion outstanding loans as of
infrastructure development projects
end of June 2015, making them major players
implementing on Public-Private Partnership
in industrial term lending (Table 8.12 and
(PPP) basis have been financed through
Chart 8.5). Though six SCBs and two
selected participating financial institutions
specialised banks together had 22.4 percent
(PFIs). Infrastructure development projects,
shares of outstanding loans, but with a very
power, services, industry and social sectors
high level of overdue loans, their actual role in
are considered eligible for IPFF financing. At
current lending was quite minor, as they
least 25 percent of cost of any approved
disbursed only Taka 41.3 billion (6.9 percent)
project is to be borne by the entrepreneurs'
out of total Taka 597.8 billion in FY15. In case
own sources as equity and at least 15 percent
of disbursement, PCBs had the major share
of the project cost is to be borne by the PFI in
holders (Taka 462.9 billion) in FY15, followed
the second phase. The remaining 60 percent
by financial institutions (Taka 77.3 billion),
may be financed by IPFF. The PFIs are
SCBs (Taka 30.8 billion), foreign banks (Taka
supposed to bear all the commercial risks
16.3 billion) and two specialised banks (Taka
associated with debt financing. As per
10.5 billion).
agreement, total cost of the project, was USD
8.30 The NBFIs had very low overdue loans 60.00 million with a 5 year tenure starting
(7.3 percent of outstanding loans) as of end of from January 2007 to December 2011. IPFF
June 2015. Overdue loans were also low for disbursed 100 percent of its on-lending
private commercial banks (8.9 percent) and component within 4th year of the project.
foreign banks (13.2 percent). Overdue loans Resultantly additional fund of USD 307.00
of the specialised banks and the SCBs were million (IDA USD 257.0 million and GoB USD
very high (56.0 and 16.6 percent respectively) 50.0 million) was sanctioned extending the
as of end of June 2015. tenure of the project up to December 2015.
8.31 Since BKB and RAKUB are agriculture It is worth mentioning here that IPFF has
sector lenders, they have insignificant role in been able to disburse 100 percent (Taka 4.2
industrial term lending. billion equivalent to USD 57.5 million) of its
on-lending component to 7 small power plants
Investment Promotion and Financing
having capacity of 178 MW within 4th year of
Facility (IPFF)
the project tenure in the first phase. All the
8.32 "Investment Promotion and Financing power plants are contributing power to the
Facility (IPFF) Project" is an on-lending national grid.
75
Under the second phase of IPFF, USD 171.1 Table 8.13 Outstanding housing loans
million was disbursed for three central water (billion Taka)
treatment plants, an inland container depot, a Outstanding as of end June
Lenders P
FY13 FY14 FY15
nationwide fibre optic cable installation project
a. Specialised housing
and four power generation projects having
finance providers 55.2 59.4 63.6
capacity of 356 MW till June 2015.
i) HBFC 28.0 29.7 30.3
Equity and Entrepreneurship Fund (EEF) ii) Delta-Brac Housing
Finance 24.4 26.4 28.7
8.33 Equity and Entrepreneurship Fund iii) National Housing
(EEF) was formed by the Government with Finance 2.8 3.3 4.6
budgetary allocation of Taka 1.0 billion in b. Banks 349.0 358.0 395.5
FY01 to encourage investments in the risky i) PCBs 229.8 231.8 266.0

ii) SCBs 73.1 95.6 108.5
but prospective agro-based/food processing
iii) Other banks (foreign
and IT sector projects. A sub agency
and specialised) 46.1 30.6 21.0
agreement regarding the transfer of c. Other financial institutions 16.7 23.2 30.8
operational activities of EEF was signed on 1 d. Micro-credit lenders
June 2009 between Bangladesh Bank (BB) Grameen Bank 0.04 0.04 0.02
and ICB. Under this agreement ICB is now Total 420.9 440.6 489.9
performing the operational activities of EEF P= provisional.

Sources: Department of Financial Institutions and Markets, Statistics
while EEF Unit of Bangladesh Bank is doing Department, Bangladesh Bank, and Grameen Bank.
the activities relating to policy making, fund

management and performance monitoring. So domestic market and these are being
exported also.
far, Taka 18.3 billion has been released to the
fund out of total budgetary allocation of Taka Housing Finance
30.0 billion in different fiscal years. Up to 30
8.34 Total outstanding housing loans from
June 2015 with the project cost of Taka 66.8
banks and financial institutions as of end of
billion, a total of 1726 projects (including 1621 June 2015 amounted to Taka 489.9 billion
agro-based/food processing projects and 105 (Table 8.13), which was 8.8 percent of total
IT projects) got EEF sanction at different credit to the private sector.
stages of disbursement. Cumulative equity
8.35 In recent years, significant changes
disbursement stood at Taka 11.5 billion at the
have taken place in total housing loan
end of FY15 against total fund disbursement
portfolios. Of the total, private sector banks
of Taka 18.3 billion from the Government. Till
with ample deposit resources have been
now, 127 EEF supported companies have expanding their housing loan portfolios and
availed share buy-back facilities partially or now have the dominant market position (Table
fully to the tune of Taka 1.8 billion. 8.13) with the largest amount of Taka 266.0
Employment opportunity has been created for billion in outstanding housing loans as of end
40,600 people in the EEF assisted projects. of June 2015. The SCBs had the second
World class softwares developed under EEF largest amount of Taka 108.5 billion and other
assisted ICT projects are being used in the banks had Taka 21.0 billion in outstanding
76
Box 8.1
Financial Derivative Market of Bangladesh
Financial market of Bangladesh is still in its nascent stage. In fact, no derivative security has been
developed for the capital market. There are very few derivatives for the money/foreign exchange
market. These are currency forward and swap, mainly, to hedge exchange rate risk and fund
management respectively. However, interest rate swap and commodity hedging from abroad are also
allowed subject to prior Bangladesh Bank permission against specific underlying transactions.
Derivative transactions in foreign exchange are guided by country's foreign exchange regulations.
Though a large number of deregulatory measures have been taken, capital account transactions are
yet to be made convertible. Gradual and cautious steps for opening the external sector have
benefitted us so far. Our foreign exchange and money market were unaffected during the last
financial crisis due meanly to their limited integration with international market. The figure presented
below depicts a very small volume with modest and stable growth of interbank derivative transactions
(swap and forward) in USD over the last five caledar years (Soure : FRTMD, BB).
Transaction in interbank forward and swap
20,000
(million USD)
14,854
15,000 13,114
12,190
10,000
11,568 11,858
5,000
-
2011 2012 2013 2014 2015
Derivatives if well managed can contribute to a country's economic development by making various
risks at minimal level. Due to the recent debacle in capital market, slow growing FDI, volatile
international commodity market, scarcity of investment opportunities due to underdeveloped eqiuity
market, investors/other businessmen of Bangladesh are interested for innovative and versatile
financial products such as derivatives for hedging and market expansion. Some studies have
suggested that derivative securities can strengthen capital market of an emerging country like
Bangladesh, both in terms of risk mitigation and creating alterative investment vehicles by reducing
exchange rate and commodity price volatility. However, there are some prerequisites for setting up a
derivative markets in Bangladesh. These include development of financial system, legal framework,
customer awareness, stable exchange rate, foreign exchange liberalisation, efficient payment system
with credibility and transparency, etc. Besides, a coordinated effort of Government and regulatory
bodies (central bank, securities and exchange commission, tax authorities, etc.) is essential to
develop a derivative market in Bangladesh.
housing loans as of end of June 2015. 8.36 The state-owned House Building
Besides, two private sector specialised Finance Corporation (HBFC) had Taka 30.3
housing finance companies also provide a billion in outstanding housing loans as of end
significant amount of loan. They supply fund of June 2015. The sources of Corporation's
for their operations by taking long term fund are paid-up capital by the Government
deposits including some contractual deposit and the proceeds as received by selling
schemes. Government guaranteed interest bearing
77
debentures to different organisations. The Chart 8.6 Taka-US Dollar exchange

second mode of funding has been unavailable rate: FY15
in recent years. In the past, the HBFC funded 78.0
77.9
its housing loans by issuing low interest
77.8
Taka per USD

debentures bought by the SCBs and the BB. 77.7
The HBFC has been constrained to rely on 77.6
77.5
recoveries of past loans for new lending after
77.4
defraying operating and debt servicing costs. 77.3
Consequently, its new lending amount has 77.2
77.1
declined. In FY14 and FY15, Taka 3.9 and 2.7
May'15
Nov'14
Aug'14
Sep'14
Dec'14
Feb'15
Mar'15
Jan'15
Apr'15
Jun'15
Oct'14
Jul'14
billion were disbursed out of recoveries of
Taka 4.6 billion and Taka 4.8 billion
respectively.
of the Department of Women Affairs at the
8.37 Grihayan Tahbil created by the cost of Taka 0.2 billion financed by Grihayan
Government of Bangladesh, provide housing Tahabil where a total of 744 women workers
loan to the NGOs at the rate of 2.0 percent will get the residence facility.
simple interest who in turn provides housing
Foreign Exchange Market
credit to the rural poor at the rate of 6.0
percent for a recovery period up to 10 years. 8.38 Bangladesh Bank closely monitors the
Up to June 2015, the Grihayan Tahbil foreign exchange market to avoid undue
released Taka 1.9 billion against allocation of volatility in the exchange rate. BB engages in
Taka 2.9 billion through 513 NGOs for rural market interventions if it deems necessary.
housing programme which covered 450
8.39 In FY15, Taka experienced a
upazilas of 64 districts of the country and
depreciation of 0.22 percent against US dollar
61614 houses were constructed. As on end of
compared to 0.18 percent appreciation in
June 2015, Tahbil recovered Taka 1.2 billion
FY14 due mainly to BB's interventions in the
against the total recoverable amount of Taka
foreign exchange market to maintain stability.
1.3 billion and recovery rate was 91.9 percent.
The weighted average inter-bank rate stood at
In addition, a dormitory/women hostel for the Taka 77.80 per USD as on 30 June 2015
poor female workers is being constructed at against Taka 77.63 per USD as on 30 June
Ashulia of Savar Upzilla under the supervision 2014 (Chart 8.6).
78
Chapter-9
Agricultural and Rural Finance
Annual Agricultural Credit Programme Institutions (MFIs). Moreover, an amount of

Taka 4.5 billion has been disbursed to the
9.1 Agriculture sector is the main source
sharecroppers through the BRAC under the
of food for the people of Bangladesh and
refinance scheme of BB to facilitate usage of
about half of the population directly or
agri-technology. Several surveys recently
indirectly depends upon this sector. The
conducted show that this special credit
agriculture sector accounted for 16.0 percent
programme improves the living standard of
of GDP and grew by 3.0 percent in FY15
the sharecroppers'.
compare to 4.4 percent of FY14. Although
growth rate has declined compared to the Implementation of Some Important
previous year, the agricultural sector still Initiatives of Agricultural Credit
remains very important for the country. Programme in FY15
Acknowledging the importance of this sector, Around 3.2 million farmers availed
Bangladesh Bank (BB) has been pursuing agricultural and rural credit of which 0.3
some policy measures in the recent years to million women got Taka 9.0 billion as
support this sector. BB regularly formulates agricultural and rural credit from different
annual agricultural credit policy which helps to banks.
increase the supply of credit in the rural areas
Around Taka 6.2 billion was disbursed
and reviving the rural economy. This attempt
among about 0.2 million farmers through
has been leading to vast expansion of
15489 open credit disbursement
employment generating activities and
programmes arranged by different banks.
promoting financial inclusion. This policy
support accelerates the agricultural Around 2.5 million small and marginal
production and helps to reduce rural poverty farmers got Taka 112.03 billion
through increasing flow of funds. BB declared agricultural loans from different banks.
its annual agricultural and rural credit policy
About Taka 506.3 million of agricultural
and programme for FY15 with a disbursement
and rural credit was disbursed among
target of Taka 155.5 billion, which was 6.5
about 9773 farmers living in the less
percent higher than the disbursement target
developed area like haor, char, etc.
of Taka 146.0 billion in FY14. The
achievement against this target was 102.8 Around 9.9 million bank accounts were
percent marked by the significant participation opened by the farmers in the state owned
of private sector banks through their branches commercial banks with an initial deposit
as well as through linkages with Microfinance of Taka 10 only.
79
Chapter-9 Agricultural and Rural Finance
An amount of Taka 0.8 billion was Table 9.1 Comparative statement of disbursement
disbursed at 4.0 percent concessional & recovery of agricultural loan
(billion Taka)
rate for the production of certain crops like
Disbursement FY13* FY14* FY15*
pulse, oilseed, spices, and maize for 1 2 3 4
which the country relies on import. I. Disbursement (target) 141.30 145.95 155.50
a) Crops loan (other than tea) 65.38 69.38 75.69
In the 3 Hill Tract districts, more than b) Purchase and installation of 4.34 3.68 3.39
Taka 0.5 billion was disbursed among irrigation equipment

c) Livestock 13.55 15.26 16.70
18340 tribal farmers only at 5.0 percent
d) Marketing of agricultural goods 3.32 2.57 1.91
interest rate. e) Fisheries 12.68 12.68 15.36
f) Poverty alleviation 12.63 11.16 11.37
It is to be noted that, BB has announced its g) Other agricultural activities 29.40 31.22 31.08
annual agricultural and rural credit policy and II. Actual disbursement 146.67 160.37 159.78
programme for FY16. The target for a) Crops loan (other than tea) 64.34 71.31 76.04
b) Purchase and installation of 2.79 2.39 2.38
disbursement of agricultural credit has been
irrigation equipment
fixed at Taka 164 billion which is 5.5 percent c) Livestock 18.03 19.96 20.57
higher than the disbursement target of Taka d) Marketing of agricultural goods 2.26 1.67 1.54
e) Fisheries 13.21 13.78 16.53
155.5 billion in FY15.
f) Poverty alleviation 16.58 18.64 14.81
Disbursement g) Other agricultural activities 29.46 32.62 27.91

III. Term structure of loan disbursed
9.2 The actual disbursement of agricultural Short term 106.12 118.85 127.48
Longer term 40.55 41.52 32.30
credit under Annual Agricultural Credit
IV. Recovery 143.62 170.46 154.07
Programme by the participating banks/NBFIs V. Due for recovery 195.46 248.13 220.34
in FY15 stood at Taka 159.8 billion which was VI. Total outstanding loan 310.58 346.33 329.37
VII. Overdue 52.09 76.12 67.29
0.4 percent lower than the actual
VIII. Overdue as percent of outstanding 16.77 21.98 20.43
disbursement of Taka 160.4 billion in FY14.
* Excluding BRDB and BSBL
Table 9.1 shows the comparative position of Source: Agricultural Credit Department, Bangladesh Bank.
overall disbursement and recovery of

agricultural loan and Charts 9.1 and 9.2 show The total outstanding loan in the agricultural
targets and actual disbursement of sector (including all banks) decreased by
Taka 16.9 billion or 4.9 percent to Taka 329.4
agricultural loan respectively in FY15.
billion in FY15 from Taka 346.3 billion in FY14
About 79.8 percent of disbursement was short (Table 9.2).
term lending and the rest was long-term loans
Two specialised banks- BKB, RAKUB and six
to purchase irrigation equipments, agricultural
SCBs have played key role in the
machinery, livestock, etc. The credit for disbursement of agricultural and rural finance
production of crops and poverty alleviation while the contribution of foreign and private
programmes constituted 59.6 and 11.6 commercial banks is also increasing.
percent respectively of the total short term However, the SCBs and RAKUB fell short of
loans (Table 9.1). targets by 9.2 and 4.0 percent respectively.
80
Agricultural and Rural Finance Chapter-9
On the other hand, BKB, FCBs and PCBs Chart 9.1 Targets for agricultural credit
exceeded the disbursement target by 0.1, disbursement in FY15
13.3 and 11.8 percent respectively in FY15 Poverty Crops
alleviation 48.7%
(Table 9.2). Apart from this, BRDB and BSBL 7.3%
disbursed Taka 7.2 billion from their own fund

which raised total disbursement to Taka 167.0
billion (including all banks) during FY15. Other
agricultural
activities
Recovery 23.4% Livestock
10.7%
9.3 Total recovery of agricultural credit Fisheries
9.9%
decreased by 9.6 percent to Taka 154.1 billion
in FY15 from Taka 170.5 billion in FY14 due
to some policy initiatives like loan Chart 9.2 Actual agricultural credit
disbursement in FY15
rescheduling, bad loan write off and political
Poverty
unrest. In spite of this, rate of recovery (with alleviation Crops
9.3% 47.6%
due for recovery) of agricultural credit was
69.9 percent during FY15 which was higher
than the rate of recovery (with due for
Other
recovery) of agricultural credit (68.5 percent) agricultural
activities
in FY14 (Table 9.1). 19.9%
Fisheries Livestock
The overdue as percentage of outstanding 10.3% 12.9%
agricultural loan decreased from 22.0 percent

to 20.4 percent at the end of June 2015 (Table SCBs' overdue loan as percent of their
9.2). It is important that banks should set up outstanding loan stood at 31.2 percent at the
their recovery drive matching with the end of FY15, while the overdue of RAKUB
harvesting seasons and strengthen incentive and BKB were recorded to 33.7 and 18.1
measures ensuring appropriate dissemination percent respectively of their outstanding loan
of information so that the recovery of (Table 9.2). The private commercial banks
agricultural loan improves further in the years play a crucial role in agricultural lending which
ahead. is increasing remarkably. The contribution of
PCBs was Taka 61.0 billion in FY14 which
Sources of Agricultural Finance
increased by 7.9 percent and stood at Taka
9.4 State-owned banks are still playing the 65.8 billion in FY15. The PCBs' overdue loan
major role for sources of finance in as percent of their outstanding loan stood at
agriculture. PCBs had the largest share in the 3.2 percent at the end of FY15.
annual disbursement of agricultural loan. In
Bangladesh Bank's Refinance against
FY15, PCBs disbursed 41.2 percent of the
Agricultural Loans
total disbursement, followed by BKB (30.1
percent), SCBs (16.1 percent), RAKUB (9.6 9.5 Only BKB, RAKUB and BRAC have
percent) and FCBs (3.0 percent). The enjoyed refinance facilities to the tune of Taka
81
Table 9.2 Agricultural credit performance by lenders - FY15

(billion Taka)
Disbursement Actual Overdue as %
Lender` Recovery Overdue Outstanding
Target disbursement of outstanding
1 2 3 4 5 6 7
SCBs 28.40 25.79 25.30 26.21 84.04 31.19

BKB 48.00 48.03 48.56 23.98 132.71 18.07
RAKUB 16.00 15.36 18.27 14.96 44.38 33.71
Sub Total 92.40 89.18 92.13 65.15 261.13 24.95
FCBs 4.20 4.76 7.07 0.00 2.13 0.17
PCBs 58.90 65.84 54.87 2.14 66.11 3.24
Sub Total 63.10 70.60 61.94 2.14 68.24 3.14
Grand Total 155.50 159.78 154.07 67.29 329.37 20.43
Summary
FY15@ 155.50 159.78 154.07 67.29 329.37 20.43
FY14@ 145.95 160.37 170.46 76.12 346.33 21.98
FY13@ 141.30 146.67 143.62 52.09 310.58 16.77
FY12@ 138.00 131.32 123.59 60.52 259.75 23.30
FY11 126.17 121.84 121.48 60.97 254.92 23.92
@ excluding BRDB and BSBL.

Source : Agricultural Credit and Financial Inclusion Department, Bangladesh Bank.
11.1 billion from Bangladesh Bank during total amount of Taka 1.1 billion and Taka 0.6
FY15. An amount of Taka 18.4 billion billion was recovered under close monitoring
(including interest) was recovered against and supervision of Bangladesh Bank in FY15.
refinance loan due from different banks and These includes the agro based industries and
institutions leaving an outstanding balance of Technology Development Project (ATDP),
Taka 43.6 billion (including interest) as of end Marginal and Small Farm System Crop
June 2015 for future recovery. Details of Intensification Project (MSFSCIP), Shashya
Bangladesh Bank's refinance to different Gudam Rin Prokolpo (SHOGORIP),
institutions are shown in Table 9.3. Northwest Crop Diversification Project
(NCDP) and Second Crop Diversification
Bangladesh Bank undertook a special Project (SCDP). The ADB financed NCDP
refinance scheme of Taka 2.0 billion to Project was launched in December 2001 and
purchase raw jute from jute producers to completed in June 2009. It had a credit
provide working capital to jute goods component of Taka 1.8 billion for financing
manufacturing companies and jute exporters production and marketing of high value crop
in FY15. A total of 11 banks availed of this in sixteen north western district. After
window and disbursed Taka 1.5 billion in FY15. completion of the project the credit fund is
converted into a revolving fund and will
Agricultural Credit Projects/Programmes
continue up to June 2019. The revolving fund
under Bangladesh Bank Supervision
will be provided to RAKUB for distribution of
9.6 Some on-going self and donor financed loans among the farmers and agro-based
agricultural projects/programmes disbursed a enterprises through four NGOs/MFIs on a
82
Table 9.3 Bangladesh Bank's refinance against agricultural loans

(billion Taka)
FY13 FY14 FY15

Particulars
Refinance Repayment Outstanding Refinance Repayment Outstanding Refinance Repayment Outstanding
BKB 5.00 2.20 33.42 0.00 3.42 31.13 5.00 9.06 28.34
RAKUB 0.18 1.76 16.14 6.00 9.12 13.00 2.00 4.79 11.11
BRAC 4.49 2.46 4.49 4.50 4.49 4.50 4.11 4.50 4.11
BSBL - 0.04 0.13 - 0.04 0.085 - 0.04 0.043
BRDB - - - - - - - - -
Total 9.67 6.46 54.18 10.50 17.07 48.71 11.11 18.39 43.60
Source : Agricultural Credit and Financial Inclusion Department, Bangladesh Bank.
reimbursement basis. A total amount of Taka is working to facilitate this and monitoring the
0.5 billion was disbursed to RAKUB under the SME financing activities and development. To
project in FY15. On the other hand, a total expand and develop this sector, Bangladesh
amount of Taka 0.6 billion was disbursed Bank continued refinancing facilities to banks
under SCDP, another ADB funded project in and NBFIs for SMEs during FY15.
FY15.
At the end of June 2015, a total amount of
Financing of Small and Medium Scale Taka 48.2 billion was provided to different
Enterprises banks and NBFIs under refinance schemes
9.7 An emerging SME sector is playing a against 47988 enterprises. Bangladesh
key role for the development of the economy Bank's refinance facility to banks under some
of Bangladesh which encourages private special schemes and programmes during
ownership and entrepreneurial skills, FY15 are illustrated below:
generates employment, diversifies economic A. Refinance for Small Enterprises
activities and makes a significant contribution
to overall economic growth. Bangladesh Bank, with the help of
Government and different development
BB has undertaken different programmes to partners, has been implementing eight
provide relatively cheaper funds to SME
different revolving refinance facilities for
financing banks and NBFIs. Special emphasis
banks and NBFIs. Recently, BB has
has been given to bring the women
constituted a refinance fund of Taka 1.0 billion
entrepreneurs in the mainstream of
for new cottage, micro and small enterprises.
development process of the country. BB has
Different special schemes and programmes
reserved 15.0 percent of total SME financing
for SME development are described below:
fund for women entrepreneurs at a maximum
annual interest of 10.0 percent in an attempt A.1. Bangladesh Bank Fund (BB Fund):
to enhance more female participation in the Bangladesh Bank has launched a refinance
productive sectors. SME & Special scheme named Small Enterprise Fund (SEF)
Programmes Department (SME&SPD) of BB of Taka 6.0 billion at bank rate to support the
83
development of small enterprises in the to long term financing to eligible SMEs. The
country which is being used as a revolving total fund of the SMEDP (ADB-2) was USD
fund. An amount of Taka 23.3 billion (including 95.0 million. Out of that, ADB provided USD
women fund) was refinanced to 22 banks and 76.0 million from its special fund and BB
22 NBFIs at the end of June 15 to support provided USD 19.0 million on behalf of GoB
25115 enterprises. which was transferred from the balance of the
earlier ADB-1 (SMESDP) fund. Disbursement
A.2. Enterprise Growth and Bank
from this fund was completed in December
Modernisation Programme (EGBMP) Fund:
2013 and Taka 7.5 billion was provided to
With the objective of financing and
banks and NBFIs against their financing to
development of small enterprise sector in the
country, the World Bank provided an 13645 enterprises.
additional amount of USD 10 million to A.5. JICA Two Step Loan Fund: Small
EGBMP fund in 2004, under a development and Medium-scale Enterprises (SMEs) have
credit agreement signed with the Government been considered as the thrust sector in the
of Bangladesh. Furthermore, the Government economic development of the country. As per
of Bangladesh allocated an amount of Taka loan agreement between JICA, Japan and
0.6 billion under the said agreement. An Government of Bangladesh, a project named
amount of Taka 1.2 billion has been received "Financial Sector Project for the Development
combining the IDA credit fund and of Small and Medium-Sized Enterprise
Government of Bangladesh fund for (FSPDSME)-BD-P67" has been implementing
refinancing. Out of this fund, an amount of by Bangladesh Bank. The objective of the
Taka 3.1 billion was been provided to 32 project is to create a medium to long term
banks and NBFIs against 3160 enterprises on financing market for SMEs specially for the
revolving basis. Disbursement from this fund productive investments. The size of the fund
was completed in June 2011. is JPY 5000 million, including a technical
A.3. Small and Medium Enterprise Sector assistance component. The principal
Development Project (SMESDP): Asian component of the fund is Two Step Loan
Development Bank initially provided an (TSL) of JPY 4787.5 million. Refinancing or
amount of USD 30 million to SMESDP to pre-refinancing facilities are being provided to
strengthen the SME sector in Bangladesh. An participating NBFIs at the bank rate for
amount of Taka 3.4 billion was disbursed lending to SME sub-projects of productive
through banks and NBFIs till September 2009 investment for medium to long term duration
against 3264 enterprises. The total disbursed at the market rate. As of end of June 2015, an
amount was recovered from NBFIs by the end amount of Taka 3.2 billion was refinanced
of June 2015. against 436 enterprises.
A.4. Small and Medium-Sized Enterprise In the backdrop of tragic incidence of Rana
Development Project (SMEDP): The Plaza collapse and recent crisis in the RMG
objective of SMED project was to provide and knitwear sector, a special initiative has
credit facility for enhancing access to medium taken under the JICA assisted FSPDSME
84
project to finance the improvement of safe new entrepreneurs in cottage, micro and
working environment of RMG sectors. A RMG small sector. At the end of June 2015, Taka
factory which is a member of BGMEA or 0.5 billion was refinanced to banks and NBFIs
BKMEA with workers of 100-2000 can avail a against 131 enterprises.
loan up to Taka 100 million for the purpose of
B. Refinance to Women Entrepreneurs
retrofitting, rebuilding and relocating its factory
buildings, provided that the factory building is Bangladesh Bank is encouraging all banks
owned by the applicant entrepreneur. and NBFIs to provide loan to women
entrepreneurs at 10.0 percent interest rate. A
A.6. Refinance Scheme for Agro-based
dedicated women entrepreneurs desk has
Product Processing Industries: In order to
been established in the SME&SPD of BB. All
boost up agro-based product-processing
banks and NBFIs have been directed to do
industries in the areas outside divisional head the same. They have also been instructed to
quarters and Narayanganj town, Bangladesh reserve 15.0 percent of total SME funds
Bank provides refinancing facilities to banks exclusively for women entrepreneurs. An
and NBFIs at the bank rate. An amount of amount of Taka 11.7 billion was refinanced to
Taka 74.1 billion was disbursed under this women entrepreneurs at the end of June
scheme by the end of June 2015 among 2110 2015 against 12834 enterprises.
enterprises on revolving basis.
C. New Entrepreneurs Creation and
A.7. Refinance Fund for New Entrepreneurs' Development
Entrepreneurs under Cottage, Micro and
Small Category: Bangladesh Bank has To promote skills of young workers and new
created a fund of Taka 1.0 billion to provide entrants in the labour market, the Government
of Bangladesh has taken a project titled "Skills
start-up capital to new cottage, micro and
for Employment Investment Programme
small enterprises where the prospective
(SEIP)" with the assistance of Asian
entrepreneurs will get financing facilities at
Development Bank (ADB) and Swiss Agency
10.0 percent interest rate (bank rate + 5
for Development and Cooperation (SDC).
percent). At the end of June 2015, Taka 5.3
Aligned with this intiative BB has also taken
million was refinanced to banks and NBFIs
steps for creation and development of new
against eight new enterprises.
entrepreneurs. To this end, BB will provide
A.8. Islamic Shariah Based Refinance market oriented job training to 10200 people
Scheme: Bangladesh Bank launched a in the next three years to start their own SME
special refinance fund under Islamic Shariah business or be employed in the SME sector.
mode on 18 September 2014 to increase the
Microcredit Operations of Grameen Bank
involvement of Islamic banks and NBFIs in
and the Large MFIs
financing SMEs. Under this fund, Islamic
banks and NBFIs will get refinance against 9.8 Now-a-days microfinance has drawn
their financing to agro-based industries, small attention rigorously of the world communities.
enterprises (including women led SMEs) and Microfinance has considered as a tool for
85
poverty alleviation and creation of economic Table 9.4 Microcredit operations of the
opportunities for the world's poorest section of Grameen Bank and large MFIs
(billion Taka)
the people. Microcredit operators have been FY13 FY14 FY15
providing various social and financial services 1. Disbursement 367.60 395.98 507.92
to the poor with the objectives of helping them i) Grameen Bank 122.01 117.23 139.18
ii) BRAC 112.65 133.87 172.57
to be self-employed and increasing financial iii) ASA 96.18 102.60 146.39
inclusion throughout the country. In addition, it iv) TMSS 14.64 18.64 23.48
v) BURO Bangladesh 22.11 23.63 26.30
contributes a constructive role in the country's
2. Recovery 345.58 390.04 448.87
overall investment by increasing savings i) Grameen Bank 117.61 113.68 135.63
collection from remote area. ii) BRAC 103.34 138.39 150.82
iii) ASA 95.45 99.04 117.95
iv) TMSS 13.18 16.02 20.92
More than a thousand of NGO-MFIs are v) BURO Bangladesh 16.00 22.90 23.56
operating their activities in Bangladesh in
3. Outstanding Loans 227.30 252.48 479.79
which Grameen Bank as well as top four i) Grameen Bank 84.18 87.73 91.29
licensed MFIs (BRAC, ASA, TMSS, Buro ii) BRAC 66.45 81.17 193.46
iii) ASA 55.73 59.29 153.57
Bangladesh) hold the maximum share of the iv) TMSS 7.95 10.57 25.01
v) BURO Bangladesh 13.00 13.72 16.47
total loan outstanding and savings of the
sector. BRAC topped the list for loan 4. Loans Overdue 6.92 6.16 6.91
i) Grameen Bank 1.54 1.68 1.34
disbursement (Taka 172.6 billion) which ii) BRAC 3.80 2.12 2.96
followed by ASA (Taka 146.4 billion) and iii) ASA 1.18 1.70 1.89
iv) TMSS 0.24 0.33 0.35
Grameen Bank (Taka 139.18 billion) in FY15. v) BURO Bangladesh 0.16 0.32 0.38
In FY15, the share of loan disbursement of 5. Overdue as percentage of outstanding 3.04 2.43 1.44
these top four MFIs among all the licensed i) Grameen Bank 1.83 1.91 1.47
ii) BRAC 5.72 2.61 1.53
(697) MFIs reached about 36.0 percent. iii) ASA 2.11 2.87 1.23
iv) TMSS 3.01 3.17 1.39
Overall MFI sector's loan disbursement v) BURO Bangladesh 1.24 2.36 2.28
increased by 28.3 percent in FY15, compared

Source: Microcredit Regulatory Authority (MRA).
to 7.7 percent of FY14. Recovery increased
by 15.1 percent in FY15 as compared to 12.9 working as an apex microcredit funding and
percent in FY14. Their overdue as a capacity building organisation for alleviating
percentage of outstanding loans decreased poverty by providing microcredit to the poor
from 2.4 percent in FY14 to 1.4 percent in through its Partner Organisations (POs). The
FY15.
loan given by PKSF to 274 POs was Taka
Since inception in May 1990, the Palli Karma 216.6 billion in FY15 compared with Taka
Sahayak Foundation (PKSF) has been 188.3 billion to 273 POs in FY14.
86
Chapter-10
Public Finance
10.1 The Government budget for FY15 was Table 10.1 Bangladesh Government revenue
formulated with the prime objective to and expenditure
(billion Taka)
maintain the current macroeconomic stability
FY14 FY15 FY16
and promote growth. The policies and FY14# as % FY15* as % FY16 as %
of GDP* of GDP* of GDP
strategies were adopted in the budget in order
Total revenue 1403.7 11.9 1633.7 10.8 2084.4 12.1
to support inclusive growth and transform
a) Tax 1160.3 9.8 1406.8 9.3 1822.4 10.6
Bangladesh into a middle-income country by
b) Non-tax 243.4 2.1 226.9 1.5 262.0 1.5
2021. Assuming private sector investment
Total expenditure 1882.1 15.9 2396.7 15.8 2951.0 17.2
growth, the GDP growth target for FY15 was
set at 7.3 percent. The total expenditure and a) Current 1105.7 9.4 1273.7 8.4 1645.7 9.6
the total revenue in the revised FY15 budget b) ADP 553.3 4.7 750.0 5.0 970.0 5.7
fell short of the initial projection. The budget c) Others 223.1 1.9 373.0 2.5 335.3 2.0
deficit (excluding grants) as percentage of Budget deficit 478.4 4.1 763.0 5.0 866.6 5.0
GDP was 5.0 percent, which was same as the
# Actual, * Revised budget
initial target (Table 10.1). Source : Budget in Brief 2015-16, Ministry of Finance.
The revenue collection in the revised budget

for FY15 increased by 16.4 percent compared percent lower than initial target. It was higher
to the actual collection in FY14. The current than the actual total revenue receipts by 16.4
expenditure in the revised budget for FY15 percent in FY14. The tax revenue which
was higher than the actual current constituted 86.1 percent of the total revenue
expenditure by 15.2 percent in FY14. On the receipts increased by 21.2 percent compared
other hand, the Annual Development to 8.0 percent growth in FY14 (Table 10.1).
Programme (ADP) of Taka 750.0 billion in the
The non-tax revenue displayed 6.7 percent
revised budget for FY15 turned out 35.6
decrease in FY15 compared to 17.7 percent
percent higher than the actual ADP in FY14.
increase in the preceding fiscal year. The total
The fiscal deficit (excluding grants) of 5.0
revenue receipts as percentage of GDP
percent of GDP in the revised budget for
declined to 10.8 percent in FY15 compared to
FY15 was higher than the actual fiscal deficit
11.9 percent in FY14. The total tax revenue
by 0.9 percentage point in FY14 (Table 10.1).
receipts as percentage of GDP was 9.3
A. FY15 Budget and Fiscal Outcome percent in FY15 compared to 9.8 percent in
the preceding fiscal year. Similarly, the total
A.1. Revenue Receipts
non-tax revenue receipts as percentage of
10.2 The revised total revenue receipts in GDP decreased to 1.5 percent in FY15
FY15 was Taka 1633.7 billion, which was 10.7 compared to 2.1 percent in FY14.
87
Chapter-10 Public Finance
The major revenue measures in FY15 budget: Chart 10.1 Composition of Tax Revenue :
FY15 (revised)
Tax exempted income limit for individual
taxpayers was unchanged to Taka Stamp duty Others Import duty
Supplementary 2.5% 1.4% 10.7%
duty Vehicles
220,000. The limit for female taxpayers 14.1% 0.9%
and aged taxpayers (65 years of age and

above) was increased to Taka 275,000
from Taka 250,000. The limit for
physically challenged individuals was
Taxes on VAT
raised to Taka 350,000 from Taka income
Land 35.2%
& profit
revenue
300,000. The limit for war wounded 34.6%
0.6%
gazetted freedom fighters was raised to
Taka 400,000 from Taka 220,000.
Corporate tax rate was reduced for non- Chart 10.2 Composition of Tax Revenue :
listed companies from 37.5 percent to FY16 (estimated)
35.0 percent. Stamp duty Others Import duty
Supplementary 2.0% 1.4%
Vehicles 10.3%
duty
Turnover tax of both companies and 14.2% 0.7%
partnership firms was reduced from 0.5
percent to 0.3 percent.
Income Tax Law was amended to define

house rent as both rent and service
charges and to ensure payment of Taxes on
Land VAT
income & profit
monthly house rent amounting more than 35.7% revenue 35.3%
0.5%
Taka 25 thousand through banks.
Katha1 based advance tax replacing

of land in areas other than the important
existing 3 percent tax at source on
commercial and posh areas within the
registration value of sale of land in the
jurisdiction of RAJUK and CDA. Tax at
posh residential and commercially
source at 3 percent on registration value
important areas of Dhaka and Chittagong
was introduced in other City Corporations
was introduced when specific tax was
and municipalities at district headquarters
imposed in the same manner based on
and 2 percent in other municipalities and
per-square-feet in case of transfer of
1 percent in all other areas outside
important residential/ commercial and
municipalities.
other structures in Dhaka, Chittagong,
and Narayangonj city corporations. The Tax facility was extended on contribution
rate of tax at source was increased from to any fund created and approved by the
3 percent to 4 percent on the deed value government to help victims of natural
1 katha = 720 sft disaster and accidents as CSR.
88
Public Finance Chapter-10
The expenditure limit in CSR was

Table 10.2 Composition of revenue receipts
extended from Taka 80 million to Taka
(billion Taka)
120 million keeping unchanged the FY14# FY15* FY16
existing condition of allowable limit at 20 Tax revenue 1160.3 1406.8 1822.4
Value Added Tax (VAT) 410.8 495.7 642.6
percent of total income of any company.
Import duty 131.3 151.0 187.5
Export duty 0.0 0.3 0.4
Tax exemption facility was given for 5
Supplementary duty 179.3 198.5 258.8
years in graduated rate for demutualised Taxes on income and profit 378.3 486.1 649.7
stock exchange. Limit of tax exempted Stamp duty (non judicial) 28.8 35.1 36.5
dividend income was increased to Taka Excise duty 8.2 9.4 12.4
Land revenue 6.9 8.0 8.3
15000 from Taka 10000.
Taxes on vehicles 9.7 12.5 13.0
Narcotics and liquor duty 0.7 1.0 1.0
Tax exemption was given to all donations
Other taxes and duties 6.3 9.2 12.3
through banking channels to girls' schools Non-tax revenue 243.4 226.9 262.1
or colleges and vocational and technical Administrative fees and charges 30.3 46.4 52.1
institutions. Dividend and profit 44.9 31.0 52.0

Interest 6.7 7.3 7.6
Total tax exemption was given to all Capital revenue 0.8 1.3 1.4
Receipts for services rendered 7.8 4.8 5.0
donations through banking channels to
Non-commercial sales 4.1 5.1 5.3
national level research institutions Rents, leases and recoveries 1.1 1.6 1.7
established under any law engaged in Defence receipts 9.3 24.5 25.5
research work in the field of agriculture, Tolls and levies 3.1 5.0 5.2
Fines, penalties and forfeiture 3.4 2.4 2.5
industry, science and technology. Railway 8.0 11.0 11.4
Post offices 2.6 2.7 2.9
To create investment-friendly atmosphere
Other non-tax revenue and receipts 121.3 83.8 89.5
the existing tax holiday facilities were Total 1403.7 1633.7 2084.6
extended from June 2015 to June 2019.
# Actual, * revised budget.
Aside from the tax holiday, the facilities of Source : Budget in Brief 2015-16, Ministry of Finance.
accelerated depreciation alternative to tax

holiday were reinstated for the new WASA, Chittagong WASA, Khulna WASA,
industrial entrepreneurs. Rajshahi WASA, RAJUK, BTRC and
CAAB.
Tax exemption limit for agriculture sector
was also enhanced from Taka 50000 to Deduction-rate at source was reduced
Taka 200000. from existing 5 percent to 3 percent on
Tax holiday-facilities were given for local LC valuing more than Taka 500000.
pollution-free Hybrid Hoffman Kiln (HHK) Besides, tax rate was reduced from 5
brickfields. percent to 3 percent on deemed
commissions.
The rate of tax was reduced from 37.5
percent to 25.0 percent on income of all Tax exemption was given over interest
autonomous bodies including Dhaka income from investment on pensioner
89
savings certificate and wage earners' bond

Table 10.3 Composition of revenue expenditure
up to Taka 500000.
(billion Taka)
FY14# FY15* FY16
The rate of deduction of tax at source on
Social sector 327.9 385.8 424.9
cash incentive was reduced from 5
Public services 85.1 130.9 401.1
percent to 3 percent for export sector.
Interest on domestic debt 266.0 281.9 334.0
10 percent VAT facilities on crude and Defence 98.7 118.2 124.4
refined palm oil, soybean oil and Public order and safety 99.6 111.8 110.3
sunflower at the import stage were
Interest on foreign debt 16.0 16.8 17.1
extended from 30 June 2013 to 30 June
Agriculture sector 133.6 137.3 139.1
2015.
Transport and communication 42.3 48.7 51.8
Import duty on LPG cylinder import was Local government and rural development 23.3 26.1 27.9
raised to 25 percent from 5 percent. Housing 8.7 9.9 9.7
A fixed tax of Taka 100 on the single Others 4.6 6.3 5.6
piece of replacement SIM was Total : 1105.7 1273.7 1645.7
introduced. # Actual, * Revised budget.

Source : Budget in Brief 2015-16, Ministry of Finance.
The customs duties on 14 items used as
raw materials in the manufacture of anti- domestic paper, glass and ceramics,
cancer drugs and medicines were fully rubber, furniture, paint, electrical, plastic
exempted. industries that were gradually evolving
under duty and tax exemption,
The import duties applicable to infusion
concession and protection, were refixed
pump used for the treatment of
at 5 and 10 percent respectively.
Thalasamia were fully exempted.
To protect the interest of the local 15" to
The existing 10 to 25 percent duties
16'' rim sized tyre industry, in addition to
applicable for 41 items used as essential
the other existing duty and taxes, 5
raw materials in the manufacture of
percent regulatory duty were imposed on
Ayarvedic medicines were reduced to 5
it.
percent.
The existing 10 percent duty on bicycle
The duties and taxes on some new raw tube was increased to 25 percent.
materials for the poultry and cattle
The tariff value at USD 32 per barrel on
subsector recommended by the Ministry
crude petroleum oil was increased to
of Livestock and Fishery were fully
USD 40 per barrel. Likewise, tariff values
exempted.
on other refined petroleum products were
Existing customs duties of 10 and 25 increased from present 31 cent per litre to
percent on the raw materials used in 40 cent per litre.
90
The existing duties on navigation light,

Table 10.4 Composition of social sector
broadcasting equipment and fire revenue expenditure
extinguishers were fixed at 5 percent (billion Taka)
#
only. FY14 FY15* FY16
Education & technology 175.8 199.6 215.9
Dump truck was allowed to enjoy the Health 57.2 67.8 71.9
concessionary benefit that presently Recreation, culture and 6.7 8.1 8.4
religious affairs
being enjoyed by the capital goods
Labour and employment 0.4 0.6 0.8
instead of current 10 percent customs
Social security and welfare 87.8 109.7 127.9
duty. Total : 327.9 385.8 424.9
# Actual, * Revised budget.

The export-oriented readymade garments Source : Budget in Brief 2015-16, Ministry of Finance.
sector (RMG) was allowed to import the
raw materials necessary for the
manufacture of prefabricated buildings Table 10.5 Sectoral shares in ADP expenditure
(percent)
without duties on certain conditions.
FY14* FY15* FY16
Agriculture 5.9 5.8 5.2
The existing duties on fire resistant door,
Rural development & institutions 11.6 10.5 9.0
emergency light, sprinkler system, etc. Water resources 3.2 2.8 3.0
were fully exempted from duties. Industries 4.6 2.1 1.5
Power 13.4 8.8 17.0
Custom duty on multiplexer, grand master Oil, gas & natural resources 3.2 1.6 2.1
clock, etc. used in high speed internet Transport 17.2 27.5 22.5
Communication 1.3 1.3 1.9
connection was reduced to 5 percent
Physical planning, water 9.0 8.2 11.5
from 25 percent custom duty and 5 supply & housing
percent regulatory duty. Education & religious affairs 13.3 14.4 10.7
Health, nutrition, population 7.0 4.5 6.3
15 percent VAT was imposed on mobile & family welfare
phones at the import stage. Others 10.3 12.5 9.3
Total : 100 100 100
Customs duty was fixed at 25 percent on
* Revised
energy saving bulbs and electric fan Source : Annual Development Programme 2014-2015 and 2015-2016,
motors. Ministry of Planning.
1 percent 'Environment Protection

10.3 In the revised budget for FY15, direct
Surcharge' or 'Green Tax' on ad-valorem
taxes on income and profit increased at the
basis was imposed on all kinds of
rate of 28.5 percent to Taka 486.1 billion
products manufactured in Bangladesh by
increasing its share in the total tax revenue to
the industries which pollute the
34.6 percent from 32.6 percent in FY14.
environment.
Receipts from other taxes and duties,
1 percent 'Health Development Surcharge' narcotics and liquor duty, taxes on vehicle,
was imposed on all imported and stamp duty (non judicial), value added tax
domestically produced tobacco products. (VAT), land revenue, import duty, excise duty
91
and supplementary duty rose by 46.0, 42.9, Chart 10.3: Budget deficit financing: FY15 (revised)
28.9, 21.9, 20.7, 15.9, 15.0, 14.6 and 10.7 (percent of GDP)
percent respectively compared to those in Net foreign Bank
financing borrowings
FY14. A total of Taka 0.3 billion was recorded 1.1 2.1
as export duty receipts in revised budget for
FY15 (Table 10.2).
10.4 Under the non-tax revenue head,

defence, receipts from capital revenue, tolls Non-bank
borrowings
and levies, administrative fees and charges 1.5
and rents, leases and recoveries sharply
increased by 163.4, 62.5, 61.3, 53.1 and 45.5
percent respectively compared to those in Chart 10.4: Budget deficit financing: FY16 (estimated)
FY14. Other sub-sectors showing increases (Percent of GDP)
included railway 37.5 percent, non- Net foreign Bank
financing borrowings
commercial sales 24.4 percent, interest 9.0 1.4 2.2
percent and post offices 3.8 percent. On the

contrary, receipts for services rendered,
dividend and profit, other non-tax revenue and
receipts, and fines, penalties and forfeiture fell
by 38.5, 31.0, 30.9, and 29.4 percent
Non-bank
respectively. borrowings
1.0
A.2. Expenditure
10.5 The total public expenditure in the 10.3). The proposed non-development current
revised budget for FY15 amounted to Taka expenditure in FY15 had the following
2396.7 billion. This was 4.5 percent lower revisions:
than the initial estimation of Taka 2505.1 An additional amount of Taka 6.4 billion
billion but 27.3 percent higher than the was allocated for salary and allowances.
expenditure of Taka 1882.1 billion in FY14.
The revised current expenditure of Taka An additional amount of Taka 12.1 billion
1273.4 billion in FY15 was 0.7 percent lower was allocated for acquisition of assets
and works.
than the initial projection of Taka 1282.3 billion
(Table 10.1). An additional amount of Taka 10.2 billion
as compared to the original budget was
10.6 The revised current expenditure in
allocated for goods and services.
FY15 surpassed initial allocations for some of
the accounts, namely public order and safety, 10.7 The Annual Development Programme
agriculture sector, local government and rural in FY15 was revised upward by about 35.6
development, housing and others (Table percent from Taka 553.3 billion to Taka 750.0
92
Box 10.1
Financing of Budget Deficit in Bangladesh
Fiscal deficits are usual for developing

countries like Bangladesh because Chart 1 : Trends in budget deficits
government revenue collections fall short of
5.5
the country's development and non-
5.0
development expenditure. The economy
Percent of GDP
4.5
needs public investments in physical and 4.0
social infrastructure to make up for shortfall 3.5
of private investments to achieve the target 3.0
GDP growth. Revenue collections are 2.5
improving in recent years along with 2.0
expenditure. The overall fiscal deficit
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
contained within manageable limit of 5
percent of GDP except for FY08 where it
rose up to 5.3 percent (Chart 1).
Chart 2 : Pattern of domestic borrowing
The Government of Bangladesh prefers the 400
financing of fiscal deficits by using 300
concessional foreign borrowing. The cost of 200
billion Taka
foreign financing is sensitive to the external 100

factors relating to the exchange rate volatility 0
which may lead to external debt crisis. On -100
the other hand, borrowing from domestic -200
FY09
FY10
FY11
FY12
FY13
FY14
FY15
sources (the central bank, commercial banks
and sale of national savings certificates) are Bangladesh Bank Commercial banks
considered to have potential crowding out Non-bank sources Domestic borrowings
effects including inflationary pressures. Chart
2 illustrates the trend of domestic financing.
Chart 3 : Government outstanding debt
Although and risks, the criteria for choosing
a particular method should aim at minimising 45
40
costs and risks on the overall economy.
35
There is not single optimal method of
Percent of GDP
30
financing that fit for all circumstances. The 25
economic situation of a country, the 20
availability of funds, domestic financial 15
10
market and the institutional frameworks, etc.
5
play important roles in determining the
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
optimal way of deficit financing.

Domestic External Total
Finally, it is important that the Government
monitors the country's total outstanding debt
and its repayment capacity as these two variables are important indicators for the debt sustainability
of a country. Chart 3 represents government outstanding debt as percent of GDP from FY06 to
FY15. It may be noted that total outstanding debt (as percent of GDP) has been declining
consistently from 40.2 percent of GDP in FY06 to 27.3 percent of GDP in FY15. However, domestic
debt remained stable at around 15.0 percent of GDP.
93
billion. Consistent with the growth and poverty that the budget deficit will be contained within
reduction objectives, 39.2 percent of the total 5 percent of GDP as in the past. Taking all
ADP was spent on the infrastructure sector these into account the inflation target has
(power, oil, gas & natural resources, transport been set at 6.2 percent for FY16.
and communication), and 18.9 percent on the
The total size of the budget for FY16 stands
social sector (education & religious affairs,
at Taka 2951.0 billion, which is 17.2 percent of
and health, nutrition, population & family
the GDP and 23.1 percent higher than the
welfare) (Table 10.5).
revised budget for FY15. The estimated non-
A.3. Financing FY15 Budget Deficit development and development outlays are
Taka 1845.6 billion and Taka 1025.6 billion
10.8 The deficit (excluding grants) in the
respectively. The budget provides Taka 6.3
revised budget for FY15 stood at Taka 763.0
billion from revenue budget for development
billion (5.0 percent of the GDP). This ratio was
programmes, Taka 33.4 billion for non-ADP
same as the initial projection. The domestic
project and Taka 15.9 billion for non-ADP
borrowing component of the deficit financing
Food-for-Work and transfer. The total outlay
in FY15 was Taka 547.1 billion (3.6 percent of
can be classified into three broad categories
the GDP). Of this component, Taka 317.1
such as social infrastructure, physical
billion (2.1 percent of the GDP) was bank
borrowing and Taka 230.0 billion (1.5 percent infrastructure and general services. In the
of the GDP) was non-bank borrowing, mainly budget, about 23.4 percent of the total outlay
National Savings Schemes (Chart 10.3). The has been allocated for social infrastructure, of
foreign financing component (including which 20.4 percent has been allocated for
grants) of the budget deficit was Taka 215.8 human resources sector (education, health,
billion (1.4 percent of the GDP). science and technology and other related
sectors). About 30.6 percent of the total outlay
B. FY16 Budget has been allocated for physical infrastructure,
10.9 The budget for FY16 was proposed on of which 13.9 percent goes to wider
4 June 2015 and was passed by the National agriculture and rural development, 8.9 percent
Parliament on 30 June 2015. The budget for to overall communication sector and 6.3
FY16 has been formulated to chalk out the percent to power and energy. About 28.0
way towards achieving higher growth for the percent of the total outlay has been allocated
country. The budget also aims to continuation for general service sector. An allocation of 2.2
of a growth-supportive monetary policy that percent of the total outlay has been made for
includes, inter alia, targeted credit supply to PPP projects, financial assistance for different
productive sectors including agriculture, lower industries, subsidies and equity investment in
interest rate and market sensitive exchange state-owned commercial and financial
rate to create the environment for higher institutions. Apart from these three major
economic activities and higher GDP growth. categories, 11.9 percent of the total outlay has
The GDP growth target for FY16 has been set been allocated for interest payment and the
at 7.0 percent. However, it has been assumed rest 3.8 percent has been allocated for net
94
lending and other expenditures. Like the 12.3, 7.7, 7.4, 6.7, 6.3, 4.2 and 4.2 percent
preceding FY's ADP, the large size of the ADP respectively in FY16. Receipts from interest,
has been designed keeping in mind the defence receipts, tolls and levies, non-
commitment to regional parity, improved commercial sales, and railway are expected
infrastructure and quality of expenditure. to rise at 4.1, 4.1, 4.0, 3.9 and 3.6 percent
The total developmental expenditure target for against the corresponding receipts (revised)
FY16 stands at Taka 1025.6 billion, which is of preceding year (Table 10.2).
about 6.0 percent of the GDP. This B.2. Expenditure
developmental expenditure turns out 27.4
percent higher than that of the revised budget 10.11 The total public expenditure in FY16
of the previous fiscal year. is expected to increase by 23.1 percent to
Taka 2951.0 billion over the revised figure of
B.1. Revenue Receipts
FY15. The current expenditure is expected to
10.10 The revenue receipts in FY16 has grow by 29.2 percent and the ADP by 29.3
been targeted to grow by 27.6 percent to Taka percent when the other expenditure is
2084.4 billion compared to that of the expected to fall by 10.2 percent over the
previous year's revised budget. The tax and revised budget for FY15. The ratio of total
non-tax revenue receipts are expected to expenditure to GDP is predicted to increase to
increase by 29.5 percent and 15.4 percent 17.2 percent in FY16 from 15.8 percent in the
respectively against the increase of 21.2 revised budget for FY15 (Table 10.1).
percent and the decrease of 6.8 percent
respectively in the revised FY15 budget. Total 10.12 The projected current expenditure
revenue-GDP ratio is projected to incresse to for FY16 budget stands at Taka 1645.7 billion
12.1 percent in the FY16 compared to 11.9 (Table 10.1 & 10.3). About one fourth of the
percent in the FY14 (Table 10.1). A higher total current expenditure has been allocated
33.7 percent increase in receipts from the for the social sector, in which the major
direct taxes on income and profits has been shares go to the education and technology,
projected while 28.8 percent growth projected social security and welfare programmes,
for indirect taxes (VAT, import duty, health promoting human resources
supplementary duty, and export duty) (Table development, and widening social safety net
10.2). (Table 10.4).
Among non-tax revenue sources, dividend A total of Taka 199.8 billion (development and
and profit has been projected to increase by non-development) has been allocated for the
67.7 percent compared to 31.0 percent agriculture sector, which is 10.3 percent
decrease in the preceding fiscal year.
higher than that of the revised budget of the
Receipts from administrative fees and
preceding fiscal year. Taka 90.0 billion has
charges, capital revenue, post offices, other
been allocated as subsidy for this sector.
non-tax revenue and receipts, rents, leases
and recoveries, fines, penalties and forfeiture, Human resources development is an integral
and services rendered are expected to rise by part of the overall development efforts. Taka
95
600.7 billion (development and non- grant) is estimated at Taka 866.6 billion,
development) has been allocated for the higher by Taka 103.6 billion than the revised
human resources development sector. This is budget for FY15. The projected budget deficit-
20.4 percent of the total development and GDP ratio for the FY16 is 5.0 percent which
non-development budget. equal to that in FY15. The deficit is expected
10.13 The Annual Development Programme to be financed with domestic banks and non-
(ADP) for FY16 has been projected at Taka bank borrowing to the extent of Taka 565.2
970.0 billion, 29.3 percent higher than the billion (3.3 percent of GDP) against Taka
revised ADP of Taka 750.0 billion in FY15. 547.1 billion (3.6 percent of GDP) in the
About 43.5 percent of the total ADP has been revised budget for FY15, and with external
allocated for infrastructure sector. On the financing to the tune of Taka 243.3 billion (1.4
other hand, social sector will get 17.0 percent percent of GDP) in FY16 against Taka 159.1
of the total ADP (Table 10.5). billion (1.1 percent of GDP) in FY15 (Charts
10.3 and 10.4). In total domestic borrowing of
B.3. Deficit in FY16 Budget and its Financing
Taka 565.2 billion, borrowing from the banking
10.14 The FY16 budget deficit (excluding system is projected to be Taka 385.2 billion.
96
Chapter-11
External Sector
External Trade and the Balance of Chart 11.1 Key indicators of external sector
Payments - the Overall Situation Current account balance
4
11.1 The current account surpluses as 3
Percent of GDP
2
observed in FY13 and FY14 changed into 1
deficit in FY15. To be more precise, the 0
-1
current account deficit in FY15 was USD 1645 -2
million whereas the current account surpluses -3
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
were USD 1406 million in FY14 and USD
2388 million in FY13. The shift of current
account balance from a surplus to a deficit External debt/GDP ratio
was attributable chiefly to an increase in the 28
25
trade deficit, with a lesser contribution of
Percent
22
balance of service account. 19
16
The capital and financial accounts recorded 13
respective surpluses of USD 483 million and 10
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
USD 5308 million in FY15. Within the financial
account, FDI inflows of USD 1830 million and
Taka-Dollar exchange rate and REER
portfolio investment of USD 618 million
90 135
130
complemented the inflow of USD 2860 million 85 125
120
Exchange rate
for other investments. In FY15, overall 80 115 REER Index

110
balance recorded a surplus of USD 4373 75 105
100
million in FY15 compared to USD 5483 million 70 95
90
65 85
in FY14 and USD 5128 million in FY13.
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Foreign exchange reserve as of end of FY15

Exchange rate REER
stood at USD 25 billion. Trends of some major
external sector indicators are shown in Import covered by reserves
8
Chart 11.1. 7
6
11.2 Merchandise exports (fob) increased
No. of months
5
by USD 991 million (or 3.3 percent) in FY15 to 4
3
USD 30768.0 million (Appendix 3, Table XVI). 2
Despite negative growth of petroleum by- 1
0
product, tea, leather and leather products, raw
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
jute and frozen shrimp & fish, exports of
97
Chapter-11 External Sector
footwear, engineering products and chemical percentage of GDP stood at -0.84 in FY15
products contributed significantly to increase against 0.81 in FY14. Table XVI of Appendix-3
the growth of merchandise exports in FY15 of this Report shows the balance of payments
over FY14. The export of miscellaneous statement from FY09 to FY15. Chart 11.2
products, subsumed under the "others" portrays the trends of trade, current account
category showed a negative growth of 0.6 and overall balances as a percentage of GDP
percent in value terms during FY15. However, in recent years.
as a percentage of GDP, exports decreased
11.5 As a potential source of foreign
by 1.4 percentage point from 17.2 percent in
exchange reserves, foreign direct investment
FY14 to 15.8 percent in FY15.
(FDI) has been emphasised by the
11.3 Merchandise imports (fob) increased Government. Due to a number of perennial
by USD 4114 million (11.3 percent) in FY15 to problems including political unrest, a notable
USD 40685 million (Appendix 3, Table XVI). success in this regard is yet to be seen.
Imports of food grain, spices, pulses, crude According to the primary estimation, net FDI
petroleum, fertiliser, etc. grew significantly inflow in Bangladesh increased by 24.1
while imports of pharmaceutical products, oil percent to USD 1830 million in FY15 from
seeds and sugar, etc. declined in FY15. USD 1474 million in FY14.
Imports (fob) as a percentage of GDP
decreased by 0.3 percentage point from 21.2 Exports
percent in FY14 to 20.9 percent in FY15. 11.6 Table 11.1 shows that total exports in
11.4 Significant growth of gross imports FY15 had a low growth over FY14. Aggregate
along with slight export growth led to a higher exports increased by 3.4 percent in FY15 to
trade deficit during FY15 compared with USD 31208.9 million from USD 30186.6
FY14. Trade deficit widened from USD 6794 million in FY14. Apparels (woven garments
million in FY14 to USD 9917 million in FY15. and knitwear products) continued to occupy
The deficit on the services account, however, an overwhelming (above four fifths) share of
widened significantly by USD 529.0 million the export basket in FY15.
(12.9 percent) to USD 4628.0 million in FY15 Destination
from USD 4099 million in FY14. The deficit of
primary income accounts also widened 11.7 The destination pattern of exports
significantly by 13.7 percent to USD 2995.0 excluding those from EPZs in FY15 showed
million in FY15 from USD 2635 million in the continued heavy dependence on the
FY14. Secondary income increased (6.4 markets in Europe, 54.6 percent of exports
percent) from USD 14934 million in FY14 to were destined for the EU bloc while another
USD 15894 million in FY15. Workers' 22.3 percent entered into the NAFTA bloc.
remittances recorded 7.5 percent increase in Export to the ASEAN countries was 1.5
FY15. The net outcome of all these was a percent, SAARC and other regions
current account deficit in FY15 as mentioned constituted 2.1 and 19.5 percent respectively
earlier. Current account balance as a of total exports in FY15 (Chart 11.3).
98
External Sector Chapter-11
Composition Chart 11.2 Trends of trade, current account

and overall balances
11.8 Readymade garments (woven and
4
knitwear): Woven and knitwear products, 3
2
which fetch about 81.7 percent of total export 1
Percent of GDP
0
earnings, registered a high increase in -1
-2
receipts from USD 24491.9 million in FY14 to -3
-4
USD 25491.4 million in FY15. Woven and -5
Knitwear products showed the growth of 5.0 -6
-7
percent and 3.1 percent respectively in FY15 -8
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
compared to FY14.
Trade balance Current account balance
11.9 Leather: Export earnings from Overall balance
leather and leather products decreased by

13.3 percent to USD 646.7 million in FY15 Chart-11.3 Destinational pattern of
from USD 745.6 million in FY14. exports in FY15
EU
11.10 Frozen food: The frozen foods Others 54.6%
sector comprising mainly of shrimps 19.5%
registered a decrease in earnings during

FY15. Receipt from export of shrimp and fish
decreased by 7.3 percent from USD 602.6 SAARC
2.1%
million in FY14 to USD 558.8 million in FY15.
11.11 Footwear: Export earnings from ASEAN

NAFTA
22.3%
footwear products increased by 22.4 percent 1.5%
to USD 673.3 million in FY15 from USD 550.1

million in FY14.
Table 11.1 Composition of merchandise exports
11.12 Jute goods (excluding carpets): In (million US Dollar)
Items FY14 FY15 % change
FY15, jute products valued at USD 757.0 1) Raw jute 126.4 111.6 -11.7
million was exported against USD 698.1 2) Jute goods 698.1 757.0 8.4
3) Tea 3.7 2.6 -29.1
million in FY14. 4) Leather and leather products 745.6 646.7 -13.3
5) Frozen shrimps and fish 602.6 558.8 -7.3
11.13 Raw jute: In FY15, raw jute valued 6) Woven garments 12442.1 13064.6 5.0
at USD 111.6 million was exported against 7) Knitwear products 12049.8 12426.8 3.1
8) Chemical products 93.2 111.9 20.1
USD 126.4 million in FY14. 9) Petroleum by-product 162.3 77.6 -52.2
10) Engineering products 366.6 447.0 21.9
11.14 Chemical products: Export 11) Specialised textiles 108.8 107.0 -1.6
earnings from chemical products increased by 12) Footwear 550.1 673.3 22.4
13) Others 2237.3 2224.0 -0.6
20.1 percent to USD 111.9 million in FY15
Total: 30186.6 31208.9 3.4
against USD 93.2 million in FY14. Source: Export promotion bureau.
99
11.15 Tea: Tea valued at USD 2.6 million present, maximum USD 15.00 million is
was exported in FY15 against USD 3.7 million allowed to a single party except accessories &
in FY14. packaging and plastic goods manufacturer
exporter. However, this limit is maximum USD
Export Development Fund
2.00 million for accessories and packaging
11.16 The Export Development Fund and 1.00 million for plastic goods
(EDF) commenced its operation in 1989 with manufacturers.
the participation of International Development
The interest rate on EDF financing facilities is
Association (IDA) and Government of
six month LIBOR+2.5 percent. Out of that,
Bangladesh (GOB) having an initial fund
Bangladesh Bank's portion is LIBOR+ 1
amounting to USD 30.16 million to provide
foreign exchange refinance facilities to boost percent and the rest of 1.5 percent is shared
up export sector. As export posted a by commercial banks.
significant growth, the volume of the EDF fund In general, the reimbursement from the EDF
was enhanced by Bangladesh Bank from time is initially made for a tenor of 180 days with a
to time. In May 2015, the fund was enhanced provision for further extension of 90 days, if
to USD 2000 million from USD 1500 million to required for delay in repatriation of related
meet the growing demand of the exporters. export proceeds of the exporter concerned.
Out of this total amount of USD 2000 million,
USD 1800 million will be used for short term On revolving basis, the total disbursement
refinancing and the rest USD 200 million is from EDF in FY15 stood at USD 3.55 billion
set aside for long term financing programme compared to USD 2.49 billion in FY14. The
which will be used with the proposed funding outstanding balance at the end of June 2015
facilities extended by the IDA under Financial stood at USD 1.64 billion which was USD
Sector Support Programme (FSSP). 1.35 billion in the previous year.
The exporters avail of EDF loan for input Imports

imports against export LC/firm export 11.17 Import payments (fob) in FY15 stood
contract/inland back to back L/C through at USD 40685 million (Table 11.2) registering
Authorised Dealer (AD) banks. The EDF a positive growth of 11.2 percent compared to
refinancing does not have any sort of
USD 36571 million in FY14. Except raw
restriction to a particular sector rather it is
cotton, oil seeds, sugar and milk & cream, all
allowed to almost all sectors of exports. At
other importable items indulge varying
present, exporters of textile, garments,
degrees of increase in the aggregate imports
accessories/packaging materials, plastic
during FY15 over FY14. Import of food grain
goods, leather goods & footwear, ceramic
recorded significant growth of 64.5 percent in
wares, dyed yarn, agro-food processing,
FY15 mainly due to rise in rice import. Import
bicycle, etc. are availing of EDF refinancing
payment for food grains stood at USD 1490.7
facilities.
million in FY15 compared to USD 906.2
A borrower-wise maximum exposure limit is million in FY14 (rice 394.3 percent and wheat
followed to streamline the credit discipline. At 22.3 percent). Import of other food items'
100
Box 11.1
Appreciation Pressure of Taka and Its Impact on Trade
Exchange rate in Bangladesh has been

Chart 1 : Export and import growth and
determined through the demand and supply
changes in exchange rate
of the foreign currency since 30 May 2003.
30 0.3
Appreciation(+)/Depreciation(-)
An appreciation of exchange rate
20 0.2
accelerates imports, deteriorates exports
of Taka (in percent)

Growth (in percent)
10 0.1
and thus widens trade deficits. Recently in 0 0.0
Bangladesh, exchange rate was somewhat -10 -0.1

-20 -0.2
an appreciating trend from January 2014 to
-30 -0.3
September 2014, thereafter depreciating -40 -0.4
trend up to January 2015 and remained -50 -0.5
Apr -14
Jun -14
Oct -14
Apr -15
Jun -15
Jul -14
May -14
May -15
Feb -14
Mar -14
Aug -14
Sep -14
Nov -14
Dec -14
Feb -15
Mar -15
Jan -14
Jan -15
stable from March 2015 to June 2015 with
a further appreciation in February 2015
Import growth Export growth
(Chart 1).
Changes in exchange rate (in percent)
During this period balance of trade

responded negatively with the variations in
Chart 2 : Monthly trade deficit and
exchange rate. It was found that trade deficit
changes in exchange rate
was widening over the months while
2000 0.3
exchange rate was appreciating and reached
Appreciation(+)\Depriciation(-)
1800 0.2
1600 0.1
its highest level-USD 1801 million in
of Taka (in percent)

1400 0.0
September 2014 from a lower level-USD 652 1200 - 0.1
million USD
1000 - 0.2
million in January 2014 (Chart 2). Trade
800 - 0.3
deficit was narrowing thereafter as exchange 600 - 0.4
400 - 0.5
rate was depreciating and being stable and it
200 - 0.6
stood at USD 1205 million in June 2015. In 0 - 0.7
Oct -14
Mar -14
Dec -14
Mar -15
Jan -14
Apr -14
Aug -14
Jun -14
Jan -15
Apr -15
Jun -15
Jul -14
May -14
May -15
Feb -14
Sep -14
Nov -14
Feb -15
FY15, current account remained negative

due mainly to the wider trade deficit
originated from fluctuations in exchange rate. Trade Deficit
Changes in exchange rate (in percent)
Therefore, stabilisation of exchange rate is
essential in Bangladesh in order to boost
exports and reduce trade deficit. But, exchange rate alone cannot be considered as a main factor in
determination of international trade; other factors like external competitiveness, damping policies by
external competitors, multilateral agreements on trade, disturbances at internal and external sectors,
etc. should be considered as well.
101
decreased by 3.2 percent to USD 4800.1 Chart 11.4 Import growth

million in FY15 from USD 4958.0 million in
40
FY14. Except positive growth of spices (70.5
30
percent) and pulses (36.3 percent) all other
Percent
20
items showed the negative growth. Consumer
10
and intermediate goods increased by 13.6
percent to USD 22514.4 million in FY15 from 0
USD 19823.3 million in FY14 (crude -10
FY12
FY13
FY14
FY15
petroleum 337.1 percent, fertiliser 42.3, POL
40.7 percent, plastic & rubber article thereof
12.6 percent, tanning and dyeing extracts Table 11.2 Composition of merchandise
10.3 percent, etc.). All the items of capital imports payment (million US Dollar)
goods and others category registered growth Items FY14 FY15p % change
A. Food grains 906.2 1490.7 64.5
of 9.8 percent to USD 16385.0 million in FY15
1. Rice 102.8 508.1 394.3
from USD 14928.9 million in FY14 (capital
2. Wheat 803.4 982.6 22.3
machinery 17.8 percent, iron, steel & other B. Other food items 4958.0 4800.1 -3.2
base metal 12.6 percent and others 6.4 1. Milk & cream 280.3 277.2 -1.1
percent). Imports by EPZ increased by 2.0 2. Spices 107.0 182.4 70.5
percent to USD 3138.1 million in FY15 3. Oil seeds 453.6 374.0 -17.5
4. Edible oil 2946.3 2743.5 -6.9
compared to USD 3077.0 million in FY14.
5. Pulses (all sorts) 318.6 434.3 36.3
Terms of Trade 6. Sugar 852.2 788.7 -7.5
C. Consumer and intermediate goods 19823.3 22514.4 13.6
11.18 The terms of trade was 86.05 in 1. Clinker 633.2 638.4 0.8
FY15 compared to 85.89 in FY14 (base year 2. Crude petroleum 72.3 316.0 337.1
FY06=100). Both the export price index and 3. POL 3371.5 4742.5 40.7
import price index increased by 6.0 percent 4. Chemical 1577.5 1723.7 9.3
5. Pharmaceutical products 210.8 136.9 -35.1
and 5.8 percent respectively during the year
6. Fertiliser 940.9 1338.9 42.3
(Chart 11.5).
7. Tanning & dyeing extracts 543.1 599.0 10.3
Bilateral and Multilateral Relations 8. Plastics & rubber articles thereof 1822.2 2052.3 12.6
9. Raw cotton 2464.3 2295.5 -6.8
11.19 Bangladesh continued strengthening 10. Yarn 1816.9 1851.2 1.9
its foreign trade ties in FY15 through bilateral, 11.Textile & articles thereof 5360.5 5742.0 7.1
regional and multilateral negotiations and 12. Staple fibre 1010.1 1078.0 6.7
D. Capital goods and others 14928.9 16385.0 9.8
agreements. Bangladesh participated in a
1. Iron, steel & other base metal 2899.4 3265.0 12.6
number of key negotiations with a view to
2. Capital machinery 2819.1 3320.5 17.8
protecting the country's trade and economic 3. Others 9210.4 9799.5 6.4
interests. E. Imports by EPZ 3077.0 3138.1 2.0
Total import (cif) 40616.4 45190.2 11.3
11.20 The 144th BIMSTEC Working Group Total import (fob) 36571.0 40685.0 11.2
(BWG) Meeting was held at BIMSTEC P = Provisional.
Source : Compiled by Statistics Department, BB using data of NBR.
Secretariat, Dhaka, on 14 September 2015.
102
Delegations led by respective High Table 11.3 Terms of trade of Bangladesh

Commissioners/Ambassadors in Dhaka from
(Base: FY06=100)
Myanmar, Nepal, Sri Lanka and Thailand as Export price Import price Commodity
Year
well as the Secretary General of BIMSTEC index index terms of trade
participated at the meeting. The intra-regional

FY07 104.85 103.64 101.17
trade and investment under the BIMSTEC
FY08 116.34 131.42 88.53
FTA would be a concrete benchmark.
FY09 125.13 140.35 89.16
Workers' Remittances FY10 132.64 148.32 89.43
FY11 146.41 166.51 87.93

11.21 The flow of inward remittances from
FY12 151.71 176.44 85.98
Bangladeshi nationals working abroad
FY13 163.04 189.62 85.98
regained its growth in FY15 and played an
FY14 172.09 200.37 85.89
important role to increase foreign exchange
FY15 182.34 211.91 86.05
reserve and strengthening the current account
balance of the country. Receipts from this
sector increased by 7.7 percent from USD
14228.31 million in FY14 to USD 15316.92 Chart 11.5 Terms of trade
million in FY15 (Appendix-3 Table-XXII). 300
Bangladesh Bank has been trying 250
continuously to simplify the remittance
200
distribution networks including easing
Index
150
approval policy of drawing arrangements
between foreign exchange houses abroad 100
and domestic banks. As a result, 39 banks 50

have been granted permission to establish
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
more than 1200 drawing arrangements with
Export price index
more than 320 exchange houses all over the Import price index Commodity terms of trade
world for collecting remittances. Some banks

have already established 34 exchange
houses/ subsidiaries abroad to collect Multinational Money Remitters/ Exchange
remittances by their own. Houses to avoid "Pay Cash Exclusivity
Clause" or any other such clauses. The share
Some Micro Finance Institutions (MFIs) have
of major source countries in the remittance
been involved for smooth delivery of inward
receipt of FY14 and FY15 are given in Chart
remittances. Till 30 June 2015, 27 MFIs were
11.6a and 11.6b.
allowed to perform the job of remittance
distribution through their branches in remote Foreign Aid
areas.
11.22 Total official foreign aid disbursement
To increase the competition among the money decreased by 3.62 percent to USD 3009
transmitters, commercial banks are always million in FY15 from USD 3122 million in
instructed to make the contracts with FY14 (Table 11.4). Food aid disbursements
103
stood at USD 38 million in FY15 which was Table 11.4 Foreign aid receipts and debt repayments*
the same in FY14. The disbursement of (million US Dollar)
Particulars FY13 FY14R FY15p
project assistance stood at USD 2972 million
1. Receipts 2811 3122 3009
in FY15, which was USD 3047 million in i) Food aid 50 38 38
FY14. It is mentionable that no commodity aid ii) Commodity aid - - -
was received in FY15 as in the preceding iii) Project aid 2761 3047 2972
2. Repayments (MLT) 1102 1294 1106
year. Total outstanding official external debt as
i) Principal 906 1088 924
of 30 June 2015 was USD 23489 million (12.1
ii) Interest 196 206 182
percent of GDP in FY15) against USD 24388 3. Outstanding external debt
million as on 30 June 2014 (14.1 percent of as of end June 22381 24388 23489
GDP in FY14). Repayment of official external 4. Outstanding debt as

percentage of GDP 14.9 14.1 12.1
debt was USD 1106 million (excluding
5. External debt services (MLT)
repurchases from the IMF) in FY15, which as percentage of exports 4.2 4.1 3.6
was USD 188 million or 14.53 percent less P=Provisional, R=Revised.
than the repayment of USD 1294 million in *Excluding transactions with the IMF.
Source: Ministry of Finance.
FY14. Out of the total repayments, principal
payments amounted to USD 924 million while
Chart 11.6a Wage earners' remittances
interest payments was USD 182 million in
in FY14
FY15, against USD 1088 million and USD 206 Other KSA
countries 21.9%
million respectively during FY14. The debt- 28.8%
service ratio as percentage of exports was 3.6

percent in FY15. UK
6.3%
Foreign Exchange Market Operations
11.23 Bangladesh Bank introduced floating USA UAE

16.3% Kuwait
18.9%
exchange rate in May 2003 allowing the 7.8%
market to determine the exchange rate for

inter-bank and customer transactions. The
local foreign exchange market of the country Chart 11.6b Wage earners' remittances
in FY15
remained fairly liquid throughout FY15 mainly
Other
countries KSA
because of growth of export receipts and 31.8% 21.8%
wage earners remittances for the said period.

At the end of June 2015, exchange rate of UK
5.3%
Bangladesh Taka against US dollar stood at
Taka 77.80, which posted a depreciation of
0.22 percentage point from Taka 77.63 at the USA
15.5% UAE
end of June of 2014, indicating a reasonably Kuwait 18.5%
7.1%
stable exchange rate.
104
In FY15, the volume of inter-bank foreign Table 11.5 Gross foreign exchange reserves
exchange transactions was amounting to of the Bangladesh Bank
equivalent USD 19.5 billion including spot,
(End month, million USD)
forward, swap transactions, which was around Months FY11 FY12 FY13 FY14 FY15
13.37 percent higher than USD 17.2 billion in July 10749 10381 10570 15534 21384
FY14. Bangladesh Bank purchased a total of August 10992 10914 11435 16252 22070
USD 3.4 billion from local inter-bank foreign September 10834 9884 11252 16155 21837
exchange market to absorb excess liquidity as October 11160 10338 12340 17346 22313
well as keeping the foreign exchange market November 10700 9285 11754 17106 21590
stable against USD 5.2 billion in the preceding December 11174 9635 12751 18095 22310
fiscal year. January 10382 9386 13077 18119 22042
February 11159 10067 13848 19151 23032

Foreign Exchange Reserves
March 10731 9579 13971 19295 23053
11.24 The gross foreign exchange reserves April 11316 10193 14829 20370 24072
held by Bangladesh Bank comprises foreign May 10431 9520 14531 20268 23708
exchange, holdings of gold, and Special June 10912 10364 15315 21508 25026
Drawing Rights (SDR). Foreign exchange Source: Accounts and Budgeting Department, BB.
reserves grew steadily over FY15, which

crossed USD 25 billion mark on 25 June Chart 11.7 Liquid foreign exchange
2015. At the end of FY15, reserves stood at holdings abroad
30000
USD 25.02 billion. Bangladesh Bank affords
25000
best efforts to maintain optimum return from 20000
Million USD
foreign exchange reserve investment by 15000

diversifying the foreign asset portfolio in 10000
bonds (issued by sovereign, supranational 5000

0
and highly reputed foreign commercial
Feb. 15
Aug. 14
Sep. 14
Jan. 15
July 14
Oct. 14
Mar. 15
Nov. 14
Dec. 14
Apr. 15
May 15
June 15
banks), Treasury Bills and Treasury Notes of

US Government and in short term deposits Bangladesh bank Commercial banks
with internationally reputed foreign
commercial banks. policy framework are: monetary policy, the
exchange rate policy regime and external
Reserve Management Strategy
debt position. After introduction of the floating
11.25 Bangladesh Bank's reserve exchange rate regime in May 2003, BB has
management strategy and operational brought about significant changes in the
procedures are influenced strongly by monetary management in relation to its
developments in both the domestic & reserve management mechanism, which are
international financial markets as well as aligned with the best international practices.
various key aspects of the macroeconomic Currently reserve management operations are
policy stances. The most relevant elements of carried out following the Reserve
105
Management Guidelines approved by the Table 11.6 Receipts and payments of

Board of Directors of Bangladesh Bank. Main Bangladesh under the ACU
(million US Dollar)
objectives of the BB for holding foreign
Head of transaction FY13 FY14 FY15 % change
exchange reserves are to ensure adequate
1. Receipts (Export) 161.10 79.74 115.46 44.83
level of reserves to cover imbalances in the (12.53) (6.19) (8.99)
balance of payment, to maintain confidence in 2. Payments(Import) 4419.54 5706.90 5748.87 0.73
(343.66) (443.03) (442.76)
the external value of Taka, and also as a store Net: Surplus (+)/ -4258.44 -5627.16 -5633.38 0.11
of value to protect the economic well-being of Deficit (-) (-331.13) (-436.84) (-438.28)
Note: Figures in parentheses indicate Taka in billion.
the country. Other integral parts of reserve 1 ACUD = 1 USD; 1 USD = 77.80 Taka.
management are: to meet foreign debt

obligations, ensuring liquidity of reserves for Table 11.7 Outstanding principal liabilities
against the facilities received
the purpose of exchange rate management,
from the IMF
stimulating exports and growth, minimising (million SDR)
exchange rate volatility and finally, managing Amount Outstanding Instalment Outstanding
risks prudently to preserve the nominal value Facility drawn/ principal repayment principal
purchased liability in FY15 liability
of the reserves and ensuring optimum return. up to as of end as of end
June 2015 June 2014 June 2015
To contain counter party risk at minimum, BB
has invested its reserves with a number of PRGF 316.73 68.86 38.60 30.25
June 2003
internationally reputed central and commercial
banks having strong credit ratings assigned ECF 457.11 457.11 -- 457.11
by the international rating agencies (Standard April 2012
and Poor's, Moody's & Fitch). With a view to Total : 773.84 525.97 38.60 487.36
minimising exchange rate risk and ensuring
Source: Forex Reserve and Treasury Management Department, BB.
the value of reserves, currency composition
has been diversified among the major & credit risk limits, BB has diversified its
currencies and is being reviewed periodically portfolio investments into gold, T-bills, repos,
to keep pace with the developments in the short-term deposits, and high-rated sovereign,
monetary and exchange rate policy of supranational, and corporate bonds.
international arena. Investment duration and Bangladesh Bank has been maintaining a
currency benchmark as set out in the Reserve prudent and vigilant approach regarding
Management Guidelines are carefully placement of funds in banks and investments
followed to minimise interest rate risks, while in securities of countries affected by Euro
reserve management and investment debt crisis.
functions have been segregated among three
Transactions under Asian Clearing Union
independent reporting units viz., Front Office,
(ACU)
Middle Office and Back Office to mitigate
operational risks. However, in keeping with 11.26 Total transactions of Bangladesh
the stipulated liquidity restrictions and market under the Asian Clearing Union (ACU) during
106
FY15 increased slightly in terms of net volume Changes in Foreign Exchange Regulations
compared with the preceding year. Receipts
11.28 Bangladesh Bank in its ongoing
significantly increased from ACUD 79.7 million
endeavor to ease the foreign exchange
(Taka 6.19 billion) to ACUD 115.5 million
regulations embarked upon the following
(Taka 8.99 billion) and import payments
notable changes on exchange arrangements
slightly increased from ACUD 5706.9 million
during FY15.
(Taka 443.03 billion) to ACUD 5748.9 million
(Taka 447.26 billion) with the ACU member Remittance against purchase of
countries during FY15. The ACU transaction software through e-Delivery: To ease
scenario shows that the overall position of purchase of software from abroad
Bangladesh remained a net debtor during through e-Delivery, it has been decided
FY15. The debtor position of Bangladesh that ADs may be affected remittance
increased by ACUD 6.2 million or 0.11 percent against purchase of software through e-
to ACUD 5633.4 million (Taka 438.28 billion) Delivery subject to observance of some
in FY15 compared to ACUD 5627.2 million conditions including obtaining certificate
(Taka 436.84 billion) in the preceding year. issued by Bangladesh Association of
Receipts and payments of Bangladesh under Software and Information Services

(BASIS) to the effect that the purchase of
ACU arrangement during the last three years
software is genuine and sourced from
are shown in Table 11.6.
reliable supplier, payment to duties/taxes
Transactions with the IMF as per assessment of National Board of
11.27 The IMF Executive Board approved a Revenue, observing due diligence and
three-year arrangement for Bangladesh under complying with AML/CFT regulations in
the Extended Credit Facility (ECF) in April respect of the transactions, etc.
2012. A total amount of SDR 640.0 million is Releasable foreign currency amount
to be disbursed in seven equal installments in cash USD: Releasable foreign
under the facility. However, the IMF did not currency amount in cash USD for
release any installment of ECF in FY15 while outgoing Bangladeshi residents has been
the outstanding principal liabilities of ECF increased from USD 3,000 to USD 5,000
stood at SDR 457.11 million as on 30 June per person per trip from their annual
2015. Under the PRGF loan facility, entitlement applicable for personal travel
Bangladesh repaid a total amount of SDR quota/business travel quota/ treatment
38.60 million in FY15 and the outstanding abroad/ immigration/ higher education or
principal liabilities to the IMF under PRGF other special or general approved
stood at SDR 30.25 million at the end of purposes. The remainder or full amount
FY15. The total service charges paid to the of quota can be released in other freely
IMF during FY15 amounted to SDR 0.32 convertible foreign currencies in cash or
million (Table 11.7). in international cards.
107
Submission of return to Bangladesh account holders for permissible

Bank: In order to bring about further procurement of goods and services from
ease in the routine reporting to abroad.
Bangladesh Bank under the broad
Anti-money Laundering Surveillance
spectrum of foreign exchange
liberalisation, it has now been decided 11.29 Bangladesh Financial Intelligence
that ADs are no longer required to submit Unit (BFIU) took various initiatives and steps
documents in support of outward to prevent money laundering and financing of
remittances that have been approved terrorism throughout the country in FY15.
earlier by Bangladesh Bank [in terms of Reporting Agencies and their Regulatory
paragraph 1(i), chapter 5 of GFET, Vol-1]. Regime
ADs shall quote approval numbers on TM
forms and submit the same with relevant BFIU issued circulars for the scheduled
schedules. banks and financial institutions for proper
compliance of the instructions regarding
Repatriation of sales proceeds of non- prevention of Money Laundering (ML) &
resident owned equity in unlisted Terrorist Financing (TF) on 28/12/2014
companies purchased by residents: and 29/06/2015 respectively.
For the purpose of repatriation of sales
proceeds on non-resident owned equity BFIU circulated Money Laundering and
in unlisted companies, BB would accept Terrorist Financing Risk Assessment

Guidelines for Banking Sector on
fair value of the share as on the date
08/01/2015 instructing all the banks to
based on appropriate combination of
assess the associated risk of ML/TF
three valuation methods: net asset value
regarding their respective banks.
approach, market value approach, and
Meanwhile all the scheduled banks
discounted cash flow approach
submitted their own risk assessment
depending on the nature of the company.
report and BFIU vetted the same.
Earlier, the decisions were based on only
fair value approach. Receiving Suspicious Transaction Report
(STR) and dissemination of the same
Transactions in non-resident Taka
accounts: Subject to approval/reporting BFIU received 1182 Suspicious
requirements [in form A-7], BB has Transaction Reports (STRs) during
allowed debits to balances in Non- FY15. After analysing them, BFIU
resident Taka Accounts (NRTA) for disseminated 67 reports to Anti-
outward remittances towards (i) Corruption Commission (ACC) and
subsistence expenses of individual Criminal Investigation Department (CID),
account holders and their family member Bangladesh Police for their necessary
in their country of residence and (ii) actions. BFIU has been monitoring the
current payment abroad by institutional status of these cases from time to time.
108
Initiatives Taken for Strengthening BFIU NGO/NPO sector. The detailed report is
currently under review process and will
BFIU has started to use the National ID
be made public very soon.
card database of Election Commission
(EC) to verify the authenticity of the ID International Cooperation and Initiatives
card in its analysis process. Currently
Bangladesh Financial Intelligence Unit
BFIU has taken initiatives to get access
has signed 35 (till June 2015)
to birth and death registration database,
Memorandum of Understanding (MoU)
and passport database.
so far to exchange of information related
BFIU has started to use the database of to ML/TF with other FIUs, among them
Credit Information Bureau (CIB), nine MoU were signed in FY15 (Vietnam,
Bangladesh Automated Clearing House Morocco, Bahrain, Brunei-Darus Salam,
(BACH) and Dash Board of Bangladesh Russia, Fizi, Kyrgizstan, Panama and
Bank (import, export, travel and Barbados).
miscellaneous and inward remittance) in
BFIU has been nominated as the Regional
its analysis process.
Representative (RR) for 25 countries in
National Initiatives Asia Pacific Region of EGMONT Group
on 29 January 2015. The decision was
A high level committee headed by the
taken at the meeting of Egmont
Head of BFIU and Deputy Governor of
Committee (EC) and Working Group
Bangladesh Bank has formulated the
(WG) Meetings and Regional Meetings
National Strategy for Preventing Money
and Head of FIUs and Observers
Laundering and Combating Financing of
Intercessional Meeting held during 25-30
Terrorism 2015-2017 which has been
January 2015 in Berlin, Germany. BFIU
approved by the National Coordination
will perform the role of RR for the term of
Committee (NCC) on AML/CFT.
January 2015 to June 2017. As the RR of
BFIU, NGO Affairs Bureau, Microcredit the Asia Pacific Region, BFIU will co-
Regulatory Authority and Department of ordinate the respective issues of Egmont
Social Services, Goverment of Committee (EC) and Working Group
Bangladesh are currently working on the (WG) with the member FIUs of the
ML/TF risk assessment regarding the region.
109
Chapter-12
Payment and Settlement Systems
12.1 Payment and settlement system cash payment instruments, credit and debit
consists of a set of physical & electronic cards, and ATM transactions have already
infrastructures with associated procedures for become popular in Bangladesh, especially in
the transfer and settlement of financial the urban areas.
obligations arising from the exchange of
Bangladesh Automated Cheque
goods and services. It facilitates the central
Processing System (BACPS)
bank for conducting efficient monetary policy
by using market-based instruments to achieve 12.4 Bangladesh Automated Cheque
its objectives. Processing System (BACPS) started its live
operation on 7 October 2010 for developing
12.2 Bangladesh, Payment Systems
an electronic payment system in the country.
Department (PSD) of Bangladesh Bank (BB)
Later, electronic funds transfer, e-commerce,
has been working to develop payment
mobile financial services and m-commerce
systems strategy, automated cheque
joined the system for further modernisition of
processing system, electronic funds transfer,
the payment and settlement systems as set in
national payment switch, mobile financial
the strategy. These payment platforms are
services, agent banking, e-commerce, m-
briefly described in the following sections.
commerce and legal & regulatory framework.
It aspires to modernise country's payment
system to make it safe and efficient matching
12.5 Bangladesh Automated Clearing
the international standards enabling faster
House (BACH) has two components-the
economic growth and access to financial
automated cheque processing system and the
service to all citizens of Bangladesh.
electronic funds transfer system. Both
12.3 The traditional paper based payment systems operate in batch processing mode-
system was semi-automated, time consuming transactions received from the banks during
and prone to many risks. The system was not the day are processed at a pre-fixed time and
at par with international best practices. Four settled through a single multilateral netting
payment and settlement systems were in figure on each individual bank's respective
operation in Bangladesh prior to 7 October books maintained with the Bangladesh Bank.
2010. The instruments like cheques, bank A virtual private network (VPN) has been
drafts, pay orders, dividend & refund established between the participating
warrants, etc. were being cleared through the commercial banks and Data Centre (DC) and
manual clearing houses. Apart from such non- Disaster Recovery Site (DRS) for
110
Payment and Settlement Systems Chapter-12
communicating necessary information related Chart 12.1 No. of regular value instruments cleared
to BACH. Digital Certificate has also been through BACPS & associated amount
formulated in Bangladesh for secured data 1,000 2,500
900
(No. of instruments
communication.
(in billion Taka)

Amount cleared
800 2,000
(in thousand)
700
600 1,500
12.6 BACPS uses the Cheque Imaging and 500
400 1,000
300
Truncation (CIT) technology for electronic 200 500
100
clearing of the paper-based instruments, i.e. 0 -
Oct -14
Apr -15
Feb -15
Mar -15
Aug -14
Sep -14
Nov -14
Dec -14
May -15
Jan -15
Jun -15
Jul -14
cheque, pay order, dividend & refund warrant,
etc. The system supports both intra-regional No. of instruments Amount cleared
and inter-regional clearing and is based on a
centralised processing centre located in Chart 12.2 No. of high value instruments cleared
Dhaka and in designated clearing regions. through BACPS and associated amount
The system conforms to the international best 1,000 180
900 160
practices and also represents the most cost
(No. of instruments
800 140
(in billion Taka)
Amount cleared
(in thousand)
700 120
effective solution for cheque processing 600
100
500
80
throughout the country. 400
60
300
200 40
100 20
12.7 At present around 1.90 million regular 0 Oct-14 -
Aug-14
Dec-14
Mar-15
Jan-15
Apr-15
Jun-15
Jul-14
May-15
Sep-14
Nov-14
Feb-15
and around 0.143 million high value cheques
and other instruments are cleared per month No. of instruments Amount cleared
through BACPS. Total amount of regular
value instruments cleared is approximately BEFTN becomes the faster and efficient
Taka 582 billion per month and for high value means of inter-bank clearing over the existing
instruments, the amount is approximately paper-based system i.e. BACPS. A wide
Taka 774 billion per month. The clearing cycle variety of credit transfers such as payroll,
has been brought down to t+0 for high value foreign and domestic remittances, social
cheques and t+1 for regular value cheques security, company dividends, retirement,
throughout the country. Chart 12.1 and Chart expense reimbursement, bill payments,
12.2 show the trends of instruments cleared corporate payments, Government tax
and associated amount of the regular and payments, veterans payments, Government
high value cheques respectively in FY15. licence fees and person to person payments
as well as debit transfers such as mortgage
Bangladesh Electronic Funds Transfer
payments, membership dues, loan payments,
Network (BEFTN)
insurance premiums, utility bill payments,
12.8 BEFTN started its 'Live Operation' on company cash concentration are settled
28 February 2011 with the objective to under the network. At present, 55
encourage paper less electronic payment Government agencies including Cabinet
methods for secured, faster and cost-effective Ministers' salaries are being distributed
transactions specially at the corporate levels. through EFT.
111
Chapter-12 Payment and Settlement Systems
12.9 Approximately 1.0 million EFT credit Chart 12.3 No. of EFT entries &
transactions and debit transactions are associated amount
processed per month with an increasing 90 1400
80 1200
trend. The amount of EFT credit and debit 70
(in billion Taka)

1000
(in thousand)
EFT amount
60
EFT entries
transactions are approximately Taka 62.75 50 800
40 600
billion per month. Chart 12.3 shows the trends 30
400
20
of EFT credit and debit entries and associated 10 200
0 0
amount respectively in FY15.
Oct -14
Apr -15
Feb -15
Mar -15
Aug -14
Sep -14
Nov -14
Dec -14
May -15
Jan -15
Jun -15
Jul -14
Mobile Financial Services (MFS)
EFT entries EFT amount
12.10 The rapid growth of mobile phone

users and countrywide coverage of mobile
Chart 12.4 Trends of inter-bank
operator's network have made their delivery transactions through ATM
channel an important tool-of-the-trade for No. of transaction (in Thousand)
700 4000
extending banking services to the 600 3500
Transaction amount
3000
(in million Taka)

500
unbanked/banked population, specially to 2500
400
expedite faster delivery of remittances across 2000
300
1500
the country. 200 1000
100 500
0 0
From legal and regulatory perspective, only
Sep -14
Dec -14
Oct -14
Apr -15
Jan-15
Feb -15
Mar -15
Jul-14
Aug -14
Nov -14
May-15
Jun-15
the bank-led model is allowed to operate in
Bangladesh. Table 12.1 lists the prevailing No. of transactions Transaction amount
status of MFS in Bangladesh. The approved
mobile financial services (in broad categories) Person to Government payments e.g. tax,
are as follows: levy payments, etc.
Disbursement of inward foreign Person to person payments (one
remittances. registered mobile account to another
Cash in/out using mobile account through registered mobile account).
agents/bank branches/ ATMs/mobile Other payments like microfinance,
operator's outlets. overdrawn facility, insurance premium,
DPS, etc.
Person to business payments e.g. utility
bill payments, merchant payments, etc. 12.11 Bangladesh Bank has fixed limits for
cash in and cash out minimum Taka 25000
Business to person payments e.g. salary
and maximum Taka 150000 respectively per
disbursement, dividend and refund
month as well as for P2P transaction limit is
warrant payments, vendor payments, etc.
Taka 10000 per day and Taka 25000 per
Government to person payments e.g. month. Bangladesh Post Office (BPO)
elderly allowances, freedom fighter introduced the 'post e-pay' service from 5
allowances, subsidies, etc. September 2011 with 1968 branches which
112
Payment and Settlement Systems Chapter-12
Box 12.1
Electronic Money
Electronic money is a digital equivalence of cash, stored on an electronic device or remotely at a

server. One common type of e-money is the 'electronic wallet', where users store relatively small
amounts of money on their payment cards or other smart cards, to use for making small payments.
But e-money can also be stored on (and used via) mobile phones or in a payment account on the
internet.
E-money is first introduced in Bangladesh for transport service with a card named Xpass. Even with
huge opportunity it was not successful due to lack of enough public awareness. Later commercial
banks introduced prepaid cards with stored value for certain brands/super shops. But the real thrust
came with the introduction of mobile financial services. DBBL mobile services and bkash changed
the e-money landscape of the country. Now 12.2 million account holders transact Taka 460.38 crore
everyday through 3.2 million transactions.
Bangladesh Bank encourages private sector to generate innovative idea to popularise electronic
money. i-Pay Limited and Aamra Boloro Bangladesh Limited are awarded licences to work as
payment systems operators. Hopefully these two electronic money providers will be in operation by
the end of this year.
BB is very keen to enable new, innovative and secure electronic money services to be designed, to
provide market access to new companies and to foster real and effective competition among all
market participants.
will gradually be launched in all branches Table 12.1 MFS status (as on June 2015)
(9,886) of the post office in phases with the No. of banks permitted 28
help of the mobile operators' countrywide
Started MFS operation 20
networks. Clients have to register themselves
Registered customers 28.64 million
with the post office to get the service.
Number of agents 0.53 million
e-Commerce Transactions (BDT) per day 4.32 billion
12.12 BB has issued directives for the

banks for starting e-commerce activities. Transactions via internet using credit
Permitted transactions are- cards in local currency.
Online payment of utility bills from clients' Since 11 March 2011, permission has been
accounts to recipients' accounts, given to transfer less than Taka 500,000 from
one client's account to another client's
Transfer of money within different account within the same bank using
accounts of a client in the same bank, internet/online facilities subject to the fact that
payment/collection of money from/to it will fully comply with prevailing money
buyer's bank account to seller's bank laundering prevention legislations and related
account for buy/sale of products, circulars.
113
Online Payment Gateway Service likely to join to NPSB. The number and
Providers (OPGSPs) volume of the interbank ATM transaction
through NPSB are growing rapidly. PSD is
12.13 In view of the growing role of the
also drafting some operating rules regarding
services provided by OPGSPs, authorised
NPSB system. Chart 12.4 shows the trends of
dealers (ADs) are now allowed to offer the
NPSB interbank ATM transaction number and
facility of repatriation of remittances against
associated amount till 30 June 2015.
small value service exports in non-physical
Bangladesh Bank is expecting bring POS
form such as data entry/data process, off-
transaction through NPSB very shortly.
shore IT service, business process
outsourcing, etc. The exporters of the above 12.16 Bangladesh Bank has taken initiative
services will be able to receive their overseas to establish Real Time Gross Settlement
payments through the OPGSPs such as (RTGS) with the financial support of Asian
Paypal, Money Bookers, Best Payment Development Bank (ADB) which will enable
Gateway and Virtual Pay online platforms. instant settlement of high value local currency
New Payment Systems Initiatives transactions as well as government securities
and foreign currency based transactions.
12.14 In order to fulfill the ever growing Bangladesh Bank expects to launch RTGS
demand for faster and efficient payment
within 2015.
Bangladesh Bank has taken a number of new
initiatives like National Payment Switch Legal & Regulatory Framework
(NPSB), Real Time Gross Settlement (RTGS). 12.17 BB has published a number of legal
12.15 Implementation of National Payment and regulatory documents to provide legal
Switch (NPS) has been started in order to and regulatory support for electronic transfer
facilitate inter-bank electronic payments of funds. Existing legal and regulatory
originating from different delivery channels framework of payment and settlement
e.g. Automated Teller Machines (ATM), Point systems of Bangladesh are mentioned below:
of Sales (POS), internet, mobile applications,
"Bangladesh Automated Cheque
etc. The main objective of NPSB is to facilitate
Processing Systems (BACPS) Operating
the expansion of the retail payment networks
Rules and Procedures" was published on
substantially and promote e-commerce
11 January 2010.
throughout the country.
"Guidelines on Mobile Financial Services
Online payment of Government dues through
for the Banks" was published on
internet will greatly be enhanced using NPSB.
September 2011.
NPSB has been launched as "soft go-live"
since 27 December 2012 and now inter-bank "Bangladesh Payment and Settlement
ATM transactions among 46 banks are being Systems Regulations (BPSSR), 2014"
routed through NPSB. Other banks are also was published on 15 May 2014.
114
"Bangladesh Electronic Funds Transfer Exchange Commission, Central Depository

Network (BEFTN) Operating Rules" was Bangladesh Limited, National Board of
published on 15 May 2014. Revenue, etc.
"Guidelines on Agent Banking for the 12.20 Electronic payment and settlement
Banks" was published on 09 December systems have already proved their potential
2013. by offering fast, secure and cost-effective
financial services. Specially, papers less EFT
12.18 In cooperation with World Bank (IFC-
transactions are gaining increasing popularity
BICF) BB has drafted Payment Systems Act
among the corporate bodies, stock exchange
and its finalisation is in process. members and industry alliances. The mobile
Awareness Raising Campaign financial services, m-commerce and e-
commerce are significantly changing the
12.19 Bangladesh Bank has taken a
financial services landscape of the country.
number of initiatives for raising awareness on NPSB will increase end-user centric electronic
the new electronic payment systems like payments and broaden the landscape for
automated cheque processing, electronic financial transactions in the country. These
funds transfer and mobile financial services. electronic modes of payment have already
BB has organised seminars and workshops improved operational efficiency, increased
for officials of all commercial banks, transaction frequency and brought stability
Government offices and industry alliances. and flexibility in all spheres of the financial
Besides, BB has been working to popularise market. Implementation of RTGS will result in
electronic funds transfer network among the an effective and efficient 'National Payment
stakeholders like Chambers of Commerce, and Settlement System' consistent with
Stock Exchanges, Bangladesh Security and international standard.
115
Chapter-13
Administration
Appointment of New Directors in the Board Dr. Mustafa Kamal Mujeri Convener
Prof. Hannana Begum Member
13.1 Mr. Mahbub Ahmed and Mr. Md.
Mr. Md. Ghulam Hussain Member
Nojibur Rahman were appointed as Director
Dr. M Aslam Alam Member
of the Board in place of Mr. Fazle Kabir and Mr. Md. Nojibur Rahman* Member
Mr. Md. Ghulam Hussain with effect from 27
*= Mr. Md. Nojibur Rahman was appointed as member of
July 2014 and 25 January 2015 respectively. the Audit Committee in place of Mr. Md. Ghulam Hussain
with effect from 5 March 2015.
A total of eight meetings of the Board of
Directors were held during FY15. Mr. Aminur Rahman Chowdhury, FCA was
appointed as a non-executive financial
Executive Committee advisor to the Audit Committee on 9 June
2015 in place of Dr. Jamaluddin Ahmed, FCA
13.2 Under section 12(1) of Bangladesh
to assist the Committee on issues related to
Bank Order 1972 (President's Order No. 127
accounting and financial reporting.
of 1972), the Executive Committee during
FY15 was as follows: A total of 8 (eight) meetings of the Audit
Committee were held during FY15.
Dr. Atiur Rahman Chairman
Mr. Md. Abul Quasem Member In accordance with the Internal Audit
Department Charter approved by the Audit
Prof. Hannana Begum Member
Committee of the Board of Directors of the
Dr. M Aslam Alam Member BB, the Internal Audit Department (IAD)
Mr. Ahmed Jamal Secretary indentified 52 auditable units (departments/
offices/units/cells) and constructed the audit
During FY15, 6 (six) meetings of the plan for FY15. Audits that identified as high
Executive Committee were held. risk were conducted twice a year in 21
auditable units and the rest of 31 auditable
Audit Committee of the Board
units were identified as medium risk or low
13.3 According to the international best risk and audits were conducted once a year.
practices for strengthening good governance, The audit reports were placed before the
an Audit Committee was formed by the Board Governor and the Audit Committee of the
Board. The guidance/ directives/
of Directors on 12 August 2002 comprising
recommendations received by the IAD from
four non-executive Directors to assist the
the Governor and the Audit Committee were
Board in discharging its oversight
conveyed to the relevant auditable units for
responsibilities on financial reporting, internal implementation. Progress reports on
control and compliance and the auditing implementation of these guidance/
process. The composition of the current Audit directives/recommendations were placed
Committee is as follows: before the meeting of the Audit Committee.
116
Administration Chapter-13
Executive Management Team Creation/ Abolition of Posts

13.4 The Executive Management Team 13.7 In FY15, 78 new posts of officials and
(EMT) consists of Governor, 4 Deputy 12 posts of staff were created. Considering
Governors, Economic Advisor and all the importance of the job, 60 posts of officials
Executive Directors. This team reviews the and 22 posts of staff were upgraded by
implementation status of Bank's overall abolishing these posts during this period.
activities. Three posts of officials were also abolished in
A total of 5 (five) meetings of the EMT were FY15. At the end of the year, the total number
held during FY15. of sanctioned posts stood at 8124 compared
to 8037 of the previous year.
New Appointment in Different Posts
Sanctioned and Working Strength of
13.5 A total of 886 officials/ staff were
Officials and Staff
appointed in different posts during FY15. New
appointment during FY15 was as follows: 13.8 The sanctioned and working strength of
Assistant Director (General) 398 the Bank as on 30 June 2015 were as follows:
Assistant Director (Statistics) 1 Category Sanctioned Working Vacant
Assistant Director (Ex Cadre-Publication) 3 strength strength
Assistant Director (Ex Cadre-Library) 1
Class-I 4851 4120 731
Assistant Director (Ex Cadre-Law) 1
Class-II 1016 310 706
Assistant Director (Engineering-Civil) 2
Class-III 1817 1387 430
Assistant Director (Engineering-Electrical) 1
Class-IV 440 250 190
Assistant Director (Engineering-Mechanical) 1
Total 8124 6067 2057
Assistant Programmer 5
Assistant Maintenance Engineer 14 During FY15, working strength of officials
Officer (Ex Cadre-Publication) 2 (Class-I & Class-II) increased by 4.70 percent
Officer (Ex Cadre-Nurse) 1
to 4430 from 4231 and that of staff (Class-III
Medical Officer 4
& Class-IV) increased by 32.34 percent to
Cash Officer 1
1637 from 1237. At the end of the year, the
Staff 451
Total 886 ratio of officials to staff remained about 2.71:1.
About 25.32 percent of the sanctioned posts
Retirement, Voluntary Retirement,
remained vacant on 30 June 2015.
Compulsory Retirement, Resignation,
Removal, Suspension and Death Promotion
13.6 The number of officials/ staff of the 13.9 During the year, 670 officials and 116
Bank under retirement/ voluntary retirement/ staffs were promoted to their next higher
resignation/ removal/ suspension/ death grade. In FY15, 15.12 percent of the officials
during FY15 was as under: and 7.09 percent of the staffs working in the
Retirement 166 Bank were awarded promotion.
Voluntary Retirement 2
Resignation 10 Number of Officers on Deputation/ Lien
Death 10
Compulsory Retirement 2 13.10 At the end of FY15, 65 officials of the
Suspension 6 Bank were on deputation in different
Total : 196 institutions of the country and abroad. 44
117
Chapter-13 Administration
officials were on lien, of which 30 were (other than the BBTA). Moreover, nine officials
working within the country and 14 abroad. were allowed leave for higher study within the
country during FY15.
Reorganisation/ Newly Established
Departments of the Bank Step towards Automation and Paperless
Environment
13.11 During FY15, a cell named "Integrated
Supervision Management Cell" was 13.15 Document Management System
established in Bangladesh Bank, Head office. (DMS) has been implemented successfully. It
A cell named "ICT Cell" and an unit named is the beginning of e-noting system. All kind of
"Women Entrepreneur Development Unit" documents which are moving inward or
were established in Chittagong, Khulna, outward can be searched through Document
Rajshahi, Bogra, Rangpur, Sylhet, Barisal and Management System (DMS). The process of
Mymensingh offices. A cell named "Vigilance implementing e-noting system is going on. In
Cell" under Department of Financial order to create a central archive for all the
Institutions and Market was also established. documents, document archive process has
Information Systems Audit & Compliance been initiated. E-attendance system has been
Division and Website & Intranet Division in introduced. Automated system for ordinary
ITOCD were established too. leave has been incorporated under leave
management system. Employees can now
Welfare Activities and Approval of
apply for ordinary leave through this system.
Scholarship
These steps make day to day operational
13.12 During FY15, an amount of Taka 0.40 services more comfortable for the employees
million was given as medical assistance from as well as help the bank to create a paperless
the Karmachary/ Karmakarta Kallyan Tahbil, environment.
established under the auspicious of the
Reward and Recognition
Governor. Besides, an amount of Taka 58.75
million was allotted to Bangladesh Bank 13.16 In FY15, 10 individual and/or team
Schools, Mosques, Clubs, Day Care, were awarded with Bangladesh Bank
Freedom Fighters' Welfare Units, etc. to carry Employees Recognition Award for 2013
out their recreation and welfare activities. according to 'Bangladesh Bank Employees
Recognition & Reward Policy-2013'. Among
Foreign Training and Study
them five officials were honoured by gold
13.13 A number of 435 officials of the Bank medal (individually) and 18 officials (18
participated in different training courses/ individuals in five teams) by silver medal for
seminars/ workshops in abroad during FY15. their outstanding performance.
Moreover, 35 officials were approved of
Training Courses, Workshops, and
deputation and/or study leave.
Seminars Conducted by the Bangladesh
Domestic Training and Study Bank Training Academy (BBTA)
13.14 During FY15, a total of 2892 officials 13.17 Bangladesh Bank Training Academy
of the Bank participated in different training (BBTA) conducts a wide range of activities to
courses/seminars/workshops within the attain objectives of transforming itself into a
country organised by different institutions world-class center of excellence for imparting
118
Administration Chapter-13
Table 13.1 Statement on different training courses, XXXIV) Supervisory Process & Legal Framework of SME 1 15
workshops and seminars organised by XXXV) Understanding Economic Indicators 2 48
the Bangladesh Bank Training Academy XXXVI) Public Debt Management & Securities Market in BD 1 23
during FY15 XXXVII) Understanding Financial Reports 1 20
XXXVIII) Foreign Exchange & Foreign Trade 1 22
Number Number
Sl. of of
XXXIX) Procurement Procedure of BB 1 22
Subjects XL) Research Methodology for Central Bankers 1 17
no courses participants
XLI) Financial Inclusion, CSR & Green Banking Activities 1 18
1 2 3 4 XLII) Forex & Money Market Products 1 20
XLII) Foreign Exchange Risk Management 1 25
1. Foundation Course 2 107
b) For the Officials of Commercial Banks 66 3141
a) Foundation Course (AD) - 2014 1 47
I) Islamic Banking & Finance 2 62
b) Foundation Course (AD) - 2015 1 60
II) Money & Banking Data Reporting 6 227
2. Other Training Courses 120 3999
III) Detection, Disposal of Forged & Mutilated 9 535
a) For Officials of the Bangladesh Bank 69 1627
Notes & Malpractices in Banks
I) Techniques of Bank & NBFI Supervision & 4 94
IV) Risk Based Capital Adequacy according to Basel II 1 30
Inspection Report Writing.
V) Prevention of Money Laundering & Terrorist 3 99
II) Financial Instruments & Derivatives 1 26
Financing
III) Agriculture Financing & Rural Development 3 68
VI) Loan Classification, Provisioning & Re-scheduling 4 159
IV) Human Resources Management In BB 2 47
VII) SME Lending Practices & Regulatory Framework 1 23
V) Leadership, Team Building & Negotiation Skill 1 24
VIII) Financial Stability & Prudential Regulation for 3 86
VI) Integrity & Anticorruption 3 80
Banks/NBFIs
VII) Safety, Security & Disaster Management 2 62
IX) Risk Management with Specific Focus on 2 34
VIII) Stress Management 1 25
SME Business Line & Credit Institution
IX) Modernisation of Cash Management 2 51
X) BB Compliance Issues for Banks 1 33
X) ICT Security Policy & ICT Guideline 1 31
XI) Anti Money Laundering & Combating 1 93
XI) Assessment of Capital Adequacy In Banks 1 17
Financing in Terrorism
XII) Training Course on EDW 1 19
XII) Legal Issues of E-Banking 1 34
XIII) Micro & SME Financing 3 59
XIII) Risk Based Capital Adequacy according to Basel II 1 30
XIV) Determination of CAMELS Rating 1 33
XIV) Risk Management for SME Banking 1 35
XV) Financial Stability Analysis 1 27
XV) Integrated Supervision System Reporting 7 411
XVI) Financial Statement Analysis 4 85
XVI) Ratio Analysis for Supervisors With Specific 1 28
XVII) UCP-600 & Related Issues 3 65
Focus on SME Business Line
XVIII) Supervisory Process & Legal Framework 1 22
XVII) Credit Risk Management 1 29
of Bank Supervision
XVIII) Corporate Governance in Banks 1 28
XIX) Basel Core Principles of Effective Bank 1 23
XIX) Online Foreign Exchange & Transaction 2 189
Supervision Practice
Reporting for Money Changers
XX) ICT Risk Management 3 80
XX) Reporting of Capital Assessment and Leverage Ratio 1 76
XXI) Training Course on Enterprise Resources 4 97
of Banks Under BASEL-III Accords in Bangladesh
Planning (ERP) HR/MM/FICO Module
XXI) International Credit Card 1 91
XXII) Risk Based Capital Adequacy according to 1 21
XXII) Online Foreign Exchange & Transaction Reporting 1 40
Basel II
3. Workshops/ Seminars/ Lecture Sessions 28 1798
XXIII) International Trade Financing 2 55
I) Foreign Exchange & Foreign Trade 5 190
XXIV) Trade Services of OBU & Companies in EPZ 1 27
II) How to Write a Research Paper 2 46
XXV) How National Budget affects Central 1 25
III) Green Banking and Environmental Risk 1 171
Banking Policies
Management
XXVI) Prevention of Fraud/Forgery in Credit 1 30
IV) Key Activities and Current Issues of BB 2 64
Card/internet Banking/Mobile Banking
v) Public Debt Management 1 122
XXVII) Banking Laws & Regulations 1 20
VI) CIB Business rules and Online Systems 8 729
XXVIII) Currency Management, Payment & 1 25
VII) Executive Development Seminar 2 136
Settlement Systems in Bangladesh
VIII) Understanding Economic Indicators 2 51
XXIX) Core Risk Management 2 48
IX) Financial Inclusion, CSR & Green Banking 2 140
XXX) Supervisory Risk Assessment and Early 1 23
Activities
Warning Systems
X) SME Banking Policy & Loan Origination 1 88
XXXI) Monetary Policy Formulation and 1 25
XI) Green Banking: Opportunities & Initiatives in 1 31
Implementation Process in BB
Bangladesh
XXXII) Risk Based Supervision 2 45
XII) SME Financing and Its Importance in Bangladesh 1 30
XXXIII) Foreign Exchange Inspection Procedure 1 18
Grand total (1+2+3) 150 5904
on AD Branches
119
Chapter-13 Administration
quality training to the officials of Bangladesh At present, the maintenance and other post
Bank as well as commercial banks, financial operative functions of various components are
institutions, Government and non-government being performed by CBSP utilising BB fund.
organisations. To add values to knowledge CBSP has executed various initiatives under
management process, apart from training, several project components.
different types of seminars, workshops are
CBSP has successfully introduced massive
also arranged by BBTA. In view of enhancing
automation of all business functionalities of
the capacity of the faculty members and
Bangladesh Bank and the improvement of the
updating them with the changing knowledge
supervision system of the Bank with the
frontiers in various fields relating to
objective of ensuring a stable and disciplined
economics, finance and banking, BBTA also
financial system in the country.
arranges various programmes for the trainers
with the help of trained personnel of advanced On completion of Central Bank Strengthening
and specialised institutions at home and Project, initiatives have been taken to adopt a
abroad. Keeping these in mind, BBTA new project named "Financial Sector Support
conducted a total of 150 training courses, Project (FSSP)" which was approved on 29
workshops and seminars during FY15 of June 2015 by the Government to augment the
which 116 of them were held at the BBTA success of the earlier project and to take the
premises and 34 were held at other offices of financial market infrastructure to the next level
Bangladesh Bank. A total of 5904 participants of excellence. FSSP will also take initiatives to
participated in the above mentioned courses. improve the regulatory and oversight capacity
Besides these activities, INSPIRED Project of Bangladesh Bank and access to long term
Component-3 also conducted 32 training financing for manufacturing firms in
programme during FY15 and 703 participants Bangladesh with a view to enhance
participated in these courses. The courses investment in the country. The total project
conducted by the BBTA during FY15 are cost is USD 350.0 million, of which IDA will
shown in Table 13.1. provide USD 300.0 million and Bangladesh
Bank will provide USD 50.0 million. The
Central Bank Strengthening Project project will commence on 1 July 2015 and
13.18 The Central Bank Strengthening end on 31 March 2021.
Project (CBSP) was designed in early 2003 to The project will provide long term funds to
address the functional reorganisation and manufacturing enterprises for procurement of
modernisation of BB with the financial and capital machineries, equipments and other
technical assistance of the World Bank and costs related to set up of new firm, expansion
successfully completed on 31 December and/or up-gradation of existing firms which will
2012. The main intention of CBSP was to make them enable to remain competitive and
transform Bangladesh Bank as a modern and to grab the emerging business opportunities.
dynamic central bank that regulating and It will also help to facilitate output in the
supervising the financial sector of the country country, boost up the local investment, job
more effectively and efficiently. creation and economic growth in turn.
120
Chapter-14
Bangladesh Bank's Accounts for 2014-2015
14.1 Financial results of Bangladesh Bank Table 14.1 Sources of income (billion Taka)
for FY15 has been prepared in accordance
with International Financial Reporting FY15 FY14
Standards (IFRSs) approved by the Operating Income

International Accounting Standards Board A. Income from foreign
(IASB). Executive summary of Accounts of currency financial assets 12.26 10.09
Bangladesh Bank (excluding SPCBL) is Interest income 11.93 10.06
represented below. Commission and discounts 0.33 0.03
B. Income from local
Income
currency financial assets 15.81 27. 17
14.2 The total operating income of the Bank Interest income 14.09 25.79
(excluding foreign currency revaluation Commission & discounts 1.38 1.19
gain/loss) for FY15 decreased by Taka 9.19 Dividend income & misc. 0.02 0.02
billion (24.67 percent) to Taka 28.07 billion
Other income 0.32 0.17
compared with Taka 37.26 billion in FY14.
Total : (A+B) 28.07 37.26
With foreign currency revaluation, BB incurred
C. Foreign exchange
a loss of Taka 8.55 billion in FY15 against a
revaluation gain (loss) (36.62) 13.14
income of Taka 50.40 billion in FY14. The
Realised gain/(loss) (.10) 2.00
sources of income are set out in Table 14.1.
Unrealised gain/(loss) (36.52) 11.14
Income from Foreign Currency Financial Total : (A+B+C) (8.55) 50.40
Assets Note : Parenthesis indicate negative/loss.
14.3 During FY15, Bank's income from the

foreign currency financial assets increased by Chart 14.1 Bank's income, expenditure
Taka 2.17 billion (21.51 percent) to Taka and profit
12.26 billion compared with Taka 10.09 billion
100
in FY14 due to combined impact of increase
in weighted average interest rate on
investment of foreign currency. 50
billion Taka
Income from Local Currency Financial Assets

0
14.4 Bank's income from local currency
FY12 FY13 FY14 FY15
financial assets decreased by Taka 11.36 billion
-50
(41.81 percent) to Taka 15.81 billion in FY15
Income Expenditure Profit
compared with Taka 27.17 billion in FY14.
121
Chapter-14 Bangladesh Bank's Accounts for 2014-2015
This was mainly the combined impact of Table 14.2 Bank's expenditure
(billion Taka)
efficient receipt of revenue income & efficient
Particulars FY15 FY14
credit management of the Government and
A. Financial cost 5.44 5.95
efficient liquidity management of Bangladesh
Expenses on foreign currency
Bank. financial liabilities 0.42 0.24
Interest on foreign currency
Foreign Currency Revaluation Gain
financial liabilities 0.16 0.19
14.5 During FY15, BB made a loss of Taka Commission & other expenses
on foreign currency financial
36.62 billion on foreign currency revaluation.
liabilities 0.26 0.05
This was due to major foreign currencies held Expenses on local currency
by the Bank became weaker against the financial liabilities 5.02 5.71
Bangladeshi Taka. This revaluation loss was Interest expense on local
transferred to reserve account. currency financial liabilities 1.87 2.86
Commission & other local
Expenditure currency financial liabilities 3.15 2.85
B. Other expenses 12.24 10.93
14.6 Total expenditure of the Bank Note printing 3.82 3.89
increased by Taka 0.80 billion (4.74 percent) General & administrative expenses 8.42 7.04
to Taka 17.68 billion in FY15 compared with Total expenditure (A+B) 17.68 16.88
Taka 16.88 billion in FY14. The increase in
expenditure was mainly due to increase in 10.39 billion in FY15 compared to operating
general and administrative costs. The details profit amounting Taka 20.38 billion in FY14.
of expenditure are shown in the Table 14.2. Operating loss of the Bank (including foreign
currency revaluation gain/loss) is Taka 26.23
Financial Cost
billion in FY15 compared to operating profit
14.7 Financial cost decreased by Taka amounting Taka 33.52 billion in FY14.
0.51 billion (8.57 percent) to Taka 5.44 billion
Other Comprehensive Income
in FY15 compared with Taka 5.95 billion in
FY14. This decrease was mainly due to 14.10 During the year, the Bank made
decrease in interest payments on foreign and revaluation loss amounting to Taka 0.39
local currency financial liabilities. billion on gold, silver and financial
instruments. This revaluation loss was taken
Other Expenses
into other comprehensive income and
14.8 Other expenses increased by Taka 1.31 subsequently transferred to the reserve
billion (11.99 percent) to Taka 12.24 billion in account. Revaluation loss arose due to
FY15 compared with Taka 10.93 billion in decrease in value of gold and silver in the
FY14. This increase was mainly due to international market after revaluation.
increase in general and administrative costs.
Profit Appropriation
Profit for the Year
14.11 Out of Taka 10.39 billion profit, an
14.9 Operating profit of the Bank (excluding amount of Taka 0.55 billion were transferred
foreign currency revaluation gain/loss) is Taka to statutory funds, Taka 0.10 billion to
122
Bangladesh Bank's Accounts for 2014-2015 Chapter-14
Bangladesh Bank Disaster Management and 1541.44 billion in FY14 due to increase in
Social Responsibility Fund and Taka 0.29 notes in circulation, short term borrowings and
billion to asset renewal & replacement deposits from banks and financial institution in
reserve. After adjusting of Taka 0.12 billion of local currency.
interest reserve, Taka 9.57 billion was
Notes in Circulation
transferred to the Government account which
was Taka 6.06 billion less from FY14. 14.16 Notes in circulation increased by
Taka 126.46 billion (14.93 percent) to Taka
Combined Balance Sheet of Banking and
973.63 billion in FY15 compared with Taka
Issue Department
847.17 billion in FY14. For the liabilities of
Assets notes in circulation (amounting to Taka
973.63 billion), Taka 6.41 billion was backed
14.12 Foreign currency financial assets
by gold and silver, Taka 870.00 billion by
increased by Taka 273.84 billion (15.76
approved foreign currency (balance held
percent) to Taka 2011.58 billion in FY15
outside Bangladesh), Taka 67.04 billion by
compared with Taka 1737.74 billion in FY14
Government securities, Taka 0.30 billion by
due to increase in foreign reserves.
Bangladesh Taka coins and Taka 29.88 billion
14.13 Local currency financial assets by other domestic assets.
decreased by Taka 50.46 billion (17.58
Equity
percent) to Taka 236.49 billion in FY15
compared with Taka 286.95 billion in FY14 14.17 Total equity of the Bank decreased
due mainly to decrease in loans to by Taka 42.36 billion to Taka 145.84 billion in
Government and investment in repo. FY15 compared with Taka 188.20 billion in
the previous year. The equity of the bank is
14.14 Non financial assets of the Bank
enumerated below:
decreased by Taka 0.07 billion to Taka 43.11
billion in FY15 from Taka 43.18 billion in i. Capital of the bank remained unchanged
FY14. at Taka 0.03 billion;
Liabilities ii. Retained earnings decreased by Taka 6.07

billion to Taka 9.57 billion in FY15
14.15 Foreign currency financial liabilities
compared with Taka 15.64 billion in FY14;
decreased by Taka 21.59 billion (6.38
percent) to Taka 316.64 billion in FY15 from iii. Revaluation reserve decreased by Taka
Taka 338.23 billion in FY14 due to decrease 36.92 billion to Taka 64.20 billion in FY15
in liabilities with IMF and decrease in deposits compared with Taka 101.12 billion in
from banks and financial institutions in the FY14;
foreign currency clearing account.
iv. Currency fluctuation reserve decreased
Local currency financial liabilities increased by by Taka 0.10 billion to Taka 26.66 billion
Taka 287.26 billion (18.64 percent) to Taka in FY15 compared with Taka 26.76
1828.70 billion in FY15 compared with Taka billion in FY14;
123
v. Balance of statutory fund increased by 1946.97 billion in FY15 compared with Taka
Taka 0.55 billion to Taka 15.57 billion 1669.67 billion in FY14.
in FY15 compared with Taka 15.02
Consolidation
billion in FY14;
14.19 During the year, the accounts of
vi. Non statutory fund remained Security Printing Corporation (Bangladesh)
approximately unchanged to Taka Ltd. (SPCBL), a 100 percent owned
14.22 billion from FY14 to FY15. subsidiary of Bangladesh Bank has been
vii. Other reserves increased to Taka 11.34 consolidated with the accounts of Bangladesh
Bank.
billion from Taka 11.16 billion;
Auditors
viii. General reserve remained unchanged
to Taka 4.25 billion. 14.20 The financial statements of
Bangladesh Bank for FY15 were audited as
Foreign Currency Reserve
per International Standards on Auditing (ISA)
14.18 Foreign currency reserve increased by A Qasem & Co. & Rahman Rahman Huq,
by Taka 277.30 billion (16.60 percent) to Taka Bangladesh, Chartered Accountants.
124
BANGLADESH BANK
AUDITED FINANCIAL STATEMENTS

AS AT AND FOR THE YEAR ENDED 30 JUNE 2015
125
Report of the Independent Auditors

To the Government of the People's
Republic of Bangladesh
Report on the Financial Statements

We have audited the accompanying separate and consolidated financial statements (together
referred to as "financial statements") of Bangladesh Bank ("the Bank") and its subsidiary ("the
Group"), which comprise the separate and consolidated statements of financial position as at 30
June 2015, the separate and consolidated statements of profit or loss and other comprehensive
income, changes in equity and cash flows for the year then ended, and notes, comprising a
summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of these financial statements that
are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on our judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, we consider internal control relevant to
the entity's preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Bank and the Group as at 30 June 2015, and their financial performance and their cash
flows for the year then ended in accordance with International Financial Reporting Standards.
Rahman Rahman Huq A. Qasem & Co.

Chartered Accountants, Bangladesh Chartered Accountants, Bangladesh
30 August 2015
126
Bangladesh Bank
Consolidated Statement of Financial Position as at 30 June 2015
Assets Notes 2015 2014

Taka '000 Taka '000
Foreign currency financial assets
Foreign currency accounts 4 21,015,860 17,792,227
Foreign investments 5 1,684,393,258 1,416,960,021
Assets held with International Monetary Fund 6.01 131,148,185 148,468,110
Gold and silver 7 6,414,663 25,283,678
Claims from gold transactions 8 34,181,082 19,451,963
Foreign currency loans to banks 9 127,742,085 105,186,763
Other foreign currency financial assets 10 6,680,465 4,595,253
Total foreign currency financial assets 2,011,575,598 1,737,738,015

Local currency financial assets
Taka coin and cash balances 11 14,483,987 1,356,424
Securities purchased under agreement to resell 12 - 980,000
Loans to the Government of Bangladesh 13 112,289,585 168,861,943
Local currency investments 14 6,269,086 8,385,472
Local currency loans to banks, financial institutions and employees 15 107,040,212 109,704,694
Other local currency financial assets 16 531,648 1,145,214
Total local currency financial assets 240,614,518 290,433,747

Total financial assets 2,252,190,116 2,028,171,762
Non-financial assets
Property, plant and equipment 17 46,150,428 46,440,822
Intangible assets 18 445,179 678,242
Other non-financial assets 19 9,137,878 6,407,845
Total non-financial assets 55,733,485 53,526,909

Total assets 2,307,923,601 2,081,698,671
Liabilities & Equity
Liabilities
Foreign currency financial liabilities
Deposits from banks and financial institutions 20 149,159,932 149,897,535
Liabilities with International Monetary Fund 6.02 167,475,874 188,331,836
Total foreign currency financial liabilities 316,635,806 338,229,371

Local currency financial liabilities
Notes in circulation 21 973,633,449 847,170,600
Short term borrowings 23 180,721,995 57,664,690
Other local currency financial liabilities 24 173,881,247 193,316,773
Total local currency financial liabilities 1,831,253,965 1,541,934,066

Total liabilities 2,147,889,771 1,880,163,437
Equity
Capital 25 30,000 30,000
Retained earnings 32 17,210,947 22,525,327
Revaluation reserves 26 70,204,248 107,116,613
Currency fluctuation reserve 27 26,663,944 26,760,236
Statutory funds 28 15,567,046 15,017,046
Non statutory funds 29 14,219,468 14,222,452
Other reserves 30 11,337,677 11,163,059
General reserve 31 4,800,500 4,700,500
Total equity 160,033,830 201,535,233

Total liabilities and equity 2,307,923,601 2,081,698,671
The accompanying notes from 1 to 55 form an integral part of these financial statements.
Badrul Haque Khan Nazneen Sultana Dr. Atiur Rahman
General Manager Deputy Governor Governor
Accounts & Budgeting Department
127
Bangladesh Bank
Separate Statement of Financial Position as at 30 June 2015
Assets Notes 2015 2014

Taka '000 Taka '000
Foreign currency accounts 4 21,015,860 17,792,227
Foreign investments 5 1,684,393,258 1,416,960,021
Assets held with International Monetary Fund 6.01 131,148,185 148,468,110
Gold and silver 7 6,414,663 25,283,678
Claims from gold transactions 8 34,181,082 19,451,963
Foreign currency loans to banks 9 127,742,085 105,186,763
Other foreign currency financial assets 10 6,680,465 4,595,253
Total foreign currency financial assets 2,011,575,598 1,737,738,015

Taka coin and cash balances 11.01 321,706 546,240
Securities purchased under agreement to resell 12 - 980,000
Loans to the Government of Bangladesh 13 112,289,585 168,861,943
Local currency investments 14.01 17,795,000 7,005,000
Local currency loans to banks, financial institutions and employees 15.01 105,913,487 108,628,077
Other local currency financial assets 16.01 169,283 929,682
Total local currency financial assets 236,489,061 286,950,942

Total financial assets 2,248,064,659 2,024,688,957
Non-financial assets
Property, plant and equipment 17.01 38,508,515 38,700,785
Intangible assets 18 445,179 678,242
Other non-financial assets 19.01 4,158,581 3,800,104
Total non-financial assets 43,112,275 43,179,131

Total assets 2,291,176,934 2,067,868,088
Liabilities & Equity
Liabilities
Liabilities with International Monetary Fund 6.02 167,475,874 188,331,836
Total foreign currency financial liabilities 316,635,806 338,229,371

Notes in circulation 21 973,633,449 847,170,600
Short term borrowings 23 180,721,995 57,664,690
Other local currency financial liabilities 24.01 171,327,094 192,817,857
Total local currency financial liabilities 1,828,699,812 1,541,435,150

Total liabilities 2,145,335,618 1,879,664,521
Equity
Capital 25 30,000 30,000
Retained earnings 32.01 9,568,603 15,643,831
Revaluation reserves 26.01 64,204,078 101,116,443
Currency fluctuation reserve 27 26,663,944 26,760,236
Statutory funds 28 15,567,046 15,017,046
Non statutory funds 29 14,219,468 14,222,452
Other reserves 30 11,337,677 11,163,059
General reserve 31.01 4,250,500 4,250,500
Total equity 145,841,316 188,203,567

Total liabilities and equity 2,291,176,934 2,067,868,088
128
Bangladesh Bank
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2015
2015 2014
Income Notes Taka '000 Taka '000
Income on foreign currency financial assets

Interest income 33 11,925,063 10,059,966
Commission and discounts 34 333,593 34,023
Total income on foreign currency financial assets 12,258,656 10,093,989

Income from local currency financial assets
Interest income 36 15,043,034 26,119,080
Commission and discounts 37 1,382,469 1,191,498
Sales to other parties by subsidiary 1,931,237 2,017,634
Other income 347,606 184,838
Total income from local currency financial assets 18,704,346 29,513,050

Total income 30,963,002 39,607,039
Expenses
Expenses on foreign currency financial liabilities
Interest expense 35 (163,563) (195,267)
Commission and other expenses (256,150) (47,784)
Total expenses on foreign currency financial liabilities (419,713) (243,051)

Expenses on local currency financial liabilities
Interest expense 38 (1,873,588) (2,862,738)
Commission and other expenses 39 (3,153,009) (2,854,002)
Total expenses on local currency financial liabilities (5,026,597) (5,716,740)

Other expenses
General and administrative expenses 40 (14,267,927) (12,245,517)
Total other expenses (14,267,927) (12,245,517)

Total expenses (19,714,237) (18,205,308)
Foreign currency revaluation gain/(loss) - unrealised (36,521,334) 11,139,987
Foreign currency revaluation gain/(loss) - realised (96,292) 2,000,957
Profit/(loss) for the year (25,368,861) 34,542,675

Items that may be subsequently reclassified to profit or loss
Other comprehensive income
Gold revaluation gain/(loss) (4,823,824) 4,099,233
Silver revaluation gain/(loss) (74,807) 21,698
Revaluation gain on property, plant and equipment - 17,161,372
Revaluation gain/(loss) on financial instruments 4,507,599 -
Total other comprehensive income (391,032) 21,282,303

Total comprehensive income for the year (25,759,893) 55,824,978

129
Bangladesh Bank
Separate Statement of Profit or Loss and Other Comprehensive Income
2015 2014
Income Notes Taka '000 Taka '000
Income on foreign currency financial assets

Interest income 33 11,925,063 10,059,966
Commission and discounts 34 333,593 34,023
Total income on foreign currency financial assets 12,258,656 10,093,989

Income from local currency financial assets
Interest income 36.01 14,084,803 25,789,022
Commission and discounts 37 1,382,469 1,191,498
Dividend income 25,000 25,000
Other income 37.a 323,836 165,889
Total income from local currency financial assets 15,816,108 27,171,409

Total income 28,074,764 37,265,398
Expenses
Expenses on foreign currency financial liabilities
Interest expense 35 (163,563) (195,267)
Commission and other expenses (256,150) (47,784)
Total expenses on foreign currency financial liabilities (419,713) (243,051)

Expenses on local currency financial liabilities
Interest expense 38 (1,873,588) (2,862,738)
Commission and other expenses 39 (3,153,009) (2,854,002)
Total expenses on local currency financial liabilities (5,026,597) (5,716,740)

Other expenses
Note printing expenses (3,817,289) (3,885,924)
General and Administrative expenses 40.01 (8,423,247) (7,042,372)
Total other expenses (12,240,536) (10,928,296)

Total expenses (17,686,846) (16,888,087)
Foreign currency revaluation gain/(loss) - unrealised (36,521,334) 11,139,987
Foreign currency revaluation gain/(loss) - realised (96,292) 2,000,957
Profit/(Loss) for the year (26,229,708) 33,518,255

Items that may be subsequently reclassified to profit or loss
Other comprehensive income
Gold revaluation gain/(loss) (4,823,824) 4,099,233
Silver revaluation gain/(loss) (74,807) 21,698
Revaluation gain on Property, plant and equipment - 12,311,838
Revaluation gain/(loss) on Financial Instruments 4,507,599 -
Total other comprehensive income (391,032) 16,432,769

Total comprehensive income for the year (26,620,740) 49,951,024

130
Bangladesh Bank
Consolidated Statement of Changes in Equity
Taka '000
Non - distributable Distributable
Revaluation reserve Other reserves

Currency
fluctuation Statutory Non- Asset General Retained
Foreign Financial Property, fund statutory renewal & Interest reserve Equity
Particulars Capital Gold and reserve earnings
currency instruments plant & funds replacement reserve
silver accounts equipment reserve
Balance as at 1 July 2013 30,000 11,429,710 39,951,542 - 23,521,843 24,759,279 14,467,046 14,226,290 2,743,468 8,320,428 4,600,500 46,493,169 190,543,275
Dividend paid for 2012-2013 - - - - - - - - - - - (36,302,026) (36,302,026)
Adjustment against due from government - - - - - - - - - - - (4,368,179) (4,368,179)
131
Transfer to general reserve - - - - - - - - - - 100,000 (100,000) -

Transfer to other funds - - - - (197,161) - - - - - - 147,161 (50,000)
Total comprehensive income for the year - 4,120,931 11,139,987 - 17,161,372 2,000,957 550,000 50,000 279,000 (191,855) - 20,714,584 55,824,977
Adjustment against revaluation - - - - (11,611) - - (53,838) 12,018 - - (20,775) (74,206)
Prior year adjustment - - - - - - - - - - - (4,038,607) (4,038,607)
Balance as at 30 June 2014 30,000 15,550,641 51,091,529 - 40,474,443 26,760,236 15,017,046 14,222,452 3,034,486 8,128,573 4,700,500 22,525,327 201,535,233
Adjustment against due from government1 - - - - - - - - - - - (16,050) (16,050)
Total comprehensive income for the year - (4,898,630) (36,521,334) 4,507,599 - (96,292) - - - - - 11,248,766 (25,759,892)
Utilisation of funds2 - - - - - - - (102,984) - - - - (102,984)
Prior year adjustment3 - - - - - - - - - - - 5,303 5,303
Appropriation of profit to other funds - - - - - - 550,000 100,000 291,500 (116,883) - (824,617) -
Transfer to general reserve - - - - - - - - - - 100,000 (100,000) -
Balance as at 30 June 2015 30,000 10,652,011 14,570,195 4,507,599 40,474,443 26,663,944 15,567,046 14,219,468 3,325,986 8,011,690 4,800,500 17,210,947 160,033,828
Chapter-14
1 The amount of Taka 16,050 thousand under retained earnings represents adjustment against payments made by the Bank on behalf of the Government.
2 Taka 102,984 thousands represent appropriation against funds. Please refer to note no. 29.
3 This amount represents income from derecognition of property, plant and equipment which were not recorded in the prior year.
Chapter-14
Bangladesh Bank
Separate Statement of Changes in Equity
Taka '000
Non - distributable Distributable
Revaluation reserve Other reserves

Currency
fluctuation Statutory Non- Asset General Retained
Foreign Financial Property, fund statutory renewal & Interest reserve Equity
Particulars Capital Gold and reserve earnings
currency instruments plant & funds replacement reserve
silver accounts equipment reserve
Balance as at 1 July 2013 30,000 11,429,710 39,951,542 - 22,174,046 24,759,279 14,467,046 14,226,290 2,743,468 8,320,428 4,250,500 40,733,254 183,085,563
Adjustment against due from government - - - - - - - - - - - (4,368,179) (4,368,179)
Transferred to other funds - - - - - - - - - - - (50,000) (50,000)
132

Total comprehensive income for the year - 4,120,931 11,139,987 - 12,311,838 2,000,957 550,000 50,000 279,000 (191,855) - 19,690,164 49,951,022
Adjustment against revaluation - - - - (11,611) - - (53,838) 12,018 - - (20,775) (74,206)

Prior year adjustment - - - - - - - - - - - (4,038,607) (4,038,607)
Balance as at 30 June 2014 30,000 15,550,641 51,091,529 - 34,474,273 26,760,236 15,017,046 14,222,452 3,034,486 8,128,573 4,250,500 15,643,831 188,203,567
Adjustment against due from government1 - - - - - - - - - - - (16,050) (16,050)
Total comprehensive income for the year - (4,898,630) (36,521,334) 4,507,599 - (96,292) - - - - - 10,387,918 (26,620,740)
Utilisation of funds2 - - - - - - - (102,984) - - - - (102,984)
Prior year adjustment3 - - - - - - - - - - - 5,303 5,303
Appropriation of profit to other funds - - - - - - 550,000 100,000 291,500 (116,883) - (824,617) -
Balance as at 30 June 2015 30,000 10,652,011 14,570,195 4,507,599 34,474,273 26,663,944 15,567,046 14,219,468 3,325,986 8,011,690 4,250,500 9,568,603 145,841,315
1 The amount of Taka 16,050 thousand under retained earnings represents adjustment against payments made by the Bank on behalf of the Government.
2 Taka 102,984 thousands represent appropriation against funds. Please refer to note no. 29.
3 This amount represents income from derecognition of property, plant and equipment which were not recorded in the prior year.
Bangladesh Bank
Consolidated Statement of Cash Flows
2015 2014
Taka '000 Taka '000
Cash flows from operating activities
Interest received 17,320,021 28,892,992
Interest paid (2,037,150) (3,058,005)
Received from customer 1,515,822 2,017,634
Fees, commission and other income received 1,873,282 1,435,347
Commission and discounts paid (3,456,192) (2,901,786)
Payments to employees and suppliers (12,868,135) (12,526,798)
Funds advanced from/(to) banks and employees 3,445,120 8,070,164
(Increase)/decrease in other assets (358,475) 282,926
Currency issued 126,462,849 100,787,983
Increase/(decrease) in other liabilities (21,364,483) 93,439,392
Net cash from operating activities 110,532,659 216,439,849
Cash flows from investing activities

Investment income received 6,764,070 5,800,645
(Increase)/decrease in foreign treasury bills and bonds (277,059,508) (194,751,026)
(Increase)/decrease in other investments (20,829,203) (41,700,679)
(Increase)/decrease in Government securities 56,569,155 135,815,043
(Increase)/decrease in foreign currency investment (38,524,845) 13,140,944
(Increase)/decrease in investments in debenture 1,958,132 33,333
Additions to property, plant and equipment (564,289) (899,806)
Settlement of liabilities with IMF (3,536,036) 668,964
Net cash used in investing activities (275,222,523) (81,892,582)
Cash flows from financing activities

Dividend paid to the Government of Bangladesh (15,627,781) (36,302,026)
Net cash (used in)/from financing activities (15,627,781) (36,302,026)
Net increase/(decrease) in cash and cash equivalents (180,317,645) 98,245,240
Cash and cash equivalents as at 1 July 332,605,866 234,360,626
Cash and cash equivalents as at 30 June 152,288,221 332,605,866
Cash and cash equivalents include

Foreign currency accounts 21,015,860 501,735,055
Foreign investments with maturity of three months or less 949,687,576 479,878,616
Taka coin and cash balances 14,483,987 1,356,424
Securities purchased under agreement to resell - 980,000
Foreign currency deposits from banks and financial institutions (149,159,932) (149,897,536)
Short term borrowings (180,721,995) (57,664,690)
Deposits from banks and financial institutions (503,017,274) (443,782,003)
133
Bangladesh Bank
Separate Staement of Cash Flow
2015 2014
Taka '000 Taka '000
Cash flows from operating activities
Interest received 16,508,623 28,640,420
Interest paid (2,037,150) (3,058,005)
Fees, commission and other income received 1,850,124 1,416,398
Commission and discounts paid (3,456,192) (2,901,786)
Payments to employees and suppliers (11,249,458) (9,802,448)
Funds advanced from/(to) banks and employees 3,495,228 8,177,733
(Increase)/decrease in other assets (358,475) 479,392
Currency issued 126,462,849 100,787,983
Increase/(decrease) in other liabilities (21,364,483) 92,149,220
Net cash from operating activities 109,851,066 215,888,908
Cash flows from investing activities

Dividends received 25,000 25,000
Investment income received 6,764,070 5,800,645
(Increase)/decrease in foreign treasury bills and bonds (277,059,508) (194,751,026)
(Increase)/decrease in other investments (20,829,203) (41,503,629)
(Increase)/decrease in Government securities 56,569,155 135,815,043
(Increase)/decrease in foreign currency investment (38,524,845) 13,140,944
(Increase)/decrease in investments in debenture (10,790,000) 35,000
Additions to property, plant and equipment (511,660) (857,729)
Settlement of liabilities with IMF (3,536,036) 668,964
Net cash used in investing activities (287,893,026) (81,626,788)
Cash flows from financing activities

Dividend paid to the Government of Bangladesh (15,627,781) (36,302,026)
Net cash (used in)/from financing activities (15,627,781) (36,302,026)
Net increase/(decrease) in cash and cash equivalents (193,669,741) 97,960,093
Cash and cash equivalents as at 1 July 331,795,682 233,835,589
Cash and cash equivalents include

Foreign currency accounts 21,015,860 501,735,055
Foreign investments with maturity of three months or less 949,687,576 479,878,616
Taka coin and cash balances 321,706 546,240
Securities purchased under agreement to resell - 980,000
Foreign currency deposits from banks and financial institutions (149,159,932) (149,897,536)
Short term borrowings (180,721,995) (57,664,690)
Deposits from banks and financial institutions (503,017,274) (443,782,003)
134
Bangladesh Bank : Notes to the Financial Statements

As at and for the year ended 30 June 2015
1. Reporting entity
Bangladesh Bank ("the Bank"), a body corporate, is the Central Bank of Bangladesh,
established on the 16th day of December, 1971 under the Bangladesh Bank Order, 1972
(P.O. No. 127 of 1972). The Bank is domiciled in Bangladesh and the head office of the Bank
is situated at Motijheel C/A, Dhaka-1000.
The Bank has 10 (ten) branch offices situated at the following locations:
Location Address
Motijheel Office Motijheel C/A, Dhaka-1000
Chittagong Office Notun/617, Shahid Sohrawardi Road, Chittagong
Rajshahi Office Natore Road, Majhi Hata, Boalia, Rajshahi-6000
Bogra Office Holding - 1683, Thonthonia, Bogra-5800
Rangpur Office Bangladesh Bank Rangpur Office, Rangpur-5400
Khulna Office 1, Ratan Sen Road, Khulna-9100
Barishal Office Deen Bondhu Sen Road, Barishal-8200
Sylhet Office VIP Road, Taltola, Sylhet-3100
Sadarghat Office Bahadurshah Road, Sadarghat, Dhaka-1000
Mymensing Office 29, Durgabari Road, Mymensingh-2200
The Bank has exclusive agency arrangement with Sonali Bank Limited for carrying out
certain sepcific treasury related functions across the country. As at 30th June, 2015, 589
Branches of Sonali Bnak Limited were engaged in daily treasury functions under the referred
agency arrangement with the Bank.
As per the Article 7A of the Bangladesh Bank Order, 1972, functions of the Bank among
others include:
- to formulate and implement monetary policy;

- to formulate and implement intervention policies in the foreign exchange market;
- to give advice to the Government on the interaction of monetary policy with fiscal and
exchange rate policy, on the impact of various policy measures on the economy and to
propose legislative measures it considers necessary or appropriate to attain these.
- to hold and manage the official foreign reserves of Bangladesh;
- to promote, regulate and ensure a secure and efficient payment system, including the
issue of bank notes; and
- to regulate and supervise banking companies and financial institutions.
The Bank also acts as the banker to the Government as per Article 16(18) of the
Bangladesh Bank Order, 1972.
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The entire Capital of the Bank had been allotted to the Government of Bangladesh as per
Aritcle 4(2) of the Bangladesh Bank Order, 1972.
The Bank has a fully owned subsidiary company named The Securities Printing Corporation
(Bangladesh) Ltd. ("SPCBL" or "the subsidiary") which was formed on 22nd April, 1992 for
the purpose of printing and supplying of currency notes. The Bank and its subsidiary are
collectively referred to as "the Group". Refer to note 3.01(a) and 14.02.
2. Basis of preparation of the financial statements
2.01 Statement of compliance
The consolidated and separate financial statements (financial statements) of the Group
and the Bank respectively have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as issued by the International Accounting
Standards Board (IASB). The compliance status of these IFRSs is as follows:
Compliance status
IAS 1: Presentation of Financial Statements Complied
IAS 2: Inventories Complied
IAS 7: Statement of Cash Flows Complied
IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors Complied
IAS 10: Events after the Reporting Period Complied
IAS 11: Construction Contracts Not applicable
IAS 12: Income Taxes Complied
IAS 16: Property, Plant & Equipment Complied
IAS 17: Leases Complied
IAS 18: Revenue Complied
IAS 19: Employee Benefits Complied
IAS 20: Accounting for Government Grants and Disclosure of Government Assistance Complied
IAS 21: The Effects of Changes in Foreign Exchange Rates Complied
IAS 23: Borrowing Costs Complied
IAS 24: Related Party Disclosures Complied
IAS 26: Accounting and Reporting by Retirement Benefit Plans Not applicable
IAS 27: Separate Financial Statements Complied
IAS 28: Investment in Associates and Joint Ventures Not applicable
IAS 32: Financial Instruments: Presentation Complied
IAS 33: Earnings Per Share Not applicable
IAS 34: Interim Financial Reporting Not applicable
IAS 36: Impairment of Assets Complied
IAS 37: Provisions, Contingent Liabilities and Contingent Assets Complied
136

Compliance status
IAS 38: Intangible Assets Complied
IAS 39: Financial Instruments: Recognition and Measurement Complied
IAS 40: Investment Property Not applicable
IAS 41: Agriculture Not applicable
IFRS 1: First Time Adoption of International Financial Reporting Standards Not applicable
IFRS 2: Share Based Payment Not applicable
IFRS 3: Business Combination Complied
IFRS 4: Insurance Contracts Not applicable
IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations Not applicable
IFRS 6: Exploration for and Evaluation of Mineral Resources Not applicable
IFRS 7: Financial Instruments: Disclosures Complied
IFRS 8: Operating Segments Not applicable
IFRS 10: Consolidated Financial Statements Complied
IFRS 11: Joint Arrangements Not applicable
IFRS 12: Disclosure of Interests in Other Entries Complied
IFRS 13: Fair Value Measurement Complied
2.02 Basis of measurement
The financial statements are prepared on a historical cost basis except for the
following material items in the consolidated and separate statements of financial
position ("the statement of financial position"):
Basis of measurement Material items

- Gold and claims from Gold transactions
- Silver
- Property, plant and equipment
"Fair Value (FV)" US dollar treasury bills, foreign bonds
Government treasury bills and bonds;
Bangladesh House Building Finance Corporation
(BHBFC) debentures;ICB Islamic Bank Limited shares.
Present value (PV) Liability for the defined benefit obligation
2.03 Functional and presentation currency
The financial statements are presented in Bangladesh Taka (Taka/Tk/BDT), which is

the Group's functional and presentation currency. Except as indicated, financial
information presented in Bangladesh Taka has been rounded off to the nearest
thousand.
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2.04 Relationship between Issue Department and Banking Department
Under the Bangladesh Bank Order, 1972, issue of bank notes shall be conducted by
the Bank in an Issue Department, which shall be separated and kept wholly distinct
from the Banking Department. Accordingly, the Issue Department is solely concerned
with the note issue and the assets backing the issue. The Banking Department
comprises all other activities of the Bank. The separation into departments is made
within the Bank and reports on both the Banking and Issue Departments (together
referred as "statement of affairs") are made internally and submitted to the Ministry of
Finance throughout the year at weekly interval. The annual financial statements are
prepared on a combined basis to include all the assets and liabilities of the Bank. The
assets backing the note issue as at the year end are disclosed in note 21.
2.05 Use of estimates and judgments
Preparation of the financial statements requires management to make judgments,

estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates. Estimates and underlying assumptions are reviewed on going
concern basis. Revisions to accounting estimates are recognised in the period in
which the estimates are revised and in any future period affected.
Estimates, judgements and assumptions are made for impairments of loans, fair value
of securities, assessment of fair value hierarchy, fair valuation of property, plant and
equipment, economic lives of assets for calculation of depreciation and for calculation
of provision for post retirement benefits like pension, gratuity and leave encashment
and assumptions used in the acturial valuations of defined benefit plans.
2.06 Comparatives
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors requires an

entity to correct material prior period errors retrospectively by restating the
comparatives amounts for prior period presented in which the error occurred. While
preparing financial statements as at 30 June 2015, no such material prior period errors
were identified.
3 Significant accounting policies
Accounting policies set out below have been applied consistently to all periods presented in
these financial statements by Group entities. Certain comparative amounts have been
reclassified to conform with the current year's presentation.
138

3.01 Basis of consolidation
(a) Subsidiary
SPCBL is the wholly owned subsidiary of the Bank. It is responsible for printing and
supplying the Bank with currency notes based on the requirements from time to time.
SPCBL sells these notes to the Bank at a specified mark-up agreed beforehand
between the Bank and SPCBL. SPCBL is also engaged in printing of security products
for other parties besides the Bank.
(b) Transactions eliminated on consolidation
Intra-group balances and transactions and any unrealised income and expenses
arising from intra-group transactions are eliminated in preparing the consolidated
financial statements. Unrealised gains arising from transactions with the subsidiary are
eliminated to the extent of the Groups interest in the subsidiary. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no
evidence of impairment.
3.02 Foreign currency transactions
Transactions in foreign currencies are translated to Taka at the exchange rate ruling
at the dates of the transactions in compliance with IAS 21 : The Effects of Changes in
Foreign Exchange Rates. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated to Taka at the exchange rate ruling at
that date. Foreign exchange difference arising on translation are recognised in the
statement of profit or loss. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are translated to Taka at foreign exchange
rates ruling at the dates the fair values were determined and exchange difference are
recognised in other comprehensive income. At the reporting date the exchange rate of
Taka against major foreign currencies held by the Group used in preparing the
financial statements were as follows:
Exchange rates
Foreign currency 2015 2014
Taka Taka
US Dollar 77.8004 77.6300
Australian Dollar 59.9686 73.1973
Canadian Dollar 62.2652 72.7827
EURO 86.6152 106.3065
Pound Sterling 122.2556 132.8249
CNY 12.5414 12.5107
JPY 0.6355 0.7663
SDR 109.4185 120.0082
139

3.03 Foreign exchange gain/loss
Realised foreign exchange gain/loss is calculated using average cost methodology. At

the end of each month, the change in the average cost balance is calculated on a
currency by currency basis by applying (a) where there is a net increase in the
currency position, the increase to the average value is the average rate for the month
multiplied by the currency amount of the increase and (b) where there is a net
decrease in the currency position, the decrease to the average value is calculated by
the applying the opening average rate to the carrying amount of the decrease. The
difference between the book value at the period end exchange rate and the average
value by currency is determined. The balance is considered as unrealised revaluation
reserve.
The difference between unrealised revaluation reserve account and the ledger balance
is accounted as realised exchange gain/loss for the period and is recognised in
the statement of profit or loss for the year. Subsequently the gain/loss has been
transferred to currency fluctuation reserve in the statement of financial position.
3.04 Financial assets and liabilities
Financial assets comprise among others foreign currency accounts, foreign

investments, assets held with International Monetary Fund (IMF), gold and silver,
claims on gold transactions, foreign currency loans to banks, other foreign currency
financial assets, Taka coin and cash balances, securities purchased under agreement
to resell, loans to Government of Bangladesh, local currency investments, local
currency loans to banks, financial institutions and advances to employees and other
local currency financial assets.
Financial liabilities comprise deposits from banks and financial institutions, liabilities
with IMF, notes in circulation, short term borrowings and other local currency financial
liabilities.
(a) Recognition and initial measurement
Loans and advances are initially recognised in the Statement of Financial Position on
the date they are originated. Regular way purchases or sales of financial assets are
recognised or derecognised, as applicable, on the settlement date at which the assets
are received or, as the case may be, delivered by the Group. All other financia
assets and liabilities are initially recognised when the Group becomes a party to the
contractual provision of the instruments. Financial assets and liabilities are initially
measured at fair value.
140

(b) Classification and subsequent measurement
Classification of financial assets and liabilities for purposes of measurement subsequent

to initial recognition in accordance with IAS 39 Financial Instruments: Recognition and
Measurement are made in the following manner:
(1) Financial assets and financial liabilities at fair value through profit or loss.
Financial assets or financial liabilities at fair value through profit or loss are either:
- classified as held for trading; or

- designated by the Group as at fair value through profit or loss upon initial recognition.
Financial assets or financial liabilities are classified as held for trading if:
- they are acquired or incurred principally for the purpose of selling or purchasing
them in the near term;
- on initial recognition they are part of a portfolio of identified financial instruments
that are managed together and for which there is evidence of a recent actual
pattern of short-term profit taking; or
- they are derivatives (except for dervatives that are financial guarantee contracts
or designated and effective hedging instruments).
The Group designates financial assets and liabilities at fair value through profit or
loss in the following circumstances:
- designation eliminates or significantly reduces an accounting mismatch which

would otherwise arise; or
- assets or liabilities contains an embedded derivative that significantly modifies
the cash flow that would otherwise be required under the contract.
(2) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or

determinable payments and fixed maturity that the Group has the positive intention
and ability to hold to maturity other than:
- those that are upon initial recognition designated as at fair value through profit or
loss;
- those that are designated as available for sale; and
- those that meet the definition of loans and receivables.
A sale or reclassification of a more than an insignificant amount of held-to-maturity

investements would result in there classification of all held-to-maturity investments
141

as available-for-sale, and would prevent the Group from classifying investment

securities as held-to-maturity for current and the following two financial years.
However, sales and reclassifications in any of the following circumstances would not
trigger a reclassification:
- sales or reclassification that are so close to maturity that changes in the market
rate of interest would not have a significant effect on the financial asset's fair
value;
- sales or reclassification after the Group has collected substantially all of the
asset's original principal; and
- sales or reclassification attributable to non-recurring islolated events beyond the
Group's control that could not have been reasonably anticipated.
Treasury bills and bonds of the Government of Bangladesh, foreign bonds, US

dollar treasury bills and investment in debentures are classified as held to maturity
investments unless the reclassification as available-for-sale is required in the
circumstances described above.
(3) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market other than:
- those that the Group intends to sell immediately or in near term, which are
classified as held for trading, and those that the Group has, upon initial
recognition, designated as at fair value through profit or loss;
- those that the Group has, upon initial recognition, designated as available for
sale; or
- those for which the Group may not recover substantially all of its initial
investment, other than because of credit deterioration, which are classified as
available for sale.
Loans and receivables are initially measured at fair value plus transaction cost
directly attributable to the acquisition of the financial assets, and subsequently
measured at their amortised cost using the effective interest method.
Taka coin and cash balances, foreign currency accounts, short term investments
with overseas commercial banks, assets held with IMF, foreign currency loans to
banks, interest receivable, ways and means advances, overdraft block and current
loans to Government of Bangladesh, securities purchased under agreement to
resell, local currency loans to banks, financial institutions and employees and
other local currency financial assets are classified as loans and receivables.
142

(4) Available-for-sale financial assets
Available-for-sale financial assets are those non-derivative financial assets that the
Group has designated as available for sale or has not classified as (a) loans and
receivables, (b) held-to-maturity investments or (c) financial assets at fair value
through profit or loss or (d) trading assets and liabilities.
Swift shares, gold and silver, claims from gold transactions and shares of ICB
Islamic Bank Limited are classified as available-for-sale financial assets. Swift
shares are measured at cost as there is no quoted market price for these shares.
Shares of The Security Printing Corporation (Bangladesh) Ltd. (SPCBL) are

measured at cost in the separate financial statement of the Bank in accordance
with IAS 27 Separate Financial Statements.
(5) Financial liabilities carried at amortised cost
Short-term borrowings, notes in circulation, deposits from banks and financial

institutions and liabilities with IMF are classified as financial liabilities carried at
amortised cost.
(c) Amortised cost measurement principles
Amortised cost of a financial asset or liability is the amount at which the financial asset
or financial liability is measured at initial recognition, minus principal repayments, plus
or minus the cumulative amortisation using the effective interest method of any
difference between that initial amount and the maturity amount, minus any reduction
for impairment or uncollectibility.
Effective interest method is a method of calculating the amortised costs of a financial

asset or a financial liability (or group of financial assets or financial liabilities) and of
allocating the interest income or interest expense over the relevant period. The
effective interest rate is the rate that exactly discounts estimated future cash payments
or receipts through the expected life of the financial instrument to the net carrying
amount of the financial asset or financial liability on initial recognition. When
calculating effective interest rate, the Group estimates the cash flows considering all
contractual terms of the financial intruments, and any revisions to these estimates are
recognised in profit or loss. The calculation includes amounts paid or received that are
an integral part of the effective interest rate of a financial instrument, including
transaction costs and all other premiums and discounts.
143

(d) Fair value measurement principles
Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date
in the principal or, in its absence, the most advantageous market to which the Group
has access at that date. The fair value of a liability reflects its non-performance risk.
When available, the Group measures the fair value of an instrument using the quoted
prices in an active market for that instrument. A market is regarded as active if
transactions for the assets or liabilities take place with sufficient frequency and volume
to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, then the Group uses valuation
techniques that maximise the use of relevant observable inputs and minimise the use
of unobservable inputs. The chosen valuation technique incorporates all of the factors
that market participants would take into account in pricing a transaction.
The best evidence of the fair value of a financial instrument at initial recognition is
normally the transaction price - i.e. the fair value of the consideration given or
received. If the Group determines that the fair value at initial recognition differs from
the transaction price and the fair value is evidenced neither by a quoted price in an
active market for an identical asset or liability nor based on a valuation technique that
uses only data from observable markets, then the financial instrument is initially
measured at fair value, adjusted to defer the difference between the fair value at initial
recognition and the transaction price. Subsequently, that difference is recognised in
the profit or loss on an appropriate basis over the life of the instrument but no later
than when the valuation is wholly supported by observable market data or the
transaction is closed out.
If an asset or a liability measured at fair value has a bid price and an ask price, then
the Group measures assets and long positions at a bid price and liabilities and short
positions at an ask price.
Portfolios of financial assets and financial liabilities that are exposed to market risk and
credit risk that are managed by the Group on the basis of the net exposure to either
market or credit risk are measured on the basis of a price that would be received to
sell a net long position (or paid to transfer a net short position) for a particular risk
exposure. Those portfolio-level adjustments are allocated to the individual assets and
liabilities on the basis of the relative risk adjustment of each of the individual
instruments in the portfolio.
144

The Group recognises transfers between levels of the fair value hierarchy as of the
end of the reporting period during which the change has occurred.
(e) Gains and losses on subsequent measurement
Gains and losses arising from a change in the fair value of available-for-sale assets
are recognised in other comprehensive income (OCI). When the financial assets are
sold, collected or otherwise disposed of, the cumulative gain or loss recognised in OCI
is transferred to the statement of profit or loss. Gains and losses arising from a change
in the fair value of financial assets and financial liabilities classified as at fair value
through profit or loss are recognised in the statement of profit or loss. Gains and
losses on subsequent measurement of loans and receivables and held to maturity
financial instruments are recognised in the statement of profit or loss.
(f) Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows
from the financial asset expire, or it transfers the rights to receive the contractual cash
flows in a transaction in which substantially all the risks and rewards of ownership of
the financial asset are transferred or in which the Group neither transfers nor retains
substantially all the risks and rewards of ownership and it does not retain control of the
financial asset. Any interest in such transferred financial assets that qualify for
derecognition that is created or retained by the Group is recognised as a separate
asset or liability. On derecognition of a financial asset, the difference between the
carrying amount of the asset (or the carrying amount allocated to the portion of the
asset transferred), and the sum of (i) the consideration received (including any new
asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that
had been recognised in other comprehensive income is recognised in the statement of
profit or loss.
Group enters into transactions whereby it transfers assets recognised on its statement
of financial position, but retains either all or substantially all of the risks and rewards of
the transferred assets or a portion of them. lf all or substantially all risks and rewards
are retained, then the transferred assets are not derecognised. Transfers of assets
with retention of all or substantially all risks and rewards include, for example, claims
from gold transactions and repurchase transactions. Group derecognises a financial
liability when its contractual obligations are discharged or cancelled or expired.
Available-for-sale financial assets and financial assets held for trading are de-
recognised when sold and corresponding receivables from the buyer for the payment
145

are recognised when the asset is delivered to the buyer. Held-to-maturity instruments
and loans and receivables are de-recognised on the day they are repaid in full by the
debtor or are deemed to be completely uncollectible.
(g) Identification and measurement of impairment
Financial assets not carried at fair value through profit or loss are reviewed at each
reporting date to determine whether there is objective evidence of impairment.
Financial assets are impaired when objective evidence demonstrates that a loss event
has an impact on the future cash flows that can be estimated reliably.
Evidence of impairment is considered at both a specific asset level and collective level.
All individually significant financial assets are assessed for specific impairment. All
significant assets found not to be specifically impaired are then collectively assessed
for any impairment that has been incurred but not yet identified. Assets that are not
individually significant are then collectively assessed by grouping together financial
assets (carried at amortised cost) with similar risk characteristics.
Objective evidence that financial assets (including equity securities) are impaired can
include default or delinquency by a borrower, restructuring of a loan or advance by the
Group on terms that the Group would not otherwise consider, indications that a
borrower or issuer will enter bankruptcy, the disappearance of an active market for a
security, or other observable data relating to a group of assets such as adverse
changes in the payment status of the borrowers or issuers in the group, or economic
conditions that correlate with defaults in the group.
Impairment losses on assets carried at amortised cost are measured as the difference
between the carrying amount of the financial assets and the present value of
estimated cash flows discounted at the assets' original effective interest rate. Losses
are recognised in profit or loss and reflected in an allowance account against loans
and advances.
If in a subsequent period the amount of an impairment loss decreases and the

decrease can be linked objectively to an event occurring after the write down, the
write-down or allowance is reversed through the statement of profit or loss.
(h) Off-setting
Financial assets and liabilities are offset and the net amount is reported in the
statement of financial position when and only when the Group has a legal right to set
off the amounts and it intends to settle on a net basis.
146

Income and expenses are presented on a net basis only when permitted under IFRS
or for gains and losses arising from a group of similar transactions such as in the
Group's trading actvities.
3.05 Foreign currency accounts
Foreign currency accounts comprise balances held in the current accounts maintained
with different central banks and foreign commercial banks in the designated foreign
currency. These are measured at each reporting date by translating to the functional
currency at the exchange rates prevailing on that date. Gains and losses arising upon
translation are recognised in the statement of profit or loss and are subsequently
transferred from retained earnings to revaluation reserve - foreign currency accounts
and currency fluctuation reserve (refer to note 3.03 for accounting policy on foreign
exchange gain/loss).
3.06 Foreign investments
Foreign investments comprise short term interest bearing deposits held with overseas
commercial banks for periods ranging from 1 to 3 months in designated foreign
currencies, overnight investment, foreign currency treasury bills purchased at a
discount and interest bearing foreign bonds. The carrying amount of these investments
in foreign currency at each reporting date is translated to the functional currency at the
exchange rate on that date. Gains and losses arising upon translation are recognised
in the statement of profit or loss and are subsequently transferred to revaluation
reserve - foreign currency accounts.
3.07 Other foreign currency financial assets
Other foreign currency financial assets comprise Swift shares and accrued interest and
dividend thereof. Swift shares have no quoted market price, and are measured at cost.
3.08 Taka coin and cash balances
Taka coin and cash balances represents the face value of unissued one and two Taka
coins and notes held by the Bank purchased from the Government at respective face
values, cash and cash equivalents held with SPCBL and cash deposit with Sonali
Bank Limited, Mymensingh branch.
3.09 Loans to the Government of Bangladesh
Loans to the Government of Bangladesh (the Government) consist of "Ways and

Means" advances, as well as credit facilities in the form of overdraft (block and
current), and Government treasury bills and bonds.
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Ways and Means Advance (WMA)
When total payments to the Government exceed total deposits from the Government,
the excess of payment over receipt, with a limit not exceeding Taka 40,000 million
(2014: Taka 40,000 million), is treated as WMA with interest being charged thereon at
the repo rate. WMA is realised only after realisation of Government overdraft-current
account balance in full.
Overdraft - current and block
Government borrowing in excess of the Taka 40,000 million limit set for WMA are
recognised as overdraft-current with a limit not exceeding Taka 40,000 million (2014:
Taka 40,000 million). Interest is charged thereon at a rate one percent higher than the
repo rate. Any recovery or surplus realised by the Bank from the Government is first
applied to the overdraft-current account balance. Any surplus remaining after
adjustment of the overdraft-current balance in full then applied to the WMA.
Overdraft block was formerly known as Government treasury bills. At the beginning of
the financial year 2006-2007 the balance of Government treasury bills was transferred
to overdraft-block account. From the financial year 2007 and onwards an amount of
Taka 15,000 million has been repaid every year by the Government. Interest is
charged thereon at the rate of 91 day treasury bill.
Treasury bills and bonds
Government treasury bills and bonds are the securities which are purchased and held
by the Bank when commercial banks and financial institutions do not purchase those
from the Government. These are measured at fair value at each statement of financial
position date.
3.10 Local currency investments
Group investment comprises investment in debenture of BHBFC, shares of the ICB

Islamic Bank Ltd and short term deposit with local commercial banks . Investment in
debentures and shares are measured at fair value.
3.11 Local currency loans to banks, financial institutions and employees
These comprise loans to nationalised commercial and specialised banks, other

scheduled banks and financial institutions and loans to the Bank employees. These
are reported net of allowances for loan impairment losses if any.
148

3.12 Gold and silver
Physical gold and silver are stored at Motijheel branch of the Bank. These are stated at
market value. Valuation gains and losses are recognised in OCI and are reported
under gold and silver revaluation reserves the in statement of changes in equity.
In managing its investment portfolio, the Bank lends part of its gold holdings to first-
class foreign financial institutions. It receives interest in return. Gold lending
transactions are effected on a secured basis. The gold price risk remains with the
Bank. Gold investments are entered in the statement of financial position under claims
from gold transactions and measured at market value. The interest accrual is
recognised under Interest income - foreign currency operations.
3.13 Property, plant and equipment
(a) Recognition and measurement
Items of PPE are initially recognised at cost and subsequently carried at revalued
amounts, being fair values at the date of the revaluation, less subsequent accumulated
depreciation and impairment losses if any.
Land and buildings, appearing as items of PPE are used for its operating, administrative
and staff's residence purposes.
(b) Revaluation
If an assets carrying amount is increased as a result of a revaluation, the increase is

recognised in OCI and accumulated in equity under the heading of revaluation
reserve. However, the increase is recognised in profit or loss to the extent that it
reverses a revaluation decrease of the same asset previously recognised in profit or
loss.
If an assets carrying amount is decreased as a result of a revaluation, the decrease is

recognised in profit or loss. However, the decrease is recognised in OCI to the extent
of any credit balance existing in the revaluation surplus in respect of that asset. The
decrease recognised in OCI reduces the amount accumulated in equity under the
heading of revaluation surplus.
The Bank revalued its land as at 30 June 2014 and other items of PPE were revalued
as at 1 July 2009 by an independent valuer. The Bank has a policy to revalue all items
of property, plant and equipment every five years. As the policy on measurement and
recognition of PPE is under review, no revaluation has been performed in this respect
since 2009.
149

The Subsidiary's property, plant and equipment were revalued as at 1 July 2013 by an
independent valuer. The revalued property, plant and equipment reflecting the fair
values of the assets are incorporated in the consolidated financial statements.
Significant methods and assumptions for revaluation of items of property, plant and
equipment were as follows:
(i) Land was revalued on a reasonable approximation basis. The valuer applied their
knowledge of recorded land sales in the respective areas to land measurement
established at last valuation;
(ii) Buildings, capital work in progress, electrical installation and gas installation were
revalued on the basis of fair values of materials, labour and direct overheads
used in construction and installation; and
(iii) Mechanical equipment, fixture and fittings and motor vehicles were revalued on the
basis of replacement costs.
(c) Subsequent costs
Cost of replacing a part of PPE is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the
Group and its cost can be measured reliably. The carrying amount of the replaced part
is derecognised. The costs of the day-to-day servicing of PPE are recognised in the
statement of profit or loss as incurred.
(d) Capital work in progress
Capital work in progress is recognised when it is incurred and depreciated after the
completion of the project.
(e) Depreciation
Items of property, plant and equipment are depreciated from the date they are
available for use or, in respect of self-constructed assets, from the date that the asset
is completed and ready for use. Depreciation is calculated to allocate the cost of items
of property, plant and equipment less their estimated residual values using the
straight-line basis over their estimated useful lives. Depreciation is generally
recognised in profit or loss, unless the amount is included in the cost of another asset.
Land is not depreciated. Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate. The estimated useful lives
for the current and comparative years of significant items of property, plant and
equipment are as follows:
150

Class of PPE Bank Subsidiary (SPCL)

Building and other construction 5% 2.5% - 20%
Mechanical and office equipment 10% 5% - 20%
Computer and networking 20% -
Fixture and fittings 10% 10%
Motor vehicles 20% 20%
Electrical installation 20% -
Gas installation 20% -
(f) Borrowing cost capitalisation
The Bank capitalises borrowing costs in accordance with the provision of IAS 23 as
part of the cost of assets that are directly attributable to the acquisition, construction,
or production of a qualifying asset if following conditions are met:
z It is probable that they will result in future economic benefits to the entity;
z The costs can be measured reliably.
If borrowing costs do not meet both the criteria, they are recognised as expenses. For
the purpose of capitalisation, a qualifying assets is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale.
(g) Impairment
The carrying value of the Banks property, plant and equipment and intangible assets
are reviewed at each balance sheet date to determine whether there is any indication
of impairment. If any such indication exists, the asset's recoverable amount is
estimated. An impairment loss is recognised whenever the carrying amount of that
asset or its cash-generating unit exceeds its recoverable amount. Impairment losses, if
any, are recognised in the profit and loss account. For the assets that have indefinite
useful life, the recoverable amount is estimated at each balance sheet date.
The recoverable amount of asset is the greater of net selling price and value in use.
The estimated future cash flows are discounted to their present value using discount
rate that reflects the current market assessment of the time value of money and the
risk specific to the asset. For an asset that does not generate significantly independent
cash inflows, the recoverable amount is determined for the cash generating unit to
which the asset belongs.
An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount.
151

An impairment loss is reversed only to the extent that the asset's carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
3.14 Intangible assets and their amortisation
Software acquired by the Group is measured at cost less accumulated amortisation

and accumulated impairment losses if any.
Expenditure on internally developed software is recognised as an asset when the

Group is able to demonstrate its intention and ability to complete the development and
use the software in a manner that will generate future economic benefits, and can
reliably measure the costs to complete the development. The capitalised costs of
internally developed software include all costs directly attributable to developing the
software and capitalised borrowing costs, and are amortised over its useful life.
Internally developed software is stated at capitalised cost less accumulated
amortisation and impairment.
Subsequent expenditure on software assets is capitalised only when it increases the

future economic benefits embodied in the specific asset to which it relates. All other
expenditure is expensed as incurred. Software is amortised on a straight line basis in
profit or loss over its estimated useful life, from the date that it is available for use.
The estimated useful life of software for the current and comparative periods is five
years. Amortisation methods, useful lives and residual values are reviewed at each
reporting date and adjusted if appropriate.
3.15 Securities borrowing, lending business and repurchase transactions
In course of its financial market operations, the Bank engages in repurchase

agreements involving Government treasury bills and bonds (which is used as a
collateral for repurchase transactions). When the Bank sells a financial asset and
simultaneously enters into an agreement to repurchase the asset (or a similar asset) at
a fixed price on a future date, the arrangement is accounted for as a deposit, and the
underlying asset continues to be recognised in the financial statements. Similarly,
when commercial banks sell a financial asset to the Bank and simultaneously enter
into an agreement to repurchase the asset at a fixed price on a future date, the
agreement is accounted for as a loan, and the underlying asset is not recognised in
the financial statements.
3.16 Employee benefits
Employee benefits are all forms of consideration given by the entity in exchange for
service rendered by an employee. Employee benefits are recognised as:
152

(a) a liability (accrued expense) when an employee has provided service in exchange
for employee benefits to be paid in the future; and
(b) an expense when the entity consumes the economic benefit arising from service
provided by an employee in exchange for employee benefits.
3.17 Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and

are expensed as the related service is provided. A provision is recognised for the
amount expected to be paid under short-term cash bonus, medical allowances or any
others are charged as expenses in the statement of profit or loss.
3.18 Post employment benefits
Post-employment benefits are employee benefits (other than termination benefits) which
are payable after the completion of employment. The Group operates a number of post-
employment benefit plans and recognises expenses for these plans in the statement of
profit or loss.
(a) Defined contribution plans
Defined contribution plans are post-employment benefit plans under which an entity pays
fixed contributions into a separate entity (a fund) and will have no legal or constructive
obligation to pay further contributions if the fund does not hold sufficient assets to pay all
employee benefits relating to employee service in the current and prior periods.
(i) Contributory provident fund
Bank and employees contribute to the fund, which invests in various securities. The
Bank commits a return of 13% on the balance of the contributed amount. In the
event that the return from securities is lower than the committed return of 13%, the
shortfall, if any, would be paid by the Bank and is recognised in the statement of
profit or loss. Bank's obligations for contributions to the above fund are recognised
as an expense in the statement of profit or loss as incurred.
(b Defined benefit plans
Defined benefit plans are post-employment benefit plans other than defined contribution
plans.
(i) General provident fund
Employees contribute at various rates of their basic salaries to the fund. No

contributions are made by the Bank for the above fund. The provident fund invests
in various securities and the Bank has committed a return of 13% (2014: 13%). Any
shortfall in the return from investments is funded by the Bank by charging in its
statement of profit or loss.
153

(ii) Pension scheme

Employees are entitled to pension amounting to maximum of 80% of their last
basic salary. 50% of the pension amount is paid as a lump sum computed at the
rate of Taka 230 (2014: Taka 230) per Taka 1 surrendered from the pension.
Employees may choose to surrender the remaining 50% for a lump sum payment
computed at the rate of Taka 115 (2014: Taka 115) per Taka 1 or to receive their
pension monthly over the remaining lifetime.
All employees irrespective of joining date are entitled to medical allowance in cash
(Taka 700 per month upto age 65 years and Taka 1,000 after 65 years) even after
retirement as prescribed by the government.
The Bank actuarially valued its pension liabilities as at 30 June 2012. The
calculation was performed by a qualified actuary using the projected unit credit
method. Actuarial gains or losses arising from the change in defined benefit
obligation are recognised in other comprehensive income. However, Bank did not
make any acturial valuation this year in view of the declaration of the national pay
scale which will necessitate changes in the salary structures and it was considered
prudent to do the acturial valuation based on the new pay scale.
(iii) Gratuity scheme
On retirement the employees are entitled to receive two months of final basic
salary for every year of service. The Bank actuarially valued its gratuity scheme
and measured its liability for defined benefit obligation as at 30 June 2012. The
calculation was performed by a qualified actuary using the projected unit credit
method. Actuarial gains or losses arising from the change in defined benefit
obligation are recognised in other comprehensive income.
When the benefits of a plan are improved, the portion of the increased benefit
relating to past service by employees is recognised as an expense in the
statement of profit or loss when the plan amendment or curtailment occurs.
(iv) Leave encashment
Those employees who have unutilised leave up to one year or more at the time of
retirement age of 59 are allowed to leave with salary for one year.The remaining
unutilised leave is encashed (maximum twelve months). Employees are not
allowed to encash their unutilised leave until reaching retirement age.
3.19 Other long-term employee benefits
Other long-term employee benefits are employee benefits (other than post-
employment benefits and termination benefits) which do not fall due wholly within
twelve months after the end of the period in which the employees render the related
service. All employees after retirement are entitled a maximum of Taka 1,000 per year
in the form of medicine.
154

3.20 Provisions
Provisions are recognised in respect of restructuring, redundancy and legal claims

arising from past events where it is probable that an outflow of resources will be
required to settle the obligations and the amount can be reliably estimated.
A provision is recognised in the statement of financial position when the Group has a
legal or constructive obligation as a result of past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the obligations a
reliable estimate can be made of the amount of the obligation.
A legal obligation is an obligation that derives from a contract, legislation or other

operation of law. A constructive obligation is an obligation that derives from an entitys
actions such as by an established pattern of past practice, published policies etc. The
amount recognised as a provision is the best estimate of the expenditure required to
settle the present obligation at the reporting date. Where the effect of the time value of
money is material, the amount of provision is the present value of the expenditures
expected to be required to settle the obligation. Provisions are reviewed at each
reporting date and adjusted to reflect the current best estimate and any changes in the
estimates are applied prospectively.
3.21 Notes in circulation
Currency issued by the Bank represents a claim on the Bank in favour of the holder. The
liability for currency in circulation is recorded at face value in the financial statements.
3.22 Government grants
Government grants are recognised at fair value when there is reasonable assurance
that the Group will comply with the conditions attached to them and the grants will be
received. Grants related to purchase of assets are treated as deferred income and
allocated to the statement of profit or loss over the useful lives of the related assets.
3.23 Interest income and expenses
Interest income and expenses are recognised in the statement of Profit or Loss and
Other Comprehensive Income using the effective interest rate method. The effective
interest rate is the rate that exactly discounts the estimated future cash payments and
receipts through the expected life of the financial asset or liability (or, where appropriate,
a shorter period) to the carrying amount of the financial asset or liability. The effective
interest rate is established on initial recognition of the financial asset and liability and is
not revised subsequently.
Interest income and expenses include the amortisation of any discount or premium or
other differences between the initial carrying amount of an interest bearing instrument
and its amount at maturity calculated on an effective interest rate basis.
155

Fees and commission income and expenses that are integral to the effective interest
rate on a financial asset or liability are included in the measurement of the effective
interest rate.
3.24 Commission and discounts
Commission income arises on instruments issued by the Group, long outstanding

entries of the sundry accounts, sale proceeds of sundry items, car and bus fares
realised from the staff and other miscellaneous items.
3.25 Dividend income
Dividend income is recognised in the separate financial statements of the Bank when
the right to receipt of income is established.
3.26 Income tax
(a) Bangladesh Bank
The Bank is not subject to income taxes on any of its income, stamp duties, and
customs duties on gold, silver, coins, currency notes, security papers and any other
goods that may be specified by the Government as per Article 73, 74 and 75 of
Bangladesh Bank Order, 1972.
(b) Subsidiary
The Subsidiary is subject to income tax. Income tax on the profit or loss for the year
comprises of current tax and deferred tax. Income tax is recognised in the statement of
profit or loss except to the extent that it relates to items recognised directly to equity, in
which case it is recognised in equity. Present applicable income tax rate is 35%.
Current tax is expected tax payable on the taxable income for the year, using tax rates
enacted or substantively enacted at the reporting date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is provided for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amount used for taxation
purposes. Deferred tax is not recognised for the following temporary differences:
the initial recognition of goodwill, the initial recognition of assets and liabilities in a
transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss, and differences relating to investments in subsidiaries to the extent
that they probably will not reverse in the foreseeable future. Deferred tax is measured at
the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the
reporting date.
156

3.27 Subsequent events
Events after the reporting date that provide additional information about the Group's
position at the reporting date or those that indicate the going concern assumption is
not appropriate are reflected in the financial statements. Events after the reporting
period which are not adjusting events are disclosed in the notes when material in
compliance with IAS 10 Events after the Reporting Period. Up to the date the financial
statements were authorised for issue, no events have occurred which require to
disclosure in the financial statements.
2015 2014
4 Foreign currency accounts Taka '000 Taka '000
The accounts represent the equivalent accumulated value of different foreign currencies held
with other central banks and balances of deposits with foreign commercial banks.
Balance held with

Other Central Banks 19,546,523 16,829,772
Foreign commercial banks 1,469,337 962,455
Total 21,015,860 17,792,227
5 Foreign investments
Overnight Investment 247,393,553 483,942,828

Short term deposits with overseas commercial banks 674,465,879 492,050,716
US Dollar treasury bills 83,279,606 83,075,584
Foreign bonds 679,254,220 357,890,893
Total 1,684,393,258 1,416,960,021
6 International monetary fund (IMF) related assets and liabilities
6.01 Assets held with International Monetary Fund
Quota 58,352,886 64,000,373

SDR holding 72,789,125 84,454,866
Interest receivable on SDR holding 6,174 12,871
Total 131,148,185 148,468,110
6.02 Liabilities with International Monetary Fund
IMF Securities 56,675,010 62,320,401

IMF-1 and IMF-2 account 1,617,261 1,624,626
SDR allocation 55,847,748 61,252,784
IMF extended credit facility 50,016,838 54,857,548
Loan under the Poverty Reduction and Growth Facility 3,314,286 8,266,285
Interest payable 4,732 10,192
Total 167,475,874 188,331,836
157

Bangladesh has been a member of the International Monetary Fund ("IMF") since
1972. The Bank also acts as both the fiscal agent and the depository for the IMF. As
fiscal agent, Bangladesh Bank is authorised to carry out all operations and
transactions with the IMF. As depository, Bangladesh Bank maintains the IMFs
currency holdings and ensures that the assets and liabilities of IMF membership are
properly reflected in its accounts and presented in its financial statements.
The quota of Bangladesh is its membership subscription. Quota is the amount of

money that each IMF member country is required to contribute to the IMF. A member
must pay its subscription in full upon joining the fund; up to 25 percent must be paid in
SDRs or widely accepted currencies such as the US dollar, euro, yen or pound
sterling, while the rest is paid in the member's own currency. The subscription is
granted mainly by the issue of promissory notes in favor of the IMF and partly paid in
reserve assets, partly by the Government of Bangladesh and partly by deposits to the
IMF account maintained with the Bank.
Special Drawing Rights (SDR) are allocated by the IMF to members on the basis of
members' quota at the time of the SDR allocation. Bangladesh Bank pays interest on
its SDR allocations and earns interest on its holdings of SDR.
IMF has revalued SDR against Bangladesh currency (Taka) on 30 April 2015.
Accordingly, IMF related assets and liabilities were translated to Taka at the exchange
rate ruling at 30 June 2015 (converted at the rate of Taka 0.00913 per one SDR).
2015 2014
Taka '000 Taka '000
7 Gold and silver
Gold 6,188,335 24,982,543

Silver 226,328 301,135
Total 6,414,663 25,283,678
The Bank has in total 443,112.24 troy ounce of Gold and 185,115.91 troy ounce of Silver under
its holding.
8 Claims from gold transactions 34,181,082 19,451,963
These represent claims against gold loan to Standard Chartered Bank, London and HSBC,
London for 3 to 12 months. The physical gold are held on site by Bank of England, London.
158

2015 2014
9 Foreign currency loans to banks Taka '000 Taka '000
Export Development Fund (EDF) Dollar investment 127,742,085 105,186,763

Central Bank of Iraq - 296,164
Rupali Bank Karachi 10,735 11,040
127,752,820 105,493,967
Provision for loan losses (10,735) (307,204)
Total 127,742,085 105,186,763
This non-convertible account was created in 1979 on request of Bangladesh Bank. The purpose
of creating the account is to adjust some unadjusted export bills prior to our independence. The
principal amount of this account can not be remitted, transferred and converted. But the interest
can be transferred after paying tax and complying with the rules of the State Bank of Pakistan.
10 Other foreign currency financial assets
Swift shares 80 80
Interest receivable 6,680,385 4,595,173
Total 6,680,465 4,595,253
10.a Bank has bought one share of SWIFT as part of membership of the said organisation. Face
value of the share is equivalent to Taka 80,474.57.
10.b Interest receivable represents interest on account of short term deposits with foreign banks,
foreign bonds, EDF investment and gold investment.
11 Consolidated Taka coin and cash balances
Taka coin 303,316 516,415

Cash balances (SPCBL) 14,162,281 810,184
Cash balances (separate) 18,390 29,825
Total 14,483,987 1,356,424
11.01 Taka coin and cash balances
Taka coin 303,316 516,415

Cash balances 18,390 29,825
Total 321,706 546,240
Taka coin and cash balances represent the face value of unissued one and two taka
coins and notes held by the Bank purchased from the Government at respective face
values, cash and cash equivalents held with SPCBL and cash deposit with Sonali
Bank Limited, Mymensingh branch.
159

2015 2014
Taka '000 Taka '000
12 Securities purchased under agreement to resell - 980,000
When commercial banks sell a financial asset to the Bank and simultaneously enter into an
agreement to repurchase the asset at a fixed price on a future date, the agreement is accounted
for as a loan, and the underlying asset is not recognized in the financial statements. On the
reporting date, there is no securities purchased under agreement to resell.
13 Loans to the Government of Bangladesh
Ways and means advance (WMA) 24,354,400 -

Overdraft - block (ODB) 86,850,000 131,510,000
Overdraft - current (ODC) - -
Treasury bills - 2,327,168
Treasury bonds 1,085,185 35,024,775
Total 112,289,585 168,861,943
On 7 September 2014, the Government adjusted Tk. 44,660.00 million worth overdraft block
balance. However, yearly scheduled amount of Tk. 15,000 million was not offset during the
current year.
Applicable interest rates for the WMA, ODB and ODC during the year were:
WMA 5.25% 5.25%

ODC 6.25% 6.25%
ODB 5.39% 6.85%
14 Consolidated local currency investments
Debenture - BHBFC (Note - 14.c) 5,795,000 6,505,000

Short term money market investments (Note - 14.a) 462,501 1,868,910
Shares- ICB Islamic Bank Ltd. (Note - 14.d) 7,452 7,452
Others 4,134 4,110
Total 6,269,086 8,385,472
14.01 Local currency investments
Debenture - BHBFC (Note - 14.c) 5,795,000 6,505,000

Investment in subsidiary (Note 14.b) 12,000,000 500,000
Total 17,795,000 7,005,000
14.a These represent the total amount of term deposits by SPCBL with different local commercial
banks.
160

2015 2014
14.b Investment in subsidiary Taka '000 Taka '000
SPCBL is the wholly owned subsidiary of the Bank. Total paid up capital of SPCBL stood at Tk.
12,000,000 thousand after subscription of further Tk. 11,500,000 thousand on 12 November
2014 by the Bank. For the year ended 30 June 2014, SPCBL declared and paid Tk. 25 million as
dividend.
14.c Debenture - BHBFC represents subscription by the Bank of debentures issued by BHBFC from
time to time.
Rate of interest Balance as on 30 June 2015
4.5% 2,680,000
5% 3,015,000
2.75% 100,000
Total 5,795,000
14.d SPCBL holds 7,45,200 shares of Tk. 10 of ICB Islamic Bank Ltd. (Formerly the Oriental Bank
Ltd.) as per Bangladesh Bank Circular No - BRPD (R-1) 651/9(10)/2007-446 dated 2 August
2007.
15 Consolidated local currency loans to banks, financial institutions and employees
(i) Local currency loans to banks, financial institutions
State owned banks:

Commercial Banks 4,963,167 4,105,182
Specialised Banks* 33,362,448 39,719,785
38,325,615 43,824,967
Provision for impairment (Note 15.a) (140,426) (206,952)
38,185,188 43,618,015
Other banks and financial institutions:
Private banks 3,019,500 2,634,900
Other loans and advances 26,172,779 28,601,184
29,192,279 31,236,084
Total (i) 75,807,208 82,449,115
(ii) Local currency loans and advances to employees
Loans and advances to employees 31,782,362 27,750,850

Provision for loan losses (Note 15.b) (549,357) (495,271)
Total (ii) 31,233,004 27,255,579
Total loans (i + ii) 107,040,212 109,704,694
161

2015 2014
Taka '000 Taka '000
15.01 Local currency loans to banks, financial institutions and employees
(i) Local currency loans to banks, financial institutions
State owned banks:

Commercial Banks 4,963,167 4,105,182
Specialised Banks * 33,362,448 39,719,785
38,325,615 43,824,967
Provision for impairment (Note 15.a) (140,426) (206,952)
38,185,188 43,618,015
Other banks and financial institutions:
Private banks 3,019,500 2,634,900
29,192,279 31,236,084
Total (i) 75,807,208 82,449,115
(ii) Local currency loans and advances to employees
Loans and advances to employees 30,655,637 26,674,233

Provision for loan losses (Note 15.b) (549,357) (495,271)
Total (ii) 30,106,279 26,178,962
Total loans (i + ii) 105,913,487 108,628,077
*Specialised banks include banks catering the specific needs of different economic sectors
as described below:
Banks Specialized Sectors

Bangladesh Krishi Bank Agricultural
Rajshahi Krishi Unnayan Bank Agricultural
Bangladesh Samabay Bank Limited Agricultural
15.a Provision for impairment
Opening balance 206,952 226,117

Charged during the year - 140,426
Released during the year (66,525) (159,591)
Total 140,427 206,952
162

2015 2014
Taka '000 Taka '000
15.b Provision for loan losses
Opening balance 495,271 264,099

Charged during the year 54,086 231,172
Total 549,357 495,271
Provision for impairment is an asset type account which is kept for reducing loss on interest
from non-interest bearing loans. The released amount is due to write back of provision of
rescheduled Demand Loan.
Provision for loan losses is also an asset type account maintained for adjusting bad debt
staff advance interest of employees staff advance.
16 Consolidated other local currency financial assets
Interest receivables (Bangladesh bank) 169,283 929,682

Interest receivables (SPCBL) 362,365 215,532
Total 531,648 1,145,214
16.01 Other local currency financial assets
Interest receivables 169,283 929,682

Total 169,283 929,682
Interest receivables include interest receivable on Government Treasury Bonds, interest

receivable on Debenture-HBFC and debtors adjusting account of Debt Management
Department and Expenditure Management Department.
163

17 Consolidated Property Plant & Equipment

i) 2015 Taka '000
Mechanical Computer Capital
Building Fixture Electrical Gas
Land and office and Motor work in Total
Particulars and other and
equipment networking vehicles installation installation progress
construction fittings
Cost
As at 1 July 2014 36,551,304 4,829,898 4,103,203 1,681,243 158,129 241,289 216,021 811 1,580,747 49,362,645
Addition during the year - 10,296 98,642 118,830 18,489 3,586 16,053 1,205 340,454 607,555
Transfers during the year - 228,753 28,838 - - - 37,020 - (294,611) -
Disposals during the year - (5,102) (419) (2,128) (165) (1,847) (114) - - (9,775)
As at 30 June 2015 36,551,304 5,063,845 4,230,264 1,797,945 176,453 243,028 268,980 2,016 1,626,590 49,960,425
4257227
Accumulated depreciation
As at 1 July 2014 - 938,987 688,352 989,711 75,411 134,134 94,432 796 - 2,921,823
Charge for the year - 253,445 219,034 333,895 13,894 36,905 35,884 202 - 893,259
Disposals during the year - (1,314) (391) (1,343) (78) (1,847) (112) - - (5,085)
As at 30 June 2015 - 1,191,118 906,995 1,322,263 89,227 169,192 130,204 998 - 3,809,997
Net book value

As at 30 June 2015 36,551,304 3,872,727 3,323,269 475,682 87,226 73,836 138,776 1,018 1,626,590 46,150,428
As at 30 June 2014 36,551,304 3,890,911 3,414,851 691,532 82,718 107,155 121,589 15 1,580,747 46,440,822
The Bank revalued its land as at 30 June 2014 and other items of property, plant and equipment were revalued as at
1 July 2009 by an independent valuer. The Subsidiary's property, plant and equipment were revalued on 1 July 2013.
Refer to note 3.13 (b).
Land includes Taka 27,539 million of leasehold land, all on standard terms of thirty to ninety-nine years.
As the Bank's policy on measurement and recognition of property, plant and equipment is currently under review, no
revaluation for assets other than land has been carried out since 2009.
164

ii) 2014
Taka '000
Cost
As at 1 July 2013 21,369,423 4,213,240 3,740,394 1,571,693 153,163 231,548 122,370 811 1,513,391 32,916,033
Addition during the year 189,673 37,438 191,007 109,729 15,717 28,546 69,403 - 360,979 1,002,492
Valuation gain/(loss) 14,992,208 427,038 135,039 15,554,285
Transfers during the year - 155,426 36,763 77,185 - - 24,249 - (293,623) -
Disposals during the year - (3,244) - (77,364) (10,751) (18,805) (1) - - (110,165)
As at 30 June 2014 36,551,304 4,829,898 4,103,203 1,681,243 158,129 241,289 216,021 811 1,580,747 49,362,645
As at 1 July 2013 - 1,160,200 1,624,978 664,772 67,454 92,075 65,315 634 - 3,675,428
Disposals during the year - (462,443) (1,144,584) - (4,553) (1,355) - - - (1,612,935)
As at 30 June 2014 - 938,987 688,352 989,711 75,411 134,134 94,432 796 - 2,921,823
Net book value

As at 30 June 2014 36,551,304 3,890,911 3,414,851 691,532 82,718 107,155 121,589 15 1,580,747 46,440,822
As at 30 June 2013 21,369,423 3,053,040 2,115,416 906,921 85,709 139,473 57,055 177 1,513,391 29,240,605
1 July 2009 by an independent valuer.
Land includes Taka 17,080 million of lease hold land, all on standard terms of ninety-nine years.
165

17.01 Property, plant and equipment

i) 2015 Taka '000
Cost
As at 1 July 2014 32,892,704 3,621,579 1,032,518 1,681,243 119,475 216,702 216,021 811 1,578,493 41,359,546
Addition during the year 6,606 51,397 118,830 18,436 3,586 16,053 1,205 288,281 504,394
Transfers during the year 228,753 26,584 37,020 (292,357) -
Disposals during the year (5,102) (419) (2,128) (165) (114) (7,928)
As at 30 June 2015 32,892,704 3,851,836 1,110,080 1,797,945 137,746 220,288 268,980 2,016 1,574,417 41,856,012
As at 1 July 2014 - 881,406 534,073 989,711 42,157 116,186 94,432 796 - 2,658,761
Disposals during the year - (1,314) (392) (1,344) (78) - (113) - - (3,241)
As at 30 June 2015 - 1,075,587 611,900 1,322,263 54,930 151,613 130,204 999 - 3,347,497
Net book value

As at 30 June 2015 32,892,704 2,776,249 498,180 475,682 82,816 68,675 138,776 1,017 1,574,417 38,508,515
As at 30 June 2014 32,892,704 2,740,173 498,445 691,532 77,318 100,516 121,589 15 1,578,493 38,700,785
166

ii) 2014
Taka '000
Cost
As at 1 July 2013 20,391,193 3,433,198 836,902 1,571,693 114,802 214,337 122,370 811 1,512,152 28,197,458
Addition during the year 189,673 37,438 158,853 109,729 15,424 21,170 69,403 - 358,725 960,415
Valuation gain/(loss) 12,311,838 - - - - - - - - 12,311,838
Transfers during the year - 154,187 36,763 77,185 - - 24,249 - (292,384) -
Disposals during the year - (3,244) - (77,364) (10,751) (18,805) (1) - - (110,165)
As at 30 June 2014 32,892,704 3,621,579 1,032,518 1,681,243 119,475 216,702 216,021 811 1,578,493 41,359,546
As at 1 July 2013 - 698,937 465,232 664,772 35,234 75,112 65,315 634 - 2,005,236
Disposals during the year - (1,180) - - (4,553) (1,355) - - - (7,088)
As at 30 June 2014 - 881,406 534,073 989,711 42,157 116,186 94,432 796 - 2,658,761
Net book value

As at 30 June 2014 32,892,704 2,740,173 498,445 691,532 77,318 100,516 121,589 15 1,578,493 38,700,785
As at 30 June 2013 20,391,193 2,734,261 371,670 906,921 79,568 139,225 57,055 177 1,512,152 26,192,222
167

2015 2014
18 Intangible assets Taka '000 Taka '000
Intangible asset at cost 1,183,974 1,178,358
Accumulated amortisation (865,368) (623,255)
Capital work in progress 126,573 123,139
Total 445,179 678,242
Balance represents the accumulated value of Enterprise Resources Planning (ERP), Core
Banking Solutions (CBS), Enterprise Data Warehouse (EDW), Bangladesh Automated Clearing
House (BACH), Bangladesh Electronic Fund Transfers Network (BEFTN), Credit Information
Bureau (CIB) and Bank's in-house built softwares.
19 Consolidated other non financial assets
Prepayments and advances 1,144,229 924,283
Stock 6,986,234 4,891,562
Sundry debtors 1,007,415 592,000
Total 9,137,878 6,407,845
19.01 Other non-financial assets

Prepayments and advances 4,127,278 3,772,413
Stock (Printed books, forms and papers, 31,303 27,692
office supplies and stock of medicine)
Total 4,158,581 3,800,104
20 Deposits from banks and financial institutions

Foreign currency deposits from commercial banks 78,892,716 74,802,048
(Foreign currency clearing)
Asian Clearing Union (ACU) 70,261,285 75,093,095
Interest payable to ACU 5,930 2,393
Total 149,159,932 149,897,535
21 Notes in circulation
Notes in circulation 973,633,537 847,170,638
Cash in hand (88) (38)
Total 973,633,449 847,170,600
Notes in circulation represent currency issued having a claim on Bangladesh Bank. The
denomination of notes in circulation as at 30 June 2015 was as follows:
2015 2014
Denomination Number in pieces Value in Taka '000 Value in Taka '000
5 Taka coin 795,587,204 3,977,936 3,803,145
5 Taka note 773,856,189 3,869,281 3,547,743
10 Taka note 1,262,478,936 12,624,789 12,743,266
20 Taka note 415,286,916 8,305,738 7,159,252
50 Taka note 179,632,928 8,981,646 8,400,687
100 Taka note 707,500,119 70,750,012 68,930,841
500 Taka note 886,746,888 443,373,444 424,240,371
1000 Taka note 421,750,690 421,750,690 318,345,333
Total 5,442,839,870 973,633,537 847,170,638
168

2015 2014
Taka '000 Taka '000
Liability for notes in circulation is recorded at its face value in the statement of financial position.
In accordance with Article 30 of Bangladesh Bank Order, 1972, these liabilities are supported by
the following assets:
Gold 6,188,335 6,134,183

Silver 226,328 301,135
Approved Foreign Exchange 870,000,000 800,000,000
Bangladesh Government securities 67,036,120 10,214,848
Taka coin 303,316 516,415
Total 973,633,537 847,170,638
22 Deposits from banks and financial institutions
State owned commercial banks 123,192,501 102,556,236

Government specialised banks 15,436,474 22,205,015
Private banks 333,584,536 288,472,651
Foreign banks 26,183,067 26,743,289
Financial institutions 4,620,696 3,804,812
Total 503,017,274 443,782,003
Deposits from banks and financial institutions comprise required reserve deposits such as Cash
Reserve Ratio (CRR), calculated at a rate of 6.5% (2014: 6.5%) on the bank's liability base,
together with balances held for settlement purposes.
23 Short term borrowings
Securities sold under agreement to repurchase 166,350,000 37,930,000

Bangladesh Bank bills 14,371,995 19,734,690
Total 180,721,995 57,664,690
Securities sold under agreement to repurchase and Bangladesh Bank bills are instruments used
by the Bank to withdraw liquidity from the market. The balances at the year end reflect market
conditions at that date.
169

Restated
2015 2014
Taka '000 Taka '000
24 Consolidated other local currency financial liabilities
Government deposits 5,033 41,199,148
Other deposits (Note 24.02) 121,568,330 104,206,158
Bank notes adjusting account - demonetised Pakistani notes 3,230 3,230
Sundry creditors account 4,222,001 2,983,413
Interest suspense account 732 715
Deposits from donor agencies 22,337,551 21,422,994
Inter-branch adjustments (suspense) (211,897) 437,732
Credit guarantee scheme for small industrial investors 248,808 248,808
Provision for pension* 6,618,747 5,738,714
Provision for gratuity* 1,470,184 1,553,726
Provision for leave encashment 1,534,606 1,664,214
Small and medium enterprise fund - Government 1,772,064 1,772,064
Loan from Govt of Bangladesh - Central bank strengthening project(Note-24.03) 2,721,734 2,764,580
DFID -RPP Project 137,029 391,272
Small and medium enterprise fund ADB-2 7,332,907 6,667,569
Deferred tax liability 1,133,504 594,810
Miscellaneous 521,144 456,806
Others - subsidiary 1,421,567 1,210,821
Fund for small investor affected in capital market 1,043,971 -
Total 173,881,247 193,316,773
24.01 Other local currency financial liabilities

Government deposits 5,033 41,199,148
Other deposits (Note 24.a) 121,568,330 104,206,158
Bank notes adjusting account - demonetised Pakistani notes 3,230 3,230
Sundry creditors account 4,222,919 4,290,128
Interest suspense account 732 715
Deposits from donor agencies 22,337,551 21,422,994
Inter-branch adjustments (suspense) (211,897) 437,732
Credit guarantee scheme for small industrial investors 248,808 248,808
Provision for pension* 6,618,747 5,738,714
Provision for gratuity* 1,470,184 1,553,726
Provision for leave encashment 1,534,606 1,664,214
Small and medium enterprise fund - Government 1,772,064 1,772,064
Loan from Govt of Bangladesh - Central bank strengthening project (Note-24.b) 2,721,734 2,764,580
DFID -RPP Project 137,029 391,272
Small and medium enterprise fund ADB-2 7,332,907 6,667,569
Miscellaneous 521,144 456,806
Fund for small investor affected in capital market 1,043,971 -
Total 171,327,094 192,817,857
*Refer to note 51 for details.
170

2015 2014
Taka '000 Taka '000
24.a Other deposits comprise Bangladesh Government special islamic bonds fund deposit, employees
provident fund deposit, liquidator bank deposit, scheduled bank's insurance fund deposit, security
deposit, employees co-operative socities deposits and other sundry deposits.
24.b Unutilised Central Bank Strengthening Project (CBSP) fund
Government of Bangladesh (GOB) signed a credit agreement with the International
Development Agency (IDA) for a project named Central Bank Strengthening Project (CBSP).
The related credit reference is IDA 3792 BD and the project was meant for "Improvement of
efficiency of the Bank through functional reforms and large scale automation of its' business
process". Subsequent to this agreement, a subsidiary Loan Agreement was signed between
GOB and Bangladesh Bank to this effect for execution of the Project. The total cost of the
project was Taka 3,892 million (USD 55.60 million), of which IDA provided Taka 3,060 million
(USD 43.71 million) through the Government and the rest Taka 832 million (USD 11.88 million)
was funded by the Bank. The project started in late 2003 and was completed on 30 April 2013.
The Bank has to repay the principal and the interest amount of the loan to Government within a
tenure of 30 years. In the year end 2014-15 total dues against the project was Taka 2,721.73
million on account of the Government. The repayments will initiate after the schedules and
process are finalised by the Government of Bangladesh. Till 30 June 2015, total outstanding
stood at Taka 100.22 million and accrued provision stood at Taka 110.89 million.
25 Capital
At 30 June 2015 the authorised and subscribed capital as per Bangladesh Bank Order 1972,
was Taka 30 million (30 June 2014: Taka 30 million). The entire capital of the Bank stands
vested in and allocated to the Government as per Article 4(1) and 4(2) of the Order.
26 Consolidated revaluation reserves
Revaluation reserve - gold and silver (Note 26.a) 10,652,011 15,550,641
Revaluation reserve - foreign currency accounts (Note 26.b) 14,570,195 51,091,529
Revaluation reserve - property, plant and equipment (Note 26.04) 40,474,443 40,474,443
Revaluation Reserve-Financial Instrument (Note 26.05) 4,507,599 -
Total 70,204,248 107,116,613
26.01 Revaluation reserves
Revaluation reserve - gold and silver (Note 26.a) 10,652,011 15,550,641
Revaluation reserve - foreign currency accounts (Note 26.b) 14,570,195 51,091,529
Revaluation reserve - property, plant and equipment (Note 26.c) 34,474,273 34,474,273
Revaluation reserve-financial instruments (Note 26.d) 4,507,599 -
Total 64,204,078 101,116,443
26.a Revaluation reserve - gold and silver
The Bank accounts for the gain/loss on revaluation of gold and silver in the statement of
other comprehensive income and subsequently transferred to a separate account,
revaluation reserve-gold and silver, which forms part of equity.
171

2015 2014
Taka '000 Taka '000
26.b Revaluation reserve - foreign currency accounts
The Bank accounts for the unrealised gain/loss on revaluation of foreign currency to the
statement of profit or loss and subsequently transferred to a separate account, revaluation
reserve-foreign currency, which forms part of equity.
26.c Revaluation reserve - property, plant and equipment
The Bank accounts for the gain/loss on revaluation of property, plant and equipment in the
statement of other comprehensive income and subsequently transferred to a separate
account, revaluation reserve - property, plant and equipment, which forms part of equity.
26.d Revaluation reserve - financial instruments
The Bank accounts for the gain/loss on revaluation of financial instruments in the statement
of other comprehensive income and subsequently transferred to a separate account,
revaluation reserve - financial instruments, which forms part of equity.
27 Currency fluctuation reserve 26,663,944 26,760,236
The Bank credited the realised gain on revaluation of foreign currencies to the statement of profit
or loss and other comprehensive income and transferred the same to a separate account -
currency fluctuation reserve, which forms part of equity.
28 Statutory funds
Rural credit fund (Note 28.a) 5,600,000 5,400,000

Agricultural credit stabilisation fund (Note 28.b) 5,600,000 5,400,000
Export credit fund (Note 28.c) 1,300,000 1,300,000
Industrial credit fund (Note 28.d) 2,187,852 2,037,852
Credit guarantee fund (Note 28.e) 879,194 879,194
Total 15,567,046 15,017,046
Statutory funds were created and maintained as per provisions of the Bangladesh Bank Order,
1972 and appropriations from profits are made in consultation with the Government of
Bangladesh.
28.a Rural credit fund
This fund was created as per Article 60(1) of Bangladesh Bank Order, 1972 for providing
short term, medium term and long term loans and advances to co-operative bank,
scheduled bank and rural credit agencies. An appropriation of Taka 200 million was made
for this fund during the year.
28.b Agricultural credit stabilisation fund
This fund was created as per Article 61 of Bangladesh Bank Order, 1972 for providing
loans and advances to apex co-operative banks. An appropriation of Taka 200 million was
made for this fund during the year.
172

2015 2014
28.c Export credit fund Taka '000 Taka '000
As per Article 63 of Bangladesh Bank Order, 1972 this fund was created for providing
medium term and short term loans and advances to scheduled banks and other credit
institutions for financing export from Bangladesh. No appropriation was made for this fund
during the year.
28.d Industrial credit fund
As per Article 62 of Bangladesh Bank Order, 1972 the fund was created for providing short
term and medium term loans and advances to co-operative banks. An appropriation of
Taka 150 million was made for this fund during the year.
28.e Credit guarantee fund
As per clause 24 of Article 16 of Bangladesh Bank Order, 1972 the Fund was created by
appropriating profit every year as per decision of the Board of Directors to cover the loss
sustained by scheduled banks for making small loans to cottage industries. No appropriation
was made for this fund during the year.
29 Non statutory funds
Small and medium enterprise fund (Note 29.a) 6,000,000 6,000,000

Housing refinance fund 6,570,000 6,570,000
Human resources development fund (Note 29.b) 349,468 402,452
Monetary management fund (Note 29.c) 200,000 200,000
Rural agri product processing industries refinance fund (Note 29.d) 1,000,000 1,000,000
Disaster management and social resposibility fund (Note 29.e) 100,000 50,000
Total 14,219,468 14,222,452
29.a Small and medium enterprise fund
This fund was created as per clause 24 of Article 16 of the Bangladesh Bank Order, 1972
for providing refinancing facilities to the schedule banks and financial institutions against
loans and advances given to the small enterprise sector and housing refinance scheme.
Appropriation to these funds are made as per decision of the Board.
29.b Human resources development fund
Human resources development fund was created as per clause 2(n) of Article 82 of
Bangladesh Bank Order,1972 and decision taken by the board of the Bank for development
of efficiency of the Bank's officials by conducting seminar, symposium, training etc. at home
and abroad. Appropriation of this fund was made from the dividend payable to Government
for the year 2010-2011.
29.c Monetary management fund
Monetary management fund was created as per decision of the Board of the Bank for
sound and smooth operation of monetary policy activities. Appropriation of this fund was
made from the dividend payable to Government for the year 2010-2011.
173

2015 2014
Taka '000 Taka '000
29.d Rural agri product processing industries refinance fund
This fund was created in 2001 for the purpose of financing rural agri product processing
industries. Under this scheme, there are 37 agri product processing industries sectors. This
fund plays an important role for developing the agri product sectors in Bangladesh.
Government of The People's Republic of Bangladesh declared this sector as "Thrust
sector" in "National Industry Policy 2010" by giving priority for development and expansion
of agri based industries.
29.e Disaster management and social resposibility fund
This fund was created by the approval of Board of Directors (6th meeting of 2013) , Minutes
no. -BD-341(2013-06)/50 on 17 June, 2013. Primariliy, the fund, Taka 50 million as
donation, was collected from Bangladesh Bank's 2012-2013 profit and subsequently Taka
50 million will be deducted from each year's profit transferring the amount to this fund. In
2014-2015, Taka 100 million has been deducted from the current year's profit.
30 Other reserves
Asset renewal and replacement reserve (Note 30.a) 3,325,985 3,034,485

Interest reserve (Note 30.b) 8,011,692 8,128,574
Total 11,337,677 11,163,059
30.a Asset renewal and replacement reserve
Every year an amount equivalent to depreciation charge against buildings and installations
are transferred to this fund during profit appropriation.
30.b Interest reserve
This was introduced in the financial year 2006-2007 as per decision of the Board, and
represents the interest accrued against the overdue loan of Bangladesh Krishi Bank and
Rajshahi Krishi Unnayan Bank.
31 Consolidated general reserve
Bangladesh Bank (Note 31.01) 4,250,500 4,250,500

SPCBL 550,000 450,000
Total 4,800,500 4,700,500
31.01 General reserve 4,250,500 4,250,500
As per Article 59 of Bangladesh Bank Order, 1972 securities of the value of Taka 30 million
was allocated by the Government and held by the Bank as the general reserve. Further an
amount of Taka 4,220.5 million was transferred to the reserve from general provision over
the years.
174

2015 2014
Taka '000 Taka '000
32 Consolidated retained earnings
Opening balance 22,525,327 46,493,169
Adjustment against due from Government (16,050) (11,829)
Adjustment against guarantee on behalf of - (4,356,350)
Rajshahi Krishi Unnayan Bank
Appropriation of profit to other funds (824,617) 147,161
Dividend paid for 2013-2014 (15,627,781) (36,302,026)
Prior year adjustment 5,303 (4,038,607)
Transferred to general reserve (100,000) (100,000)
Adjustment against revaluation - (20,775)
Profit for the year after appropriation 11,248,766 20,714,584
Closing balance 17,210,947 22,525,327
32.01 Retained earnings
Opening balance 15,643,831 40,733,254
Adjustment against due from Government (16,050) (11,829)
Adjustment against guarantee on behalf of
Rajshahi Krishi Unnayan Bank - (4,356,350)
Appropriation of profit to other funds (824,617) (50,000)
Dividend paid for 2013-2014 (15,627,781) (36,302,026)
Prior year adjustment 5,303 (4,038,607)
Adjustment against revaluation - (20,775)
Profit for the year after appropriation 10,387,918 19,690,164
Closing balance 9,568,603 15,643,831
33 Interest income
Loans to banks 1,603,486 906,507
Short term deposits with commercial banks 3,729,054 4,251,326
Bonds 6,359,498 4,708,983
US Dollar treasury bills 63,883 70,084
Claims from gold transactions 129,213 49,415
Others (SDR - investment) 39,928 73,651
Total 11,925,063 10,059,966
34 Commission and discounts
Commission on foreign currency operations 214,918 33,788
Others (trading profit on USD bond investment) 118,675 235
Total 333,593 34,023
35 Interest expense
Deposits 91,558 75,507
Asian Clearing Union (ACU) 20,230 28,425
IMF 30,887 62,688
Interest on central bank, strengthening project 20,887 28,647
Total 163,563 195,267
175

2015 2014
Taka '000 Taka '000
36 Interest income
Securities purchased under agreement to resell 1,473,884 1,427,784
Government securities 1,050,143 6,762,343
Loans and advance to the Government 6,830,530 12,738,650
Debentures 311,388 318,881
Loans to banks, financial institution and employees 4,478,140 4,597,680
Short term money market deposits 898,949 273,742
Total 15,043,034 26,119,080
36.01 Interest income
Securities purchased under agreement to resell 1,473,884 1,427,784
Government securities 1,050,143 6,762,343
Loans and advance to the Government 6,830,530 12,738,650
Debentures 311,388 318,881
Loans to banks, financial institution and employees 4,418,858 4,541,364
Total 14,084,803 25,789,022
37 Commission and discounts
Commission income from Government 5,749 3,639
Miscellaneous commission income 586,458 486,384
Gain/(loss)on sale of treasury bonds 790,263 321,928
Total 1,382,469 811,951
37.a Other income
Exchange A/C (local income) 82 133
Exchange A/C - remitance sold (local) 41 15
Exchange A/C - TT discount (local) 2,347 3,543
Exchange - miscellaneous (local) - 1
Gain on asset sale or derecognition 599 2,606
Interest income - miscellaneous -write back of provision 66,525 159,592
Grant income 254,242 379,547
Total 323,836 545,436
Other income includes exchange earnings, gain on asset derecognition and interest
provision write-back.
38 Interest expense
Bangladesh Bank bills 736,118 2,354,814
Securities sold under agreement to repurchase 1,137,470 507,924
Total 1,873,588 2,862,738
39 Commission and other expenses
Agency charges (Note 39.a) 2,642,465 2,409,580
Under writing commission on treasury bills & bonds (Note 39.b) 488,067 415,000
Interest on deposit from Undisbursed Agri Credit (Note 39.c) 22,477 29,422
Total 3,153,009 2,854,002
176

2015 2014
Taka '000 Taka '000
39.a Agency charges
Agency charge paid to Sonali Bank Limited for acting as agent of Bangladesh Bank.
39.b Underwriting commission on treasury bills and bonds
Underwriting commission paid to primary dealers for issuing Govt. treasury bill and bond.
39.c Interest on deposit from Undisbursed Agri Credit
This is paid to commercial banks against their undisbursed agri-credit.
40 Consolidated general and administrative expenses
Staff costs (Note 40.a) 6,164,947 4,318,603

Depreciation 893,262 859,329
Amortisation (intangible assets) 242,113 241,152
Directors' fees 720 741
Audit fees 8,337 12,350
Stationery 104,629 89,234
Rent, electricity etc. 309,294 292,347
Remittance of treasure 44,130 53,287
Donations 120,626 116,178
Telephone 93,962 89,265
Repairs and maintenance 425,922 401,983
Materials 3,206,419 3,126,660
Provision for Workers' Profit Participation Fund 115,931 76,152
Income tax and value added tax 778,138 1,267,741
Deferred tax 538,693 (105,840)
Miscellaneous 1,220,803 1,406,334
Total 14,267,927 12,245,517
40.a Staff costs
Salary 1,759,589 1,694,105

House rent 540,646 499,839
Contribution to contributory provident fund (95,219) (6,632)
Pension and gratuity 1,595,850 157,834
Leave encashment 2,013 11,301
General and incentive bonus 1,085,931 804,973
Income tax paid to Government (4,319) 6,055
Medical expenses 266,931 247,982
Training 154,327 140,144
Travel expenses 206,888 166,062
Lunch 304,225 300,183
Other staff costs 348,084 296,757
Total 6,164,947 4,318,603
177

2015 2014
Taka '000 Taka '000
40.01 General and administrative expenses
Staff costs (Note 40.01.a) 5,745,212 3,827,842

Depreciation 691,977 660,613
Amortisation 242,113 241,152
Directors' fee 481 523
Audit fee 8,294 12,075
Stationery 102,716 89,234
Rent 227,251 215,528
Remittance of treasure 44,130 53,287
Donations 120,626 116,178
Telephone 93,784 89,265
Repairs 386,731 389,274
Miscellaneous 759,933 1,347,400
Total 8,423,247 7,042,372
40.01.a Staff costs
Salary 1,577,827 1,479,790

House rent 540,646 499,839
Contribution to contributory provident fund (95,219) (6,632)
Pension and gratuity 1,566,700 -
General and incentive bonus 1,012,128 739,321
Income tax paid to Government (4,319) 6,055
Medical expenses 258,201 239,678
Training 153,483 140,144
Travel expenses 206,888 166,062
Lunch 271,267 266,828
Other staff costs 257,609 296,757
Total 5,745,212 3,827,842
41 Consolidated credit exposures by credit rating
Following tables represents the Group's financial assets based on Moody's credit rating of the
issuer (or equivalent moody's rating in case of rating by other agencies). For long term deposits
Aaa is the highest quality rating possible and indicates that the entity has an exceptional credit
quality and have the smallest degree of risk; Aa is excellent credit quality but are rated lower
than Aaa. Aa1 indicates the higher end of Aa category, Aa2 indicates mid range ranking of Aa
category and Aa3 indicates lower end of Aa category. For short term deposits P-1 indicates
banks rated prime -1 for deposits, and offers superior credit quality and a very strong capacity
for timely payment of short -term deposit obligations; ST-1 indicates the highest capacity for
timely repayment of obligations; ST-2 indicates a strong capacity for timely repayment of
obligations and ST-3 indicates average capacity for timely repayment of obligations.
178

2015 2014
% of % of
Credit Amount Amount financial
Rating (Taka '000) financial (Taka '000)
assets assets
i) Foreign currency financial assets
Foreign currency accounts P-1 21,015,860 0.94% 17,792,227 0.89%

Overnight Investment P-1 247,393,553 11.02% 483,942,828 24.16%
Short term deposits with overseas
commercial banks P-1 674,465,879 30.03% 492,050,716 24.57%
US Dollar treasury bills P-1 83,279,606 3.71% 83,075,584 4.15%
Foreign bonds Aaa 487,878,147 21.72% 238,757,503 11.92%
Foreign bonds Aa1, Aa2 66,104,229 2.94% 13,181,747 0.66%
Foreign bonds Aa3 30,244,944 1.35% 8,197,165 0.41%
Foreign bonds Aa, A1, A2 15,613,757 0.70% 48,078,469 2.40%
Foreign bonds A3, A+ 13,706,400 0.61% 24,486,189 1.22%
Foreign bonds B1, Ba1, Baa1, 65,706,743 2.93% 25,189,820 1.26%
Baa2, Baa3
Foreign currency loans to banks A 1,327,493 0.06% 8,975,614 0.45%
Foreign currency loans to banks Aaa to Aa 92,993,790 4.14% 93,963,942 4.69%
Foreign currency loans to banks Baa 1,364,649 0.06% 2,247,207 0.11%
Foreign currency loans to banks Unrated 32,056,154 1.43% - 0.00%
Claims from gold transactions Aa2 34,181,082 1.52% 19,451,963 0.97%
Assets held with International
Monetary Fund Unrated 131,148,185 5.84% 148,468,110 7.41%
Other foreign currency financial assets Unrated 6,680,465 0.30% 4,595,253 0.23%
Total 2,005,160,934 89.29% 1,712,454,337 85.50%
ii) Local currency financial assets
Loans to the Government of Bangladesh Ba3 112,289,585 5.00% 168,861,943 8.43%

Securities purchased under
agreement to resell Unrated - 0.00% 980,000 0.05%
Local currency investments Unrated 6,269,086 0.28% 8,385,472 0.42%
Loans to banks, financial institutions A 50,042 0.00% 3,359,856 0.17%
Loans to banks, financial institutions Aaa to Aa 7,110,357 0.32% 9,257,438 0.46%
Loans to banks, financial institutions Ba to B 14,010 0.00% - 0.00%
Loans to banks, financial institutions Baa 284,714 0.01% 17,410,752 0.87%
Loans to banks, financial institutions Unrated 68,348,084 3.04% 52,421,069 2.62%
Loans to employees Unrated 31,233,004 1.39% 27,255,579 1.36%
Other local currency financial assets Unrated 531,648 0.02% 1,145,214 0.06%
Taka coin and cash balances Ba3 14,483,987 0.64% 1,356,424 0.07%
Total 240,614,519 10.71% 290,433,747 14.50%
Total financial assets (i+ii) 2,245,775,453 100.00% 2,002,888,084 100.00%
179

41.01 Separate credit exposures by credit rating -
2015 2014
% of % of
Credit Amount Amount financial
Rating (Taka '000) financial (Taka '000)
assets assets
Foreign currency accounts P-1 21,015,860 0.94% 17,792,227 0.89%

Overnight Investment P-1 247,393,553 11.04% 483,942,828 24.20%
commercial banks P-1 674,465,879 30.09% 492,050,716 24.61%
US Dollar treasury bills P-1 83,279,606 3.72% 83,075,584 4.16%
Foreign bonds Aaa 487,878,147 21.76% 238,757,503 11.94%
Foreign bonds Aa1, Aa2 66,104,229 2.95% 13,181,747 0.66%
Foreign bonds Aa3 30,244,944 1.35% 8,197,165 0.41%
Foreign bonds Aa, A1, A2 15,613,757 0.70% 48,078,469 2.40%
Foreign bonds A3, A+ 13,706,400 0.61% 24,486,189 1.22%
Foreign bonds B1, Ba1, Baa1, 65,706,743 2.93% 25,189,820 1.26%
Baa2, Baa3
Foreign currency loans to banks A 1,327,493 0.06% 8,975,614 0.45%
Foreign currency loans to banks Aaa to Aa 92,993,790 4.15% 93,963,942 4.70%
Foreign currency loans to banks Baa 1,364,649 0.06% 2,247,207 0.11%
Foreign currency loans to banks Unrated 32,056,154 1.43% - 0.00%
Claims from gold transactions Aa2 34,181,082 1.52% 19,451,963 0.97%
Monetary Fund Unrated 131,148,185 5.85% 148,468,110 7.43%
Other foreign currency financial assets Unrated 6,680,465 0.30% 4,595,253 0.23%
Total 2,005,160,934 89.45% 1,712,454,337 85.65%
Loans to the Government of Bangladesh Ba3 112,289,585 5.01% 168,861,943 8.45%

Securities purchased under
agreement to resell - - 0.00% 980,000 0.05%
Local currency investments - 17,795,000 0.79% 7,005,000 0.35%
Loans to banks, financial institutions A 50,042 0.00% 3,359,856 0.17%
Loans to banks, financial institutions Aaa to Aa 7,110,357 0.32% 9,257,438 0.46%
Loans to banks, financial institutions Ba to B 14,010 0.00% - 0.00%
Loans to banks, financial institutions Baa 284,714 0.01% 17,410,752 0.87%
Loans to banks, financial institutions Unrated 68,348,084 3.05% 52,421,069 2.62%
Loans to employees Unrated 30,106,279 1.34% 26,178,962 1.31%
Other local currency financial assets Unrated 169,283 0.01% 929,682 0.05%
Taka coin and cash balances Ba3 321,706 0.01% 546,240 0.03%
Total 236,489,061 10.55% 286,950,942 14.35%
Total financial assets (i+ii) 2,241,649,995 100% 1,999,405,280 100%
180

41.02 Collateral held and other credit enhancements, and their financial effect
The Group holds collateral and other credit enhancements against certain of its credit
exposures. The table below sets out the principal types of collateral held against different
types of financial assets.
2015 2014
Principal Principal
Amount Amount
type of type of
(Taka '000) (Taka '000)
Collateral Collateral
Foreign currency loans to banks 127,742,085 None 105,186,763 None

Claims from gold transactions 34,181,082 None 19,451,963 None
Assets held with International Monetary Fund 131,148,185 None 148,468,110 None
Loans to the Government of Bangladesh 112,289,585 None 168,861,943 None

Securities purchased under agreement to resell - N/A 980,000 Marketable
securities
Local currency loans to banks, financial 107,040,212 - Government 109,704,694 - Government

institutions and employees guarantee guarantee
- Bank - Bank
guarantee guarantee
- Demand - Demand
Promissory Promissory
Note Note
- Employee - Employee
provident provident
fund, gratuity fund, gratuity
fund and fund and
Mortgage of Mortgage of
property property
42 Consolidated interest rate risk

Interest rate risk is the risk of loss arising from changes in interest rates. The Group is exposed
to interest rate risk as a result of mismatches of interest rate re-pricing of assets and liabilities.
Since the primary objective of the Bank is to achieve and maintain price stability, it determines at
its own discretion the monetary policy that it will implement and the monetary policy instruments
that it is going to use in order to achieve and maintain price stability. Bank's interest sensitivity
position based on contractual re-pricing arrangements as on 30 June 2015 is presented below. It
includes the Bank's financial assets and liabilities at carrying amounts, categorised by the earlier
of contractual re-pricing of maturity dates. Assets and liabilities will mature or re-price within the
following period:
181

i) As at 30 June 2015 Taka '000
Balance Re-pricing period
as at 30 Weighted
Particulars
June 2015 0 to 3 3 to 12 1 to 5 over 5 average
months months years years interest
Assets
Foreign currency accounts 21,015,860 21,015,860 - - - 0.08%

Foreign investments 1,684,393,258 949,687,576 129,939,874 604,765,809 0.71%
Assets held with International Monetary Fund 131,148,185 72,789,125 6,174 - 58,352,886 0.03%
Gold and silver 6,414,663 6,414,663 - - - n/a
Claims from gold transactions 34,181,082 - 34,181,082 0.38%
Foreign currency loans to banks 127,742,085 53,699,480 74,042,606 - - 1.10%
Other foreign currency financial assets 6,680,465 - 6,680,465 - - n/a
Total Foreign currency financial assets 2,011,575,597 1,103,606,703 244,850,200 604,765,809 58,352,886
% of each type of financial asset with total financial assets 89.32% 96.30% 89.07% 87.40% 42.02%
Taka coin and cash balances 14,483,987 14,483,987 - - - n/a

Loans to the Government of Bangladesh 112,289,585 24,354,400 15,000,000 61,002,991 11,932,194 6.08%
Local currency investments 6,269,086 789,086 765,000 3,700,000 1,015,000 5.37%
Local currency loans to banks, financial
institutions and employees 107,040,212 2,732,034 14,275,197 22,458,470 67,574,511 4.20%
Other local currency financial assets 531,648 - - - - n/a
Total Local currency financial assets 240,614,519 42,359,507 30,040,197 87,161,461 80,521,705
Total financial assets 2,252,190,115 1,145,966,210 274,890,397 691,927,270 138,874,591
Liabilities
Deposits from banks and financial institutions 149,159,932 149,159,931 - - - 0.08%

Liabilities with International Monetary Fund 167,475,874 1,621,992 - 3,314,286 162,539,596 0.04%
Total foreign currency financial liabilities 316,635,806 150,781,923 - 3,314,286 162,539,596
% of each type of financial liabilities with total financial liabilities 14.74% 23.06% - 100.00% 100.00%
Notes in circulation 973,633,449 - - - - n/a

Deposits from banks and financial institutions 503,017,274 503,017,274 - - - n/a
Short term borrowings 180,721,995 - - - - 5.67%
Other local currency financial liabilities 173,881,247 - - - - n/a
Total local currency financial liabilities 1,831,253,965 503,017,274 - - -
% of each type financial liabilities with total financial liabilities 85.26% 76.94% 0.00% 0.00% 0.00%
Total financial liabilities 2,147,889,771 653,799,197 - 3,314,286 162,539,596
All financial instruments are shown in their re-pricing period, which is equivalent to the remaining term of maturity.
182

ii) As at 30 June 2014 Taka '000
as at 30 Weighted
Particulars
Assets

Foreign investments 933,017,193 479,878,616 146,197,324 306,941,253 1.52%
Claims from gold transactions 19,451,963 - 19,451,963 0.36%
Foreign currency loans to banks 105,186,763 - 105,186,763 - - 1.09%
Taka coin and cash balances 1,356,424 1,356,424 - - - n/a

Securities purchased under agreement to resell 980,000 980,000 - - - 11.86%
Local currency investments 8,385,472 250,000 4,050,472 3,280,000 805,000 7.09%
Local currency loans to banks, financial institutions and employees 109,704,694 2,934,320 12,673,653 35,245,395 58,851,326 4.03%
Other local currency financial assets 1,145,214 - - - - n/a
Liabilities

Liabilities with International Monetary Fund 188,331,836 3,833,497 2,496,600 14,048,010 167,953,729 0.04%
Total foreign currency financial liabilities 338,229,372 153,731,033 2,496,600 14,048,010 167,953,729
% of each type of financial liabilities with total financial liabilities 17.99% 72.72% 100.00% 100.00% 100.00%

Short term borrowings 443,782,003 - - - - n/a
Total financial liabilities 1,880,163,439 211,395,723 2,496,600 14,048,010 167,953,729
183

42.01 Separate Interest rate risk
i) As at 30 June 2015 Taka '000
as at 30 Weighted
Particulars
Assets

Foreign investments 1,684,393,258 949,687,576 129,939,874 604,765,809 - 0.71%
Assets held with International Monetary Fund 131,148,185 72,789,125.20 6,174 58,352,886 0.03%
Claims from gold transactions 34,181,082 16,821,198 17,359,884 - - 0.38%
Foreign currency loans to banks 127,742,085 53,699,480 74,042,606 - - 1.10%
Taka coin and cash balances 321,706 321,706 - - - n/a

Local currency investments 17,795,000 315,000 765,000 3,700,000.00 13,015,000 5.37%
institutions and employees 105,913,487 2,732,034 14,275,197 22,458,470 66,447,785 4.17%
Other local currency financial assets 169,283 - 169,283 - - n/a
Liabilities

Liabilities with International Monetary Fund 167,475,874 1,621,992 - 3,314,286 162,539,596 0.06%
Total foreign currency financial liabilities 316,635,806 150,781,923 0 3,314,286 162,539,596
% of each type of financial liabilities with total financial liabilities 14.76% 45.48% - 100.00% 100.00%

Short term borrowings 503,017,274 - - - - n/a
% of each type financial liabilities with total financial liabilities 85.24% 54.52% - 0.00% 0.00%
Total financial liabilities 2,145,335,618 331,503,918 - 3,314,286 162,539,596
184

42.01 Separate Interest rate risk
as at 30 Weighted
Particulars
Assets

Foreign investments 1,416,960,021 479,878,616 146,197,324 306,941,253 - 1.52%
Claims from gold transactions 19,451,963 - 19,451,963 - - 0.36%
Foreign currency loans to banks 105,186,763 - 105,186,763 - - 1.09%
Other foreign currency financial assets 4,595,253 - - - - n/a
Taka coin and cash balances 546,240 546,240 - - - n/a

Securities purchased under agreement to resell 980,000 980,000 - - - 11.86%
Local currency investments 7,005,000 250,000.00 2,170,000 3,280,000 1,305,000 4.89%
Local currency loans to banks, financial institutions and employees 108,628,077 2,934,320 12,673,653 35,245,395 57,774,709 4.01%
Other local currency financial assets 929,682 - - - - n/a
Liabilities

Liabilities with International Monetary Fund 188,331,836 3,833,497 2,496,600 14,048,010 167,953,729 0.04%
Total foreign currency financial liabilities 338,229,371 153,731,033 2,496,600 14,048,010 167,953,729
% of each type of financial liabilities with total financial liabilities 17.99% 72.72% 100.00% 100.00% 100.00%

Short term borrowings 57,664,690 57,664,690 - - - 5.67%
Local currency Deposits from banks and financial institutions 443,782,003 - - - - n/a
Total financial liabilities 1,879,664,522 211,395,723 2,496,600 14,048,010 167,953,729
185

43 Consolidated liquidity risk
The table below summarises the maturity profile of the Groups financial assets and liabilities
based on the contractual repayment date determined on the basis of the remaining period at the
statement of financial position date to the contractual maturity date.
Assets and liabilities will mature within the following periods:
i) As at 30 June 2015
Taka '000
Up to 1 1 to 3 3 to 12 1 to 5 Over 5
month months months years years
Foreign currency accounts 21,015,860 - - - -

Foreign investments 554,652,038 399,923,459 139,913,581 614,504,078 -
Assets held with International Monetary Fund 72,789,125 - 6,174 - 58,352,886
Gold and silver 6,414,663 - - - -
Claims from gold transactions 16,874,920 - 17,438,800 - -
Foreign currency loans to banks 10,858,252 42,841,228 74,042,606 - -
Total 682,604,858 442,764,686 231,401,160 614,504,078 58,352,886
Taka coin and cash balances 14,483,987 - - - -

Loans to the Government of Bangladesh 24,354,400 - 15,000,000 61,000,000 11,922,800
Local currency investments 315,000 - 1,239,086 3,700,000 1,015,000
institutions and employees 1,872,484 7,043,445 20,964,276 39,691,518 72,669,324
Total 41,025,871 7,043,445 37,203,362 104,391,518 85,607,124
Total financial assets 723,630,729 449,808,131 268,604,522 718,895,596 143,960,010
Deposits from banks and financial institutions 149,159,931 - - - -

Liabilities with International Monetary Fund 1,621,992 - - 3,314,286 162,539,596
Total 150,781,923 - - 3,314,286 162,539,596
Notes in circulation 973,633,449 - - - -

Deposits from banks and financial institutions 180,721,995
Short term borrowings 503,017,274 - - - -
Other local currency financial liabilities - 62,538,213 111,488,171 - -
Total 1,657,372,718 62,538,213 111,488,171 - -
Total financial assets 1,808,154,641 62,538,213 111,488,171 3,314,286 162,539,596
Maturity gap (1,084,523,912) 387,269,919 157,116,351 715,581,310 (18,579,586)
186

43 Consolidated liquidity risk
Up to 1 1 to 3 3 to 12 1 to 5 Over 5

Foreign investments 32,802 479,845,814 146,197,324 306,941,253 -
Gold and silver 25,283,678
Claims from gold transactions - - 19,451,963 - -
Foreign currency loans to banks - - 105,186,763
Other foreign currency financial assets 4,595,253
Total 611,506,401 479,845,814 275,444,174 306,941,253 64,000,373
Taka coin and cash balances 1,356,424 - - - -

Securities purchased under agreement to resell 980,000 - - - -
Loans to the Government of Bangladesh - 4,500,000 18,084,206 122,271,208 24,006,529
Local currency investments 250,000 4,050,472 3,280,000 805,000
Local currency loans to banks, financial - 2,934,320 12,673,653 35,245,395 58,851,326
institutions and employees
Other local currency financial assets - - 1,145,214 - -
Total 2,336,424 7,684,320 35,953,545 160,796,603 83,662,855

Liabilities with International Monetary Fund 2,432,041 1,401,456 2,496,600 14,048,010 167,953,729
Total 152,329,577 1,401,456 2,496,600 14,048,010 167,953,729

Short term borrowings 57,664,690
Deposits from banks and financial institutions 443,782,003.2 - - - -
Other local currency financial liabilities 41,199,148 109,432,934 42,684,694 -
Total 1,389,816,441 - 109,432,934 42,684,694 -
Maturity gap (928,303,194) 486,128,678 199,468,185 411,005,153 (20,290,501)
187

43.01 Separate liquidity risk

Taka '000
Up to 1 1 to 3 3 to 12 1 to 5 Over 5

Foreign investments 554,652,038 399,923,459 139,913,581 614,504,078 -
Gold and silver 6,414,663 - - - -
Claims from gold transactions 16,874,920 17,438,800
Foreign currency loans to banks 10,858,252 42,841,228 74,042,606
Total 682,604,858 442,764,686 231,401,160 614,504,078 58,352,886
Taka coin and cash balances 321,706 - - - -

Loans to the Government of Bangladesh 24,354,400 - 15,000,000 61,000,000 11,922,800
Local currency investments 145,000 170,000 765,000 3,700,000 13,015,000
institutions and employees 1,872,484 7,043,445 20,964,276 39,564,793 71,669,324
Total 26,693,590 7,213,445 36,729,276 104,264,793 96,607,124

Liabilities with International Monetary Fund 1,621,992 - - 3,314,286 162,539,596
Total 150,781,923 - - 3,314,286 162,539,596

Other local currency financial liabilities - 62,538,213 108,934,018 - -
Total 1,657,372,718 62,538,213 108,934,018 - -
Maturity gap (1,098,856,193) 387,439,919 159,196,418 715,454,585 (7,579,586)
188

43.01 Separate liquidity risk
Up to 1 1 to 3 3 to 12 1 to 5 Over 5

Foreign investments 32,802 479,845,814 146,197,324 306,941,253
Gold and silver 25,283,678 - - - -
Claims from gold transactions - - 19,451,963 - -
Foreign currency loans to banks - - 105,186,763 - -
Other foreign currency financial assets - - 4,595,253 - -
Total 611,506,401 479,845,814 275,444,174 306,941,253 64,000,373
Taka coin and cash balances 546,240 - - - -

Securities purchased under agreement to resell 980,000 - - - -
Loans to the Government of Bangladesh - 4,500,000 18,084,206 122,271,208 24,006,529
Local currency investments 250,000 - 2,170,000 3,280,000 1,305,000
institutions and employees - 2,934,320 12,673,653 35,245,395 57,774,709
Other local currency financial assets - - 929,682 - -
Total 1,776,240 7,434,320 33,857,541 160,796,603 83,086,238

Liabilities with International Monetary Fund 1,624,626 2,208,871 2,496,600 14,048,010 167,953,729
Total 151,522,162 2,208,871 2,496,600 14,048,010 167,953,729

Other local currency financial liabilities 41,199,148.2 - 108,934,018 42,684,691 -
Total 1,389,816,441 - 108,934,018 42,684,691 -
Maturity gap (928,055,963) 485,071,263 197,871,097 411,005,155 (20,867,118)
189

44 Currency risk
Foreign currency monetary assets and liabilities
Taka '000
Gold and Chinese
Japanese
USD EURO GBP Canadian $ Australian $ Yuan SDR Others
Particulars Silver Yen
equivalent equivalent equivalent equivalent equivalent equivalent Renminbi equivalent equivalent
equivalent equivalent
Assets
Held in other Central Banks 456,204 - 6,576,637 2,294,103 9,162,609 581,064 716,823 938,753 - 289,666
and cash deposit abroad
Overnight Investment 244,402,177 2,991,376
Short term deposits in 516,728,208 - 4,331,991 79,055,301 - 27,628,702 32,905,057 12,312,831 - 1,503,789
overseas commercial banks
Treasury bills 83,279,606 - - - - - - - - -
Foreign bonds 570,457,535 - 86,313,413 7,434,308 - 2,561,816 8,210,537 4,276,691 - -
Loan to other banks 127,742,085 - - - - - - - - -
Interest receivable 4,987,491 89,138 1,080,017 121,090 - 56,313 305,877 38,573 - 1,886
Asset held with IMF - - - - - - - - 131,148,185 -
Total 1,548,053,305 89,138 101,293,434 88,904,803 9,162,609 30,827,894 42,138,294 17,566,849 131,148,185 1,795,341
Liabilities
Deposits from other banks 147,778,657 - 972,876 397,554 7,558 3,286 - - - -
Liabilities to IMF
Securities - - - - - - - - 56,675,010 -
Loan under poverty reduction - - - - - - - 3,314,286 -
and growth facility
SDR allocation - - - - - - - - 55,847,748 -
Extended credit facility - - - - - - - - 50,016,838 -
Others - - - - - - - - 1,621,992 -
Total 147,778,657 - 972,876 397,554 7,558 3,286 - - 167,475,874 -
Net 1,400,274,649 89,138 100,320,558 88,507,249 9,155,051 30,824,609 42,138,294 17,566,849 (36,327,690) 1,795,341
190

44 Currency risk
ii) As at 30 June 2014

Taka '000
Gold and Chinese
Japanese
USD EURO GBP Canadian $ Australian $ Yuan SDR Others
Particulars Silver Yen
equivalent equivalent equivalent equivalent equivalent equivalent Renminbi equivalent equivalent
equivalent equivalent
Assets
Held in other Central Banks 449,191,353 - 41,371,602 1,779,970 7,208,389 923,089 146,192 843,123 - 271,338
and cash deposit abroad
Short term deposits in 338,244,163 - 26,577,179 53,811,550 - 23,688,692 32,671,149 1,504,615 - 15,553,368
overseas commercial banks
Treasury bills 83,075,583 - - - - - - - - -
Foreign bonds 261,786,922 - 57,253,584 18,022,727 3,636,843 11,702,732 5,488,084
Loan to other banks 105,186,763 - - - - - - - - -
Interest receivable 3,104,213 - 897,789 147,713 - 72,602 332,462 18,048 - 22,346
Asset held with IMF - - - - - - - - 148,468,110
Other foreign assets - - - - - - - - - 80
Total 1,240,588,997 - 126,100,154 73,761,960 7,208,389 28,321,226 44,852,535 7,853,870 148,468,110 15,847,132
Liabilities
Deposits from other banks 148,615,380 - 763,722 505,776 8,851 3,806
Liabilities to IMF
Securities & Emergency - - - - - - - - 62,320,401
Natural Disaster Assistance
Loan under poverty reduction - - - - - - - - 8,266,285
and growth facility
SDR allocation - - - - - - - - 61,252,784
Extended credit facility - - - - - - - - 54,857,548
Others - - - - - - - - 1,634,818
Total 148,615,380 - 763,722 505,776 8,851 3,806 - - 188,331,836 -
Net 1,091,973,617 - 125,336,432 73,256,184 7,199,538 28,317,420 44,852,535 7,853,870 (39,863,726) 15,847,132
191

45 Sensitivity Analysis
i) At 30 June 2015, if interest rates had been 100 basis points lower with all other variables
constant, loss for the year would have been Taka 10,093 million higher (2014: Taka 18,666
million), arising mainly as a result of lower interest income on financial assets. Conversely,
if interest rates had been 100 basis point higher with all other variables held constant, loss
for the year would have been Taka 10,093 million lower (2014: Taka 18,666 million) arising
mainly as a result of higher interest income on financial assets. Profit is very sensitive to
changes in interest rates as interest is the principal source of income of the bank.
At 30 June 2015 if the Taka had weakened 10 per cent against the principal currencies in
its foreign reserves portfolio with all other variables held constant, loss for the year would
have been Taka 3,662 million lower, (2014: Taka 1,314 million). Conversely, if the Taka had
strengthened 10 per cent against the same currencies with all other variables held constant,
the Bank would have experienced a decrease in profit for the year of Taka 3,662 million,
(2014: Taka 1,314 million). At 30 June 2015 if the Taka had weakened 10 per cent against
the gold in its foreign reserves portfolio with all other variables held constant, other
comprehensive income for the year would have been Taka 482 million higher, (2014: Taka
410 million). Conversely, if the Taka had strengthened 10 per cent against the same
currencies with all other variables held constant, the Bank would have experienced a
decrease in other comprehensive income for the year of Taka 482 million, (2014: Taka 410
million) . Thus the profit and other comprehensive income are sensitive to the changes in
exchange rate movements.
ii) a. Consolidated fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date (ie an exit
price). Fair value have been based on management assumptions according to the portfolio
of the asset and liability base. IFRS requires that the fair value of the financial assets and
liabilities are disclosed according to IFRS 13 - Fair Value Measurement. The following
tables summarise the carrying amounts and fair values of those financial assets and
liabilities carried at fair value and not carried at fair value.
Carrying value Fair value
2015 2014 2015 2014

Financial assets at fair value
US Dollar treasury bills 83,279,606 83,075,584 83,279,606 83,075,584

Foreign bonds 679,254,220 357,890,893 679,254,220 357,890,893
Gold and silver 6,414,663 25,283,678 6,414,663 25,283,678
Claims from gold transactions 34,181,082 19,451,963 34,181,082 19,451,963
Loans to the Government of Bangladesh 1,085,185 37,351,943 1,085,185 37,351,943
Local currency investments 6,269,088 8,385,472 6,269,088 8,385,472
192

2015 2014 2015 2014
Financial assets - at amortised cost

Foreign currency accounts 21,015,860 17,792,227 21,015,860 17,792,227
Overnight Investment 247,393,553 483,942,828 247,393,553 483,942,828
commercial banks 674,465,879 492,050,716 674,465,879 492,050,716
Assets held with International Monetary Fund 131,148,185 148,468,110 131,148,185 148,468,110
Foreign currency loans to banks 127,742,085 105,186,763 127,742,085 105,186,763
Other foreign currency financial assets 6,680,465 4,595,253 6,680,465 4,595,253
Securities purchased under agreement to resell - 980,000 - 980,000
institutions and employees 107,040,213 109,704,694 107,040,213 109,704,694
Other local currency financial assets 531,648 1,145,214 531,648 1,145,214
Taka coin and cash balances 14,483,987 1,356,424 14,483,987 1,356,424
Financial liabilities - at amortised cost

Liabilities with International Monetary Fund 167,475,874 188,331,836 167,475,874 188,331,836
Deposits from banks and financial institutions 652,177,206 743,577,076 652,177,206 743,577,076
Notes in circulation 973,633,449 847,170,600 973,633,449 847,170,600
Short term borrowings 180,721,995 57,664,690 180,721,995 57,664,690
Other local currency financial liabilities 174,121,257 193,316,773 174,121,257 193,316,773
ii) b. Separate fair value
2015 2014 2015 2014

Financial assets at fair value
US Dollar treasury bills 83,279,606 83,075,584 83,279,606 83,075,584

Foreign bonds 679,254,220 357,890,893 679,254,220 357,890,893
Gold and silver 6,414,663 25,283,678 6,414,663 25,283,678
Local currency investments 17,795,000 7,005,000 17,795,000 7,005,000
193

2015 2014 2015 2014
Financial assets - at amortised cost

Foreign currency accounts 21,015,860 17,792,227 21,015,860 17,792,227
Overnight Investment 247,393,553 483,942,828 247,393,553 483,942,828
Monetary Fund 131,148,185 148,468,110 131,148,185 148,468,110
Claims from gold transactions 34,181,082 19,451,963 34,181,082 19,451,963
Foreign currency loans to banks 127,742,085 105,186,763 127,742,085 105,186,763
Other foreign currency financial assets 6,680,465 4,595,253 6,680,465 4,595,253
Securities purchased under agreement to resell - 980,000 - 980,000
institutions and employees 105,913,487 108,628,077 105,913,487 108,628,077
Other local currency financial assets 169,283 929,682 169,283 929,682
Taka coin and cash balances 321,706 546,240 321,706 546,240
Financial liabilities
Liabilities with International Monetary Fund 167,475,874 188,331,836 167,475,874 188,331,836
Deposits from banks and financial institutions 503,017,274 593,679,541 503,017,274 593,679,541
Notes in circulation 973,633,449 847,170,600 973,633,449 847,170,600
Short term borrowings 180,721,995 57,664,690 180,721,995 57,664,690
Other local currency financial liabilities 171,567,104 192,817,857 171,567,104 192,817,857
Determination of fair value of financial assets

As par IFRS 13, fair value of foreign securities classified as available-for-sale is based on quoted
market prices, at the statement of financial position date (2014: foreign securities available-for-sale
at fair value). Local currency financial investments includes shares in SPCBL with a value of
BDT 12,000,000,000 (2014: BDT 500,000,000) and debentures of BHBFC with a value of BDT
5,795,000,000(2014: BDT 6,500,000,000) for which fair value cannot be reliably determined as
they are not traded in the active market and there are no similar instruments with similar
characteristics. Management believes that the fair value of these shares are their carrying value.
Loans to the Government i.e. WMA, ODB and ODC are carried at cost as the interest accrued is
recovered on a daily basis. Government securities (treasury bills and bonds) classified as
available-for-sale are carried at fair value (2014: Government securities (treasury bills and bonds)
as available-for-sale measured at fair value). Loans to banks, financial institutions and employees
are carried at amortized cost and are net of provisions for impairment. The fair value of these
loans approximates their carrying value.
46 Consolidated classification of financial instruments
As per IAS 39, financial assets are classified into four categories i.e. financial assets at fair value
through profit or loss, available-for-sale financial assets, loans and receivables and held-to-
maturity investments while financial liabilities are categorised as financial liabilities at fair value
through profit or loss and at amortised cost. These categories are used to determine how a
particular financial asset is recognised and measured in the financial statements.
194

Financial Assets Taka '000
Loans and Held-to- Assets at fair Available-
Items receivables maturity value through for-sale
profit or loss
Taka coin and cash balances 14,483,987 - - -
Foreign currency accounts 268,409,412 - - -
Foreign investments:
Short term deposits with overseas commercial banks 674,465,879 - - -
US Dollar Treasury Bills - - - 83,279,606
Foreign Bonds - - - 678,881,294
Asset held with IMF 131,148,185 - - -
Gold and silver - - - 6,414,663
Claims from gold transaction - - - 34,181,082
Foreign currency loans to banks 127,742,085 - - -
Other foreign assets:
Swift shares - - - 80
Interest receivable 6,680,385 - - -
Loans to the Government:
Ways and means advance 24,354,400 - -
Overdraft - block 86,850,000 - - -
Overdraft - current - - - -
Treasury bills - - - -
Treasury bonds - - - 1,085,185
Investments:
Debenture - BHBFC - - - 5,795,000
Short term money market investments 462,501 - - -
Share of ICB Islamic Bank Limited - - - 7,452
institutions and employees:
Loan to Commercial banks 4,963,167 - - -
Loan to Specialised banks 33,222,021 - - -
Loan to Private banks 3,019,500 - - -
Other loans and advances 26,172,779 - - -
Loans and advances to employees 31,233,004 - - -
Other local currency financial assets 531,648 - - -
Total 1,442,168,694 - - 809,644,362
Financial liabilities Taka '000

Items Carried at Liabilities at fair value Total
amortised cost through profit or loss
Liabilities with IMF 167,475,874 - 167,475,874
Deposits from banks and financial institutions:
Foreign currency deposits by commercial banks 78,892,716 - 78,892,716
Asian Clearing Union (ACU) 70,261,285 - 70,261,285
Notes in circulation 973,633,449 - 973,633,449
Local currency deposits from banks and
financial institution 503,017,274 - 503,017,274
Short term borrowings 180,721,995 - 180,721,995
Total 1,974,002,593 - 1,974,002,593
195

Items receivables maturity value through for-sale
profit or loss
Taka coin and cash balances 1,356,424 - - -
Foreign currency accounts 501,735,055 - - -
Short term deposits with overseas commercial banks 492,050,716 - - -
US Dollar Treasury Bills - - - 83,075,584
Foreign Bonds* - - - 357,890,893
Asset held with IMF 148,468,110 - - -
Gold and silver - - - 25,283,678
Claims from gold transaction - - - 19,451,963
Foreign currency loans to banks 105,186,763 - - -
Swift shares - - - 80
Loans to the Government
Overdraft - block (Government treasury bills) 131,510,000 - - -
Treasury bills - - - 2,327,168
Treasury bonds - - - 35,024,775
Securities purchased under agreement to resell 980,000 - - -
Investments in shares and debentures:
Debenture-House Building Finance Corporation - - - 6,505,000
Short term money market investments - - - 1,873,020
Share of ICB Islamic Bank Limited - - - 7,452
Loan to Commercial banks 4,105,182 - - -
Loan to Specialised banks 39,512,833 - - -
Loan to Private banks 2,634,900 - - -
Other loans and advances 28,601,184 - - -
Loans and advances to employees 27,255,579 - - -
Other local currency financial assets 1,145,214 - - -
Total 1,496,732,149 - - 531,439,613

Deposits from banks and financial institution 443,782,003 - 443,782,003
Short term borrowings 57,664,690 - -
Total 1,686,846,665 - 1,686,846,665
196

46.01 Classification of financial instruments (Separate)

Items receivables maturity value through for-sale Total
profit or loss
Taka coin and cash balances 321,706 - - - 321,706
Foreign currency accounts 268,409,412 - - - 268,409,412
Short term deposits with overseas commercial banks 674,465,879 - - - 674,465,879
US Dollar Treasury Bills - - - 83,279,606 83,279,606
Foreign Bonds - - - 678,881,294 678,881,294
Assets held with International Monetary Fund 131,148,185 - - - 131,148,185
Gold and silver - - - 6,414,663 6,414,663
Claims from gold transactions - - - 34,181,082 34,181,082
Foreign currency loans to banks 127,742,085 - - - 127,742,085
Other foreign assets: -
Swift share - - - 80 80
Interest receivable 6,680,385 - - - 6,680,385
Ways and means advance 24,354,400 - - - 24,354,400
Overdraft - block 86,850,000 - - - 86,850,000
Overdraft - current - - - - -
Treasury bills - - - - -
Treasury bonds - - - 1,085,185 1,085,185
Local currency investments -
Debenture - HBFC - - 5,795,000.00 5,795,000
Investment in subsidiary - - 12,000,000.00 12,000,000
Local currency loans to banks, financial - -
Loan to Commercial banks 4,963,167 - - - 4,963,167
Loan to Specialised banks 33,222,021 - - - 33,222,021
Loan to Private banks 3,019,500 - - - 3,019,500
Other loans and advances 26,172,779 - - - 26,172,779
Loans and advances to employees 30,106,279 - - - 30,106,279
Other local currency financial assets 169,283 - - - 169,283
Total 1,426,054,822 - - 821,636,910 2,247,691,732

Deposits from banks and financial institutions 78,892,716 - 78,892,716
Deposits from banks and financial institutions 503,017,274 - 503,017,274
Total 1,974,002,593 - 1,974,002,593
197


Items receivables maturity value through for-sale Total
profit or loss
Taka coin and cash balances 546,241 - - - 546,241
Foreign currency accounts 501,735,055 - - - 501,735,055
Short term deposits with overseas commercial banks 492,050,716 - - - 492,050,716
US Dollar Treasury Bills - - - 83,075,583 83,075,583
Foreign Bonds - - - 357,890,893 357,890,893
Asset held with IMF 148,468,110 - - - 148,468,110
Gold and silver - - - 25,283,678 25,283,678
Claims from gold transactions - - - 19,451,963 19,451,963
Foreign currency loans to banks 105,186,762 - - - 105,186,762
Swift share - - - 80 80
Loans to the Government: -
Ways and means advance - - - - -
Overdraft - block (Govt. treasury bills) 131,510,000 - - - 131,510,000
Treasury bills - 2,327,168 2,327,168
Treasury bonds - 35,024,775 35,024,775
Securities purchased under agreement to resell 980,000 - - - 980,000
Local currency investments -
Debenture - HBFC - 6,505,000 6,505,000
Investment in subsidiary - - - 500,000 500,000
Local currency loans to banks, financial -
Loan to Commercial banks 4,105,182 - - 4,105,182
Loan to Specialised banks 39,512,833 - - 39,512,833
Loan to Private banks 2,634,900 - - 2,634,900
Other loans and advances 28,601,184 - - 28,601,184
Interest receivable 7,595,016 - - 7,595,016
Loans and advances to employees 26,178,962 - - 26,178,962
Other local currency financial assets 929,682 - - 929,682
Total 1,494,629,817 - - 530,059,140 2,024,688,957

Total 1,686,846,665 - 1,686,846,665
198

47 Consolidated classification of financial instrument

Analysis of financial assets and liabilities by fair value hierarchy
As par IFRS-13, the Group measures fair values using the following fair value hierarchy that
reflects the significance of the inputs used in making the measurements. The hierarchy
categorises the inputs used in valuation techniques into three levels. The hierarchy gives the
highest priority to (unadjusted) quoted prices in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs.
Level 1: quoted prices in active markets for identical assets or liabilities that the entity can
access at the measurement date. A quoted market price in an active market provides the
most reliable evidence of fair value and is used without adjustment to measure fair value
whenever available, with limited exceptions.
Level 2: inputs other than quoted market prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly and includes: quoted prices for similar
assets or liabilities in active markets quoted prices for identical or similar assets or liabilities in
markets that are not active inputs other than quoted prices that are observable for the asset
or liability.
Level 3: Valuation techniques using significant non-observable inputs. This category includes
all instruments where the valuation technique includes inputs based on unobservable data
and the unobservable inputs have a significant effect on the instruments valuation. This
category includes instruments that are valued based on quoted prices for similar instruments
where significant unobservable adjustments or assumptions are required to reflect differences
between the instruments.
Fair values of financial assets and financial liabilities that are traded in active markets are
based on quoted market prices or dealer price quotations. For all other financial instruments
the Group determines fair values using valuation techniques.
Valuation techniques include net present value and discounted cash flow models, comparison
with similar instruments for which market observable prices exist, Black-Scholes and
polynomial option pricing models and other valuation models. Assumptions and inputs used
in valuation techniques include risk-free and benchmark interest rates, credit spreads and
other premia used in estimating discount rates, bond and equity prices, foreign currency
exchange rates, equity and equity index prices and expected price volatilities and
correlations.
The objective of valuation techniques is to arrive at a fair value measurement that reflects the
price that would be received to sell the asset or paid to transfer the liability in an orderly
transaction between market participants at the measurement date.
199

Financial instruments measured at fair value - fair value hierarchy

The table below analyses financial instruments measured at fair value at the end of the
reporting period, by the level in the fair value hierarchy into which the fair value measurement
is categorised:
Financial Assets
Taka '000
Items Note Level 1 Level 2 Level 3 Total
Foreign investments: -
US Dollar Treasury Bills 5 83,279,606 - - 83,279,606
Foreign Bonds 5 678,881,294 - - 678,881,294
Gold and silver 7 6,414,663 - - 6,414,663
Claims from gold transaction 8 34,181,082 - - 34,181,082
Swift shares 10 - - 80 80
Treasury bonds 13 1,085,185 - 1,085,185
Local currency investments: - -
Short term money market investments 14 - 462,501 - 462,501
Debentures-BHBFC 14 5,795,000 5,795,000
Share of ICB Islamic Bank Limited 14 7,452 - - 7,452
Total 802,764,097 7,342,686 80 810,106,863

Taka '000
Foreign Bonds 5 357,890,893 - 357,890,893
Gold and silver 7 25,283,678 - - 25,283,678
Loans to the Government: -
Treasury bills 13 - 2,327,168 - 2,327,168
Treasury bonds 13 - 35,024,775 35,024,775
Local currency investments: -
Short term money market investments 14 - 1,873,020 - 1,873,020
Share of ICB Islamic Bank Limited 14 7,452 - - 7,452
Total 485,709,570 39,224,963 80 524,934,613
Level 3 fair value measurements

As at 30 June 2015 and 30 June 2014, the Group holds level 3 financial instruments only on
Swift shares. The management believes that the fair value of these shares is equal to its
carrying amount. A level 3 reconciliation table have not been disclosed as no change in fair
value of investment from last year.
200

Financial instruments not measured at fair value

These include taka coins and cash balances, foreign currency accounts, short term deposits
with overseas commercial banks, assets held with IMF, foreign currency loans to banks,
interest receivable, loans to government, securities purchased under agreement to resell,
short term money market investments, local currency financial assets and local currency
loans to banks, financial institutions and employees. These are measured under level 2 of
fair value hierarchy, as the management believes that the fair value of those instruments
are equal to their carrying amounts.
Financial assets Taka '000
Total fair
Total carrying
Items Level 1 Level 2 Level 3 value value
Taka coin and cash balances - 14,483,987 - 14,483,987 14,483,987
Foreign currency accounts - 268,409,412 - 268,409,412 268,409,412
Short term deposits with overseas commercial banks - 674,465,879 - 674,465,879 674,465,879
Asset held with IMF - 131,148,185 - 131,148,185 131,148,185
Foreign currency loans to banks - 127,742,085 - 127,742,085 127,742,085
Interest receivable - 6,680,385 - 6,680,385 6,680,385
Loans to the government
Loans and advances to Govt. - 24,354,400 - 24,354,400 24,354,400
Overdraft - Block 86,850,000 86,850,000 86,850,000
Loan to commercial banks - 4,963,167 - 4,963,167 4,963,167
Loan to specialised banks - 33,222,021 - 33,222,021 33,222,021
Loan to private banks - 3,019,500 - 3,019,500 3,019,500
Other loans and advances - 26,172,779 - 26,172,779 26,172,779
Loans and advances to employees - 30,106,279 - 30,106,279 30,106,279
Other local currency financial assets - 169,283 - 169,283 169,283
Total - 1,440,217,103 - 1,440,217,103 1,440,217,103
Total fair Total carrying
Liabilities with IMF - 167,475,874 - 167,475,874 167,475,874
Foreign currency deposits by commercial banks - 78,892,716 - 78,892,716 78,892,716
Asian Clearing Union (ACU) - 70,261,285 - 70,261,285 70,261,285
Notes in circulation - 973,633,449 - 973,633,449 973,633,449
Local currency deposits from banks and financial institutions - 503,017,274 - 503,017,274 503,017,274
Short term borrowings - 180,721,995 - 180,721,995 180,721,995
Total - 1,974,002,593 - 1,974,002,593 1,974,002,593
201


Taka coin and cash balances - 1,356,424 - 1,356,424 1,356,424
Loans to the government:
Overdraft - block (Government treasury bills) - - - - -
Securities purchased under agreement to resell - 980,000 - 980,000 980,000
Investments:
Debentures in House Building Finance Corporation - 6,505,000 - 6,505,000 6,505,000
Short term money market investments - 1,868,910 - 1,868,910 1,868,910
Other local currency financial assets - 1,145,214 - 1,145,214 1,145,214
Total - 1,367,146,257 - 1,367,146,257 1,367,146,257
financial institution - 443,782,003 - 443,782,003 443,782,003
Total - 1,686,846,665 - 1,686,846,665 1,686,846,665
202

47.01 Classification of financial instrument (separate)

Financial instruments measured at fair value - fair value hierarchy
Foreign Bonds 5 678,881,294 - - 678,881,294
Gold and silver 7 6,414,663 - - 6,414,663
Treasury bonds 13 1,085,185 - 1,085,185
Local currency investments:
Investment in subsidiary 14.02 - - 12,000,000 12,000,000
Debentures-HBFC 14.02 5,795,000 5,795,000
Total 802,756,645 6,880,185 12,000,080 815,841,910

Foreign Bonds 5 357,890,893 - - 357,890,893
Gold and silver 7 25,283,678 - - 25,283,678
Treasury bills 13 - 2,327,168 - 2,327,168
Treasury bonds 13 35,024,775 - 35,024,775
Local currency investments:
Investment in subsidiary 14.02 - - 500,000 500,000
Total 485,702,118 37,351,943 500,080 523,554,141
Level 3 fair value measurements

As at 30 June 2015 and 30 June 2014, the Bank holds level 3 financial instruments on
shares in the Subsidiary & debenture-HBFC. Management believes that the fair value of
these shares is equal to its carrying amount.
203

Financial instruments not measured at fair value

These include taka coins and cash balances, foreign currency accounts, short term deposits
with overseas commercial banks, assets held with IMF, foreign currency loans to banks,
interest receivable, loans to government, securities purchased under agreement to resell,
short term money market investments, local currency financial assets and local currency
loans to banks, financial institutions and employees. These are measured under level 2 of fair
value hierarchy, since management believes that the fair value of those instruments are equal
to their carrying amounts.
Taka coin and cash balances - 321,706 - 321,706 321,706
Treasury bills - 24,354,400 - 24,354,400 24,354,400
Treasury bonds 86,850,000 86,850,000
Total - 1,426,054,822 - 1,426,054,822 1,426,054,822
financial institution - 503,017,274 - 503,017,274 503,017,274
Total - 1,974,002,593 - 1,974,002,593 1,974,002,593
204


Taka coin and cash balances - 546,240 - 546,240 546,240
Foreign investments: - -
Securities purchased under agreement to resell - 980,000 - 980,000 980,000
Investments: - -
Debentures in House Building Finance Corporation - 6,505,000 - 6,505,000 6,505,000
Total - 1,369,624,816 - 1,369,624,816 1,369,624,816
financial institutions - 443,782,003 - 443,782,003 443,782,003
Total - 1,686,846,665 - 1,686,846,665 1,686,846,665
205

48 Risk management
(i) Financial risk management
International Financial Reporting Standard "IFRS 7 - Financial Instruments: Disclosures"
requires disclosure of information relating to both recognised and unrecognised financial
instruments, their significance and performance, accounting policies, terms and conditions,
net fair values and risk information- the Group's policies for controlling risks and exposures.
Bank is involved in policy-oriented activities. Therefore, the Bank's risk management

framework differs from the risk management framework for most other financial institutions.
The main financial risks to which the Bank is exposed include credit risk, foreign exchange
risk and interest rate risk. In the management of foreign reserves, minimising liquidity risk is
the prime consideration in order to ensure the availability of currency as required. Like most
central banks, the nature of the Bank's operations creates exposure to a range of operational
and reputational risks also.
Bank's management seeks to ensure that strong and effective risk management and control
systems are in place for assessing, monitoring and managing risk exposure. Experienced
staff conducts the Bank's local currency, foreign currency reserves management, and foreign
exchange dealing operations in accordance with a clearly defined risk management
framework, including limits and delegated authorities set by the Governor.
Bank is subject to an annual audit by two external auditors who are appointed by the
Government as prescribed in Article 65 (1) of the Bangladesh Bank Order, 1972. Auditing
arrangements are overseen by the Audit Committee of the Board to monitor the financial
reporting and audit functions within the Bank and the Committee reviews the internal audit
functions as well. Audit Committee reports to the Board of Directors on its activities.
The overall risk management framework is designed to strongly encourage the sound and
prudent management of the Bank's risk. The Bank seeks to ensure the risk management
framework consistent with financial market best practices. Risk tables in this note are all
based on the Bangladesh Bank portfolio as reported in its statement of financial position.
(ii) Operational risk
Operational risk is the risk of loss in both financial and non-financial terms resulting from
human error and the failure of internal processes and systems. Managing operational risk is
seen as an integral part of the day to day operations and management, which includes
explicit consideration of both the opportunities and the risks of all business activities.
Operational risk management includes Bank-wide corporate policies that describe the
standard required of staff and specific internal control systems designed around the particular
characteristics of various Bank activities. Compliance with corporate policies and
departmental internal control systems are managed by departmental management and an
active internal audit function.
206

(iii) Credit risk management

Credit risk is the risk that one party to a financial instrument will cause a loss for the other
party by failing to pay for its obligation. Credit risk is monitored and managed regularly.
Bangladesh Bank's maximum exposure to credit risk in relation to each class of recognised
financial assets, is the carrying amount of those assets as indicated in the statement of
financial position. Bangladesh Bank's exposure is to highly rated counter-parties and its credit
risk is very low, with mitigants to credit risk including both the Bank's rigorous monitoring
activities and, in many cases, guarantees from the government.
Bank's significant end-of-year concentrations of credit exposure, based on the country/region

in which the issuers' parent was located, were as follows:
Consolidated 2015 2014

Bangladesh 383,214,010 402,266,602
Other Asian countries 351,138,303 334,189,781
United States of America 673,787,180 698,182,076
Europe 478,108,449 324,018,757
Australia 80,433,234 17,653,619
Others 285,508,941 251,860,927
Total 2,252,190,116 2,028,171,762
Bank
Bangladesh 379,088,552 398,783,797
Other Asian countries 351,138,303 334,189,781
United States of America 673,787,180 698,182,076
Europe 478,108,449 324,018,757
Australia 80,433,234 17,653,619
Others 285,508,941 251,860,927
Total 2,248,064,658 2,024,688,957
(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations
associated with its financial liabilities that are settled by delivering cash or another financial
asset.
Management of liquidity risk

Liquidity risk can be caused by market disruptions or credit downgrades which may cause
certain sources of funding to dry up immediately.
To mitigate this risk, the Group has diversified funding sources and assets are managed with
liquidity in mind.
207

(v) Currency risk

The risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. In Bangladesh Bank, foreign exchange
reserve management and investment functions are guided by an Investment Committee.
Decision of the Investment Committee and dealing practices approved by the Investment
Committee serve as operational guidelines for Bangladesh Bank's reserve management
and investments. The guidelines are directed towards managing different types of risks,
while earning a reasonable return. There is an approved benchmark for investment in terms
of currency composition, portfolio duration and proportion of different assets within a band.
Dealers/portfolio managers afford best to comply with this benchmark and continually
rebalance the investment portfolio to follow the benchmark daily/weekly as approved by the
Investment Committee.
49 Contingent liabilities
The Bank had contingent liabilities for guarantees outstanding as at 30 June 2015
amounting to Taka 70,020.36 million (2014: Taka 106,819 million) in favour of International
Islamic Trade Finance Corporation which is secured by counter guarantees from the
Government of Bangladesh.
The Bank had two pending litigations against which the estimated possible liability was
Taka 1.86 million as at the reporting date. No provisions have been made in the financial
statements in respect of these as it was not possible to determine the outcome of these
cases with reasonable assurance.
50 Operating segments
The Bank's operation is concentrated in one geographical area - Bangladesh and as such
comprise a single operating segment for the purpose of IFRS 8, the relevant standard for
such segmentation. While the Bank is required by the Bangladesh Bank Order to report
revenue and expenses by references to the functions carried out by the Bank viz. Issue and
Banking department, these activities do not constitute separate operating segments for the
purpose of IFRS 8.
51 Actuarial valuation of defined benefit plans
Most recent actuarial valuation was performed in the year 2011-12 by an independent
actuarial firm. According to the valuation report, the estimated obligation of the pension fund
as at 30 June 2012 was Taka 4,745,764 thousand and for gratuity fund was Taka
1,069,800 thousand. For the years 2013, 2014 and 2015, the obligations were calculated
based on the recommendation made by the actuarial firm.
As at 30 June 2015 the obligation for pension fund and gratuity fund was calculated to Taka
6,618,746.93 thousand and Taka 1,453,800.00 thousand respectively. The balance of the
funds is as under:
208

Taka '000
Pension plans Gratuity plans
Particulars
2015 2014 2015 2014
Amounts recognised in the reporting date
Balance at the beginning of the year 5,738,714 5,710,641 1,553,726 1,774,885
Paid during the year (696,667) (150,627) (83,542) (42,459)
Current year's contribution/transfer 1,576,700 178,700 - (178,700)
Balance of the fund 6,618,747 5,738,714 1,470,184 1,553,726
Actuarial assumptions
Pension plans Gratuity plans
Particulars
2015 2014 2015 2014
Discount rate 11.50% 11.50% 11.50% 11.50%
Salary growth rate 8% 8% 8% 8%
The assumptions regarding future mortality rate are based on the published statistics and
mortality tables of the FA 1975-78 (based on experience collected from UK insurers).
Sensitivity
If the discount rate had been 100 basis points lower with all other variables constant,
contribution for pension fund and gratuity fund for the year would have been Taka 57.38
million and Taka 12.69 million higher respectively, arising mainly as a result of lower discount
income. Conversely, if discount rate had been 100 basis point higher with all other variables
held constant, contribution for the same during the year would have been Taka 57.38 million
and Taka 12.69 million lower arising mainly as a result of higher discount income. Discount
rate is very sensitive for calculation of contribution.
52 Capital commitments
As at 30 June 2015, the Bank had outstanding capital commitments of Taka. 4.85 million with
respect to different Air Conditionar purchase and installantion along with secutity instrument
and generator purchase. (2014: 36.75 million)
53 Related parties transactions
Parties are considered to be related if one party has the ability to control the other party or
exercise significant influence over the other party in making financial or operational decisions.
In the case of the Bank, related parties, as defined in IAS 24 : Related Parties Disclosure,
include directors and officers of the Bank, and companies of whom they are principal owners
and key management personnel. Banking transactions are entered into with related parties
on agreed terms and conditions on an arms length basis.
Bank is fully owned by the Government of Bangladesh. Government has interests in various
entities such as state owned banks, specialised banks and corporations. Bank deals with
these entities on the directives of the government in line with the its monetary policy
objectives.
209

The outstanding as at the reporting date and average balances during the year with respect to
related parties included in the statement of financial position are as follows:
Taka '000
2015 2014
Outstanding Average Outstanding Average
Outstanding balances with the government of Bangladesh
Ways and means advance 24,354,400 12,177,200 - 10,000,000

Overdraft - block (refer note 13) 86,850,000 109,180,000 131,510,000 138,887,155
Overdraft - current - - - 36,022,500
Treasury bills - 1,163,584 2,327,168 2,847,150
Treasury bonds 1,085,185 18,054,980 35,024,775 49,012,660
Other assets (interest receivable) 29,491 405,312 781,134 1,284,140
112,319,076 140,981,076 169,643,077 238,053,604
Other liabilities:
Deposits 5,033 20,602,091 41,199,148 20,602,078

Loan from government of Bangladesh 2,721,734 2,743,157 2,764,580 2,800,919
2,726,767 23,345,248 43,963,728 23,402,996
Balances related to subsidiary (SPCBL)
Other assets (Prepayments and advances) 4,127,278 3,713,199 3,299,119 3,574,366

Other liabilities (sundry creditors) 1,335,120 1,513,596 1,692,073 1,483,314
The income and expenses in respect of related parties included in the statement of profit or
loss are as follows:
2015 2014
Taka'000 Taka'000
Income and expenses related to government

Interest income 7,880,673 19,500,993
Commission received 5,749 3,639
7,886,421 19,504,632
Expenses
Agency charges 2,642,465 2,409,580
Under writing commission on treasury bills and bonds 488,067 415,000
3,130,532 2,824,580
Income and expenses related to subsidiary
Dividend income 25,000 25,000
Note printing expenses 3,817,289 3,885,924
Key management personnel

Salaries, wages and other benefits (refer note 54.06) 3,969 3,969
210

53.01 Transactions with the Government and Government controlled enterprises

In the normal course of its operations, the Bank enters into transactions with related
parties. Related parties include the Government of Bangladesh; as ultimate owner of the
Bank, various Government departments, and Government controlled enterprises/entities.
All transactions are carried out with reference to market rates. Transactions entered into
include:
(a) Acting as the fiscal agent, banker and financial advisor of the Government; the
Bank is the depository of the Government and or its agents or institutions and
provides banking services to Government and Government departments and
corporations;
(b) Acting as the agent of the Government or its agencies and institutions, provide
guarantees, participate in loans to Government or related institutions and foreign
reserve;
(c) The Bank does not ordinarily collect any commission, fees, or other charges for
services which it renders to the Government and related entities;
(d) Acting as the agent of the Government, the Bank issues securities of Government,
purchases any unsubscribed portion of any issue and amounts set aside for the
Bank; and
(e) As the agent of the Government manages public debt and foreign reserves.
During the year, the Bank received an amount of Taka 2,800,540.00 million (in
2014 : Taka 2,731,440.00 million) and paid Taka 2,866,080.00 million (in 2014:
2,598,210.00 million) on behalf of the Government. As at 30 June 2015, total
outstanding balance was Taka 111,210.00 million.
(f) Assets under management:
2015 2014
Taka'000 Taka'000
Japan Debt Relief Grant 918,989 1,106,605
The Bank acts as agent on behalf of Government of Bangladesh for managing the
Japan Debt Relief Grant.
53.02 Transactions with entities in which the Bank has significant investments
During the year, the Bank received debenture interest amounting to Taka 311.39
million included in the interest income.
53.03 Transactions with controlled entities
During the year, as a part of it's business operations the Bank incurred expense of Taka
3,817.29 million (2014: Taka 3,885.92 million) as note printing cost was paid to SPCBL
which is included in the statement of profit or loss of the Bank. These transactions are
eliminated in preparing consolidated financial statements. During the year, SPCBL paid
dividend amounting to Taka 25 million (2014: 25 million) as per decision of their Board.
211

53.04 Transactions with retirement benefit plans

During the year, the Group was not required to contribute any amount to the retirement
benefit plans (consisting of contribution to pension plans including widow/widowers),
as sufficient reserve is available as per the actuarial valuation report. Amounts of
balances held in the financial statements maintained by these retirement benefit plans
are given in note 52.
53.05 Board of Directors of Bangladesh Bank and Key Management Personnel
During the year, the Group was not required to contribute any amount to the retirement
benefit plans (consisting of contribution to pension plans including widow/widowers),
as sufficient reserve is available as per the actuarial valuation report. Amounts of
balances held in the financial statements maintained by these retirement benefit plans
are given in note 52.
Members of Executive Committee Audit Committee
Board Directors Members Members
Dr. Atiur Rahman - appointed as the Chairman

of the Board of Directors and also as the Member of Member of
Governor of the Bangladesh Bank for a period of Board of Executive
four years from 1 May 2009. Further he Directors Committee
reappointed on 1 May 2013 for a period up to 2
August 2016.
Mr. Md. Abul Quasem - appointed as a Director

of the Board of Bangladesh Bank on 13 February Member of Member of
2012 for a period upto 6 July, 2015 and also Board of Executive
holds the post of Deputy Governor, Bangladesh Directors Committee
Bank.
Dr. Mustafa Kamal Mujeri - appointed as a

Director of the Board of Bangladesh Bank on 11 Member of Member of
March 2010 for a period of three years and holds Board of Board
the post of Executive Director, Bangladesh Directors Audit Committee
Institute of Development Studies, Sher-E-Bangla
nagar, Dhaka. Further reappointed on 11 March
2013 for a period up to 10 March 2016.
Prof. Sanat Kumar Saha - appointed as a

Director of the Board of Bangladesh Bank on 11 Member of
March 2010 for a period of three years. Further Board of
reappointed on 11 March 2013 for a period up to Directors
10 March 2016. He is an Ex-professor, Rajshahi
University, Rajshahi.
Dr. Sadiq Ahmed - appointed as a Director of

the Board of Bangladesh Bank on 11 March Member of
2010 for a period of three years. Further Board of
reappointed on 11 March 2013 for a period up to Directors
10 March 2016. He is an Ex-Director, World
Bank, USA & Vice Chairman, Policy Research
Institute, Banani, Dhaka.
212

Members of Executive Committee Audit Committee

Board Directors Members Members
Prof. Hannana Begum - appointed as a

Director of the Board of Bangladesh Bank on 11 Member of Member of Member of Board
March 2010 for a period of three years. Further Board of Executive Audit Committee
reappointed on 11 March 2013 for a period up Directors Committee
to 10 March 2016. She is an Ex-Principal, Eden
College, Dhaka.
Dr. M Aslam Alam - appointed as a Director of

the Board of Bangladesh Bank on 13 November Member of Member of Member of Board
2012 for a period until further order and holds the Board of Executive Audit Committee
post of Secretary, Banking and Financial Directors Committee
Institution Division, Ministry of Finance, Govt. of
the Peoples Republic of Bangladesh.
Mr. Nojibur Rahman - appointed as a Director Member of Member of Board

of the Board of Bangladesh Bank on 25 Board of Audit Committee
Janurary, 2015 for a period until further order Directors
and holds the post of Secretary, Internal
Resource Department, and Chairman of National
Board of Revenue, Government of the People's
Republic of Bangladesh.
Mr. Mahbub Ahmed - appointed as a Director of

the Board of Bangladesh Bank on 27 July, 2014 Member of
for a period untill further order and holds the post Board of
of Senior Secretary, Finance Division, Ministry of Directors
Finance, Govt. of the People's Republic of
Bangladesh.
Number of meetings held during the year 8 6 8
53.06 Remuneration of members of the Board of Directors and Key management personnel
Members of the Board of Directors received remuneration totaling Taka 523,392
(2014: Taka 523,392) and the Governor received salary totaling Taka 590,400 (2014:
Taka 590,400). In addition, the Governor availed a free furnished house for his
residence and full time transport facility. Other key management personnel of the Bank
received salary totaling Taka 2,855,520 (2014: Taka 2,855,520) and in addition, they
availed official residence as well as transport.
54 Events after the reporting date
There were no material events that occurred between the end of the reporting period and
the date of authorisation of the financial statements for issue that require adjustments to or
disclosures in the financial statements.
55 Directors' responsibility for financial reporting
The Board of Directors approved the financial statement on 30 August 2015.
213
Appendix-1
Chronology of Major Policy Announcements: FY15
215
Appendix-1
Chronology of Major Policy Announcements: FY15
A. Policy Announcements on Banking and Financial Sector Development
August 2014 z With a view to enhancing the coverage of Bangladesh Bank's (BB's) refinance
scheme for renewable energy and green products, three more products have
been added to the existing 44 green products which are (1) surface water
purification plant through solar pump with maximum limit of Taka 30 million; (2)
green industry with maximum limit of Taka 200 million; and (3) ensuring work
environment as well as safety of RMG factory with maximum limit of Taka 10
million.
September 2014 z All the scheduled banks and non-bank financial institutions (NBFIs) have been
advised to establish e-tendering system within December 2015 for reducing
the usage of paper and enhancing transparency, accountability, efficiency and
promoting the process of procurement/tendering system.
November 2014 z Deposit insurance trust fund has been allowed to invest in the inter-bank repo
alongside the Government treasury bonds.
November 2014 z All scheduled banks have been advised to take necessary steps to discontinue
all activities related to the issuance of Taka 10 & Taka 50 prize bonds from
31January 2015.
November 2014 z With a view to encouraging participation of the banks in disbursing agricultural
and micro-credits, all scheduled banks have been instructed to make
provisions for all unclassified credits (irregular and regular) at 2.5 percent,
classified as 'sub-standard' and 'doubtful' at 5 percent; and classified as
'bad/loss' at 100 percent.
December 2014 z The upper limit of interest rate of agricultural and rural credit has been re-
determined at 11 percent instead of 13 percent considering the downward
trend of interest rate on deposits and advances.
December 2014 z The provisions [of section ACID of the BRPD circular letter no. 18 dated 27
October 2013] on the appointment of CEO of banks and financial institutions
have been amended replaced as follows:
'Any decision of Bangladesh Bank regarding appointment of CEO will be

treated as final and such appointed CEO cannot be dismissed, released or
removed from his office without prior approval from BB. However, (a) if any
CEO desires to terminate the contract before expiry of his/her tenure or resign
from his/her office voluntarily, the CEO shall serve at least one-month notice to
217
Appendix-1 Chronology of Major Policy Announcements: FY15
the chairman of the board stating the actual reason for such resignation, and,
at the same time a copy of such notice will have to be forwarded to
Bangladesh Bank; (b) in case the board of the bank desires to terminate the
contract before expiry or asks the CEO to tender resignation from his/her post,
the board shall serve at least one-month notice stating the reasons for such
action and at the same time a copy of such notice will have to be forwarded for
obtaining approval from BB; (c) when the position of a CEO falls vacant due to
resignation, expiry of contract, or any other reasons, the bank shall
immediately appoint a 'CEO In-charge' (for maximum 3 months) among the
officials next to the CEO and notify the same to Bangladesh Bank with details'.
December 2014 z 3 and 6 months Islami bonds are being issued through open bidding from 1
January 2015 based on profit sharing ratio (PSR).
January 2015 z BB has declared the road map for implementation of the revised regulatory
capital framework for banks in line with Basel-III in Bangladesh starting from
2015. According to the revised road map, banks have to maintain the minimum
standard 'Liquidity Coverage Ratio (LCR)' and 'Net Stable Funding Ratio
(NSFR)' from January 2015. The minimum standard for LCR will have to be
greater than or equal to 100 and for NSFR it shall be greater than 100.
January 2015 z Because of price hike of construction materials for housing and real estate
sector, the guideline for prudential regulations for consumer financing has
been amended. According to the new guideline, the maximum per party limit in
respect of housing finance by the banks has been fixed at Taka 12 (twelve)
million and maximum debt-equity ratio has been fixed at 70:30 for the housing
finance facility.
January 2015 z Banks have been advised to mitigate risks of outsourcing by taking steps to
drawing up comprehensive and clear outsourcing policies, analysing the
financial and infrastructure resources of the service providers, negotiating for
appropriate outsourcing contracts, ensuring required contingency planning by
the outsourcing firm, and establishing effective risk management programmes.
January 2015 z Bank borrowers in general have been experiencing some difficulties in running
business smoothly in recent past resulting in default with respect to debt
servicing in particular due to the prevalent economic scenario emanating from
various external and domestic factors which were beyond their control. This
phenomenon augmented a situation whereby present policy was needed to be
liberalised specially with respect to large borrowers having multiple bank
exposures. Hence, considering the significant importance of the affected large
borrowers from the socio-economic and employment generation perspective
and for supporting their recovery efforts, the Board of Directors of Bangladesh
Bank has given due cognizance of the situation and recommended necessary
policy support for the said borrowers. Accordingly, some set of instructions
218
Chronology of Major Policy Announcements: FY15 Appendix-1
have been issued in line with international best practices for restructuring of
such affected large loans.
February 2015 z BB directed to establish a "Women Entrepreneur Development Unit" in all

scheduled banks and financial institutions for allowing all sorts of services to
the women entrepreneurs, providing loans to small and cottage women
entrepreneurs in manufacturing and service sectors on priority basis and
performing development activities along with fostering inclusion of the cluster
of women entrepreneurs to loan activities precisely and more effectively. The
proposed unit has been advised to monitor the branch level activities of
women entrepreneur dedicated desk/help desk. Appointment of women
officials in "Women Entrepreneur Development Unit" has been given priority.
All scheduled banks and financial institutions have been advised to form the
said unit in their respective banks/institutions within 15 days of the issuance of
the circular and to inform BB accordingly.
February 2015 z Considering the great importance of the agricultural sector to the growth and
stability of Bangladesh economy and to implement the government's farmer-
friendly policy to boosting up agricultural production and recovering the
agricultural credit the following decisions have been taken for rescheduling
such loans:
(1) In case of rescheduling short term agricultural credit, the condition of

required down payment can be relaxed on the basis of banker-customer
relationship. In special cases, such credits can be rescheduled without
down payment.
(2) New short-term agricultural credit can be disbursed after rescheduling. In

this case, new credit facility can be given without depositing any amount
of money.
(3) If any certificate case is already filed during the trial period, credit can be
rescheduled after withdrawing or settling the certificate cases through
mutual agreement (solenama) with the customer.
February 2015 z Banks have been informed that 'Local Chief Executive Officer' post of any
foreign bank working in Bangladesh is not allowed to remain vacant for more
than three months. Besides, in case of appointing foreign nationals to the post
of 'Local Chief Executive Officer', the foreign banks will have to take approval
from BB by providing his/her necessary information along with the work permit
of Board of Investment, Bangladesh.
March 2015 z All scheduled banks have been instructed to apply maximum possible
profit/interest rate to their existing different savings accounts for all sorts of
Taka 10, Taka 50 and Taka 100 accounts including bank accounts for farmers,
school students and child labourers.
219
March 2015 z Considering the overall market status, it has been decided to bring systematic
changes in maintaining provision against investment in mutual fund units. In
the changed guidelines, banks are ordered for maintaining provision against
investment in mutual fund units.
March 2015 z A uniform account opening form and Know Your Customer (KYC) form have
been prepared for all financial institutions working in Bangladesh.
March 2015 z A guideline has been issued for contractual appointment of advisor and
consultant in financial institutions. Key features of the guideline for appointing
advisor include (1) experience and eligibility; (2) responsibilities; (3) approval
from BB; (4) policy for salary and allowances; (5) tenure; and (6) recruitment of
former employee. On the other hand, key features of the guideline for
appointing consultant include (1) responsibilities; (2) approval from BB; (3)
tenure; (4) policy for salary and allowances; and (5) recruitment of former
employee.
March 2015 z In order to strengthening monetary condition and gaining confidence of the
depositors, financial institutions have been advised to follow and specify the
following criteria for appointing an honest, skilled, experienced and appropriate
chief executive in their respective institution: (1) character credentials; (2)
experience and eligibility; (3) transparency and financial credentials; (4) age
limit; (5) tenure; (6) re-appointment; (7) policy for salary and allowance; (8)
incentive bonus; (9) honorarium for attending general meetings; (10)
approval from BB; (11) cancellation of appointment; and (12)
demission/exemption/removal and resignation.
April 2015 z Bangladesh Bank has taken initiative to introduce real time gross settlement
system (BB-RTGS) in the country. All the schedule banks have been advised
to take necessary preparation(s) to perform live transaction over BB-RTGS
system from 8 October 2015. It will use MX (ISO 20022) message format for
data exchange between central bank's system and participating bank's system
through existing virtual private network (VPN). The SWIFT network may be
included as a redundant communication channel in the next phase.
April 2015 z External auditors are appointed by NBFIs on annual basis for auditing all of
their activities. In order to ensure transparency and accountability of their
activities, NBFIs have been advised to comply with the following instructions:
(1) Approval of BB must be taken before appointing external auditors in the

annual general meeting;
(2) NBFIs must comply the instructions of the "guidelines on appointing

external auditors in financial institutions" before appointing external
auditors;
220
(3) NBFIs must provide a copy of the given guidelines to the external auditors
along with the appointment letter;
(4) NBFIs will present the comments and recommendations of the auditors'
report before the board of directors and take necessary actions
accordingly.
(5) A declaration of NBFIs specifying that any owner/partner of the concerned

audit firm is not related to ownership/business with that NBFIs, must be
attached with the proposal sent to BB for approval. This declaration must
be signed by the CEO of the concerned NBFIs.
(6) The audit report prepared by the external auditor must be scrutinised to
ensure its compliance with the 'Financial Institutions Act, 1993', the
'Company Act, 1994' and other instructions given by BB. The NBFIs have
been advised to inform BB immediately if any deviation is observed in this
regard.
May 2015 z NBFIs have been instructed to comply with guideline regarding the
maintenance of provision against unrealised losses arising from investment in
mutual fund units.
May 2015 z BB has adopted the guideline titled 'NPSB Switch Operating Rules & User
Manual: Dispute Management Rules' to ensure the development, safety,
efficiency and regulation of the country's payment system. Hence, all
scheduled banks connected to the National Payment Switch Bangladesh
(NPSB) have been advised to follow the procedure depicted in the said
guideline while managing disputes related to NPSB.
May 2015 z Recently it has been observed that the bank employees particularly the female
staff are being forced to stay at bank at the end of working day after banking
office hours. Besides, several allegations are being raised by the bank officials
regarding resignation, unlawful termination, dismissal from service,
harassment in getting post retirement financial benefits and others. As a result,
different types of complicacies are arising which are impeding proper human
resources management. Therefore, after reviewing the general norms
regarding the issues, it has been decided that banks are not allowed to force
their employees particularly the female staff to stay at bank at the end of
working day after banking office hours, i.e., 6.00 pm. The banks will have to
ensure proper security and pay compensation to any female staff if she has to
stay at bank after office hours due to special official responsibilities.
Further, banks advised to stop arbitrary dismissal of their employees and to

maintain professionalism while recruiting employees. The recruited employees
must be provided proper training to make them fit. In this regards, banks will
have to amend their service rules regarding resignation, termination or
221
dismissal, post retirement financial benefits in line with the International

Labour Organisation Conventions, Bangladesh Labour Law, 2006 and the
directives given by Bangladesh Bank from time to time.
B. Policy Announcements on External Sector Development
July 2014 z The limit of bullet repayment, against external import financing for eligible
deferred payment imports for terms not exceeding six months, has been
enhanced from USD 0.5 million to USD 1.0 million.
July 2014 z The Government has decided to provide export subsidy/cash incentive for
listed 14 major categories of export items for the FY15.
July 2014 z The maximum time limit for delivery of non-resident Bangladeshi (NRB)
remittances to the beneficiaries has been revised to two working days instead
of 72 hours.
July 2014 z In case of bulk import of raw materials against inland back to back L/C,
maximum single borrower exposure limit for the members of the Bangladesh
Garments Accessories & Packaging Manufacturers & Exporters Association
(BGAPMEA) has been enhanced from USD 1.0 million to USD 2.0 million
under the facility of export development fund (EDF) loan.
September 2014 z In case of bulk import of raw materials against inland back to back L/C,
maximum single borrower exposure limit for the members of the Bangladesh
Plastic Goods Manufacturers and Exporters Association (BPGMEA) has been
enhanced from USD 0.5 million to USD 1.0 million under the facility of EDF
loan.
September 2014 z In case of bulk import of raw cotton and other fibers against inland back to
back L/C, maximum single borrower exposure limit has been enhanced from
USD 10.0 million to USD 15.0 million under the facility of EDF loan.
October 2014 z The importers of petroleum bi-products have to take license from Bangladesh
Energy Regulatory Commission under Bangladesh Energy Regulatory
Commission Act, 2003. In this context, all authorised dealer (AD) banks have
been advised to properly abide by the directions stated in Import Policy Order,
2012-2015 and Bangladesh Energy Regulatory Commission Act, 2003 in case
of L/C opening for import of petroleum bi-products.
October 2014 z It has been decided that all institutions engaged in RMG export along with
those established outside EPZ & taking excise bond/duty draw-back incentives
will be entitled to avail 0.25 percent cash incentive upon their export value on
free on board (FoB) basis.
January 2015 z Shipping lines/air lines/licensed freight forwarders have been allowed to open
and maintain foreign currency accounts. It has been clarified that foreign
222
currency deposited in foreign currency accounts of shipping lines/airlines

against freight charges on free on board (FoB) exports from licensed freight
forwarders may be used for outward remittances on account of surplus
earnings. In this regard balances held in foreign currency accounts shall first
be used for outward remittances before use of local currency fund. However,
AD banks shall get themselves ensured of the encashment of adequate
foreign currency by the shipping lines/airlines to meet local expenses in case
of shortfall in local currency funds and submit the encashment certificates with
the statements.
Outward remittance supported by encashment certificates against free on

board (FoB) exports shall not be allowed with effect from April 2015.
February 2015 z The sale of Bangladeshi goods or raw materials to the enterprises in export
processing zone (EPZ) against payment in foreign currency is treated as
exports from Bangladesh and normal foreign exchange regulations concerning
declaration of exports on EXP forms and repatriation of proceeds is applicable
to these exports to the EPZ enterprises. This export to EPZ areas is
considered as import by EPZ enterprises. In order to bring ease in reporting
for permissible imports by enterprises of EPZ areas from non-EPZs, it has
been decided that ADs of EPZ enterprises may report import transactions to
Bangladesh Bank. This procedure of mentioning EXP numbers will also be
applicable for transactions between EPZ enterprises and intra EPZ
enterprises.
May 2015 z It has been decided to relax and enhance the upper limit of L/C up to USD
10000 from USD 7500 for import of coal through land without using SWIFT.
May 2015 z The existing guidelines permit exporters to retain specified parts of their export
earnings in foreign exchange for utilisation without prior Bangladesh Bank's
approval for bonafide business expenses abroad including maintenance of
offices abroad, import of raw materials, machineries and spares, etc. It has
been decided to further expand this facility by enhancing the exporters
retention quotas (ERQs) as under:
(a) ERQ for exports of high domestic value added merchandise shall stand
enhanced to 60 percent from existing 50 percent.
(b) ERQ for merchandise exports of high import contents (like apparels using
woven fabric) shall stand enhanced to 15 percent from existing 10
percent.
(c) ERQ for export of services shall stand enhanced to 60 percent from
existing 50 percent of repatriated export receipts.
223
Appendix-2
Bangladesh Bank's Research in FY15
225
Appendix-2
A Summary of Recent Research Activities in Bangladesh Bank and a Near/Medium Term

Agenda
Some of the key outputs of the Research Department (RD), Monetary Policy Department (MPD)
and Chief Economists Unit (CEU) are summarised here. Besides, some other analytical/research
work on-going in other parts of BB are also touched briefly. All are grouped under the following
categories (i) synthesis analysis of overall and topic-specific developments in the Bangladesh
economy (ii) empirical research on specific economic/financial sector issues and (iii)
development of new analytical tools and capacity building.
Synthesis analysis/reports related to the Bangladesh economy and their frequency
(i) BB Annual Report : First draft prepared by the Research Department with inputs from
other departments and edited by an external Editing Adviser.
(ii) Monetary Policy Review (MPR) : An annual publication focused on monetary policy
development and associated analytical work on specific themes produced by CEU.
(iii) Monetary Policy Statement (MPS) : A bi-annual announcement of policy stance along
with an update of half yearly economic developments - Jointly prepared by CEU and
MPD.
(iv) Bangladesh Bank Quarterly (BBQ) : An analysis of the past quarters economic
developments along with a near term outlook - prepared by CEU.
(v) Quarterly reviews on RMG sector; Remittances Trends and Islamic Banking prepared
by Research Department.
(vi) Monthly Economic Indicators (MEI) : A monthly update on key macroeconomic

indicators prepared by MPD.
(vii) A manuscript of the book titled "Activities of the Banks, Insurances and Financial
Institutions" prepared by Research Department and published by the MoF (yearly).
(viii) Background papers for National Budget document and 'Economic Review of
Bangladesh', an annual publication of Ministry of Finance prepared by Research
Department.
(ix) Quarterly Financial Stability Assessment Report : An analysis of the past quarters
financial change/development prepared by FSD.
(x) Vibrant Bangladesh: A Stable and Potential Economy - An illustrative time series
approach: Jointly contributed by CEU, MPD, RD, Foreign Exchange Policy
Department and Statistics Department.
227
Appendix-2 Bangladesh Bank's Research in FY15
Empirical analysis of specific economic / financial sector issues in FY15 and on-going
(i) Monetary policy / inflation related
z "Sources of Exchange Rate Fluctuations in Bangladesh" (prepared by RD, MPD

and CEU, published in BBTA Journal, Thoughts on Banking and Finance,
Volume 3, Issue 2)
z "Real Exchange Rate and its Impact on Export, Import and Trade Balance: Is
there any J-curve effect in Bangladesh?" (prepared by MPD and RD, published
as Working Paper on BB Website)
z "Forecasting Output Growth of Bangladesh" (working paper in progress, CEU)
z "Will the Growth of Remittances to Bangladesh Rebound in 2015?" (working

paper in progress, CEU)
z "Forecasting Bangladesh's Inflation Using Seasonal ARIMA Models" (working

z "Determinants of Inflation in Bangladesh: Evidence from Bayesian Vector Auto

Regression" (working paper in progress, CEU)
z "Exchange Rate policy in Bangladesh: An overview" (research work in progress,

RD)
z "Balance of Payment Constrained Economic Growth: Evidence from

Bangladesh" (research work in progress, CEU and Statistics Department)
z "Real or Nominal Shock- What Drives the Exchange Rate Movements in

Bangladesh?" (research work in progress, RD)
z "The Effectiveness of Monetary Policy in Bangladesh: A VAR Approach"

(research work in progress, Policy Support Unit)
z "Does Public Investment Crowd-out Private Investment? Evidence from

Bangladesh" ( research work in progress, CEU)
z "Real Effective Exchange Rate and Its impact on Export Earnings in

Bangladesh" ( research work in progress, RD and MPD)
z "Inflation and Economic Growth: Determining the Threshold Level of Inflation in

Bangladesh" (working paper in progress, RD)
z "Goods foster Manufacturing Output Growth in Bangladesh?" Evidence from

Time Series Analysis (working paper in progress, RD)
228
Bangladesh Bank's Research in FY15 Appendix-2
"Budget Deficit and Inflation: The impact of Budget Deficit on Inflation When
Monetary Variables Are the Channel" (working paper in progress, RD and MPD)
"Impact of Money Supply on Interest Rate" (working paper in progress, RD)
"Inflation and Inflation Uncertainty in Bangladesh: Time Series Analysis"

(working paper in progress, RD)
"Foreign Exchange (FX) Market Dynamics in Bangladesh with Floating

Exchange Rate Regime" (working paper in progress, FSD)
(iv) Financial sector related
"Designing a Sustainable Financial System in Bangladesh" UNEP's Country

Report on Bangladesh, jointly prepared by Bangladesh Bank, UNEP's Inquiry
into Design of Sustainable Financial System and International Institute for
Sustainable Development
"Workers' remittances and the Dutch disease in South Asian countries"

(prepared by Policy Support Unit and published in Applied Economics Letters)
"Trade-offs between Real Economic Activity and Bank Profitability for

Implementing New Regulatory Standards: South Asian Perspective" (prepared
by Policy Support Unit and presented in 2nd International Conference on
Economics and Finance of Nepal Rastra Bank at Kathmandu, Nepal)
"Revisiting the Gravity Model of Remittances: Implications for Bangladesh"

(prepared by CEU as well as Policy Support Unit and presented in 2nd
International Conference on Economics and Finance of Nepal Rastra Bank at
Kathmandu, Nepal)
"Impact Assessment of Bangladesh Bank's Re-finance Scheme for Financiang

Agricultural & Non-farm Rural Borrowers of Bangladesh Krishi Bank (BKB) and
Rajshahi Krishi Unnayan Bank (RAKUB)" (prepared by RD and published as
special research work in BB website)
"Common Currency in SAARC Countries: Problems and Prospects" (prepared

by RD and presented on 19th bi-annual conference of Bangladesh Economic
Association)
"Does Financial Development Spur Growth? Time Series Evidence from

Bangladesh" (prepared by RD and presented in 2nd International Conference
on Economics and Finance of Nepal Rastra Bank at Kathmandu, Nepal)
"The Impact of State Ownership and Political Ownership on Efficiency of Banks-

Evidence from Bangladesh" (working paper in progress, CEU)
229
Appendix-2 Bangladesh Bank's Research in FY15
"Foreign Borrowing Worsening Domestic Credit Demand" (working paper in

progress, CEU)
"Changes of loan classification, rescheduling, provisioning and write off policies

and its impact analysis: An Overview" (working paper in progress, CEU)
"Interaction between public and private investment in Bangladesh" (working

"Is Capital Market of Bangladesh Efficient?: A Non-parametric Approach"

(working paper in progress, CEU)
"Is inflow of foreign Loans in Bangladesh Sensitive to Interest Rate

Differentials?" (working paper in progress, RD)
" Nexus between Bank's Liquidity and Profitability in Bangladesh: An Overview "
(Research Work in progress, RD)
"Revisiting Marshall-Lerner Condition in the Economy of Bangladesh - A

Cointegration Approach" ( Research Work in progress, MPD)
"Elasticity of Imports in Bangladesh: ARDL Bounds test Approach" (working

paper in progress, MPD)
"Worsening Domestic Credit Demand" (working paper in progress, CEU)
"What matters to the profitability measures of banks in Bangladesh?" (working

paper in progress, Policy Support Unit)
"Effects on the RMG sector of Bangladesh due to Recurrent Strike, Political

Unrest: An Empirical Study" (working paper in progress, RD)
"Islamic Microfinance in Bangladesh: Performance, Potentials and Challenges"

(working paper in progress, RD)
"Measuring Systemic Liquidity Risk for Bangladesh" (working paper in progress,

FSD)
(v) Financial Inclusion
"Role of Banks in Promoting Women Entrepreneurship in Bangladesh"

(prepared by RD and MPD, published as Special Research Work on BB
Website)
"Measuring Financial Inclusion Index of Bangladesh: An Assessment of inclusive

finance" (working paper in progress, CEU)
230
Bangladesh Bank's Research in FY15 Appendix-2
"Measuring Financial Inclusion in South Asia: An Index Based Approach"

(working paper in progress, CEU)
"Financial Inclusion, Priority Sector Lending, and Rural Poverty-Bangladesh

Perspective" (working paper in progress, RD)
"Utilisation of Remittances in Bangladesh" (survey report in progress, RD)
Development of new analytical tools and capacity building
BBTA Journal on 'Thoughts on Banking and Finance' has been published since 2012.
Till date, volume-3, issue-2 of the Journal has been published whose Executive Editor
is a Research Department staff deputed to Bangladesh Bank Training Academy.
In-house seminars disseminating work by external academics and in-house research

included topics such as selected macroeconomic & fiscal sector issues- Monetary
Policy in a Developing Income Country: The Case of Bangladesh; Monetary Policy
Statement of Bangladesh Bank, January-June 2015; Coincident Indicators of the
Business Cycle; Interest Rate Spread in the Banking System; Budget FY16:
Challenges and Issues, etc.
E-views training level-2 was provided to research officials of Bangladesh Bank by the
visiting US academic scholars.
231
Appendix-3
Bangladesh: Some Selected Statistics
233
Appendix-3
Table-I : Trends of Major Macroeconomic Indicators
R P
Indicators FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
1 2 3 4 5 6 7 8 9 10 11
1. GDP growth (at FY06 constant market prices) 6.7 7.1 6.0 5.1 5.6 6.5 6.5 6.0 6.1 6.5
2. Growth of broad money (M2) 19.3 17.1 17.6 19.2 22.4 21.3 17.4 16.7 16.1 12.4
3. GDP deflator (percentage change)@ -- 6.5 7.9 6.8 7.1 7.9 8.2 7.2 5.7 5.8
@ @ @
4. CPI inflation (base: FY96=100) 7.2 7.2 9.9 6.7 7.3 8.8 8.7 6.8 7.4 6.4@
5. Foreign exchange reserves (million US Dollar) 3484 5077 6149 7471 10750 10912 10364 15315 21508 25021
6. Net foreign assets (billion Taka) 220.1 328.7 373.2 474.6 670.7 695.3 742.8 1120.7 1552.9 1874.3
7. Exchange rate (Taka/Dollar) 67.1 69.0 68.6 68.8 69.2 71.2 79.1 79.9 77.7 77.7
8. REER index as of end June (base: FY01=100) 83.9 86.6 86.0 91.3 97.7 100.0*** 100.6*** 110.1*** 114.4*** 130.4***
9. Per capita GDP in Taka (at current market prices) 34502 38773 43719 48359 53961 61198 69614 78009 86266 95864
(As percentage of GDP)@
10. Domestic savings 21.4 20.8 19.2 20.3 20.8 20.6 21.2 22.0 22.1 22.3
11. Investment 26.1 26.2 26.2 26.2 26.3 27.4 28.3 28.4 28.6 29.0
12. Revenue income 9.3 9.0 9.6 9.1 9.5 10.2 10.9 10.7 10.5 10.8
13. Revenue expenditures 7.2 7.7 8.3 8.7 8.4 8.5 8.5 8.3 8.2 8.4
14. Revenue surplus (+) / Revenue deficit (-) 2.1 1.3 1.3 0.4 1.1 1.7 2.4 2.4 2.2 2.4
15. Annual Development Programme (ADP) 4.5 3.9 3.6 2.8 3.2 3.6 3.6 4.1 4.1 5.0
16. Other expenditures 1.0 0.6 3.0 1.1 1.1 1.9 2.4 2.1 1.7 2.5
17. Total expenditures 12.7 12.2 14.9 12.5 12.7 14.0 14.5 14.5 14.0 15.8
18. Overall budget deficit (excluding grants) 3.4 3.2 5.3 3.4 3.2 3.9 3.6 3.8 3.6 5.0
19. Overall budget deficit (including grants) 2.8 2.8 4.6 3.1 2.8 3.6 3.2 3.3 3.1 4.7
20. Financing of overall budget deficit (a+b)* 2.8 2.8 4.6 3.1 2.8 3.6 3.2 3.3 3.1 4.7
a. Net foreign financing 1.1 0.9 1.4 0.4 0.8 0.3 0.3 0.5 0.3 1.1
b. Net domestic financing (i+ii) 1.7 1.8 3.2* 2.7 2.0 3.3 2.9 2.8 2.8 3.6
i. Bank borrowings 1.0 1.2 1.7 1.9 -0.3 2.7 2.6 2.3 1.3 2.1
ii. Non-bank borrowings 0.7 0.6 0.3 0.8 2.3 0.6 0.3 0.5 1.5 1.5
21. Government debt outstanding (i+ii) 40.2 38.6 37.1 35.9 32.3 32.4 31.8 30.0 29.1 27.3
i. Domestic debt 14.3 14.3 15.0 15.5 14.7 15.2 15.2 15.1 15.0 15.2
ii. External debt** 25.9 24.3 22.1 20.4 17.6 17.2 16.6 14.9 14.1 12.1
22. Current account balance : surplus(+)/deficit(-) 1.2 1.2 0.8 2.4 3.2 -1.3 -0.3 1.6 0.8 -0.8
*Including non-cash bond (liabilities of BPC) of Taka 75.23 billion.

** Excluding IMF loan.
*** Base: 2010-11= 100 & 10 currency basket.
@= Base 2005-06
P= Provisional. R=Revised.
Source: Bangladesh Bank, Bangladesh Bureau of Statistics, Bangladesh Economic Review, 2015 and Budget in Brief 2015-16.
235
Appendix-3 Bangladesh: Some Selected Statistics
Table-II : Medium-Term Macroeconomic Framework: Key Indicators
Estimated
Actual (Revised) Projection
Indicators
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
1 2 3 4 5 6 7 8 9
Real Sector
Real GDP Growth (%) 6.5 6.5 6.0 6.1 6.5 7.0 7.2 7.4
CPI inflation (%) 10.9 8.7 6.8 7.4 6.5 6.2 6.0 6.0
Gross investment (% of GDP) 27.4 28.3 28.4 28.6 29.0 30.1 31.0 31.8
Fiscal Sector (% of GDP)
Total revenue 10.2 10.8 10.7 10.4 10.8 12.1 12.7 13.1
Tax revenue 8.7 9.0 9.0 8.6 9.3 10.6 11.1 11.4
Non-tax revenue 1.5 1.8 1.7 1.8 1.5 1.5 1.7 1.7
Total expenditure 14.0 14.2 14.7 14.0 15.8 17.2 17.4 17.6
Overall balance -3.9 -3.4 -4.0 -3.6 -5.0 -5.0 -4.7 -4.6
Financing
Domestic financing 3.3 2.9 2.9 2.8 3.6 3.3 2.8 2.7
External financing (net) 0.6 0.6 1.1 0.7 1.4 1.8 1.8 1.8
Monetary sector (% change)
Domestic credit 30.8 18.8 11.0 11.6 17.3 17.9 17.1 16.3
Credit to the private sector 25.8 19.7 10.8 12.3 15.5 16.0 16.0 16.0
Broad money (M2) 21.4 17.4 16.7 16.0 16.2 16.5 16.6 16.7
External sector
Exports (% change) 39.2 6.2 10.7 12.0 5.0 12.0 12.0 12.0
Imports (% change) 52.1 2.4 0.8 8.9 12.0 11.5 11.5 11.0
Remittances (% change) 4.8 11.6 11.6 -1.6 7.0 10.0 11.0 11.0
Current account balance -1.3 -0.3 1.5 0.9 -1.0 -1.2 -1.2 -1.1
(% of GDP)
GDP (at current market prices) 9158 10552 11989 13437 15136 17167 19463 22085
(billion Taka)
Source: Bangladesh Economic Review, 2015.
236
Bangladesh: Some Selected Statistics Appendix-3
Table-III : Gross Domestic Product (GDP), Investment and Savings

(Billion Taka)
Items/Sectors FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15P

1 2 3 4 5 6 7 8 9
1. GDP (at FY06 current market prices) 6286.8 7050.7 7975.4 9158.3 10552.0 11989.2 13436.7 15136.0
2. Gross investment at current prices 1647.3 1847.7 2093.3 2511.3 2982.2 3403.7 3839.9 4384.3
a) Private 1364.5 1543.3 1720.5 2029.8 2374.2 2607.5 2960.0 3340.1
b) Public 282.8 304.4 372.8 481.5 608.0 796.2 879.9 1044.2
3. Gross domestic savings at current prices 1206.4 1433.5 1659.7 1888.4 2239.1 2642.4 2968.2 3375.3
a) Private 1129.1 1341.8 1553.6 1767.6 2096.7 2468.6 2765.3 3139.2
b) Public 77.3 91.7 106.1 120.8 143.5 173.8 202.9 236.1
4. Sectoral Share of GDP (at FY06 constant prices)
i. Agriculture 969.8 1003.4 1065.1 1112.6 1146.1 1174.4 1225.7 1262.9
a) Agriculture and forestry 772.9 796.8 849.0 882.1 903.3 916.6 951.5 971.2
1. Crops and horticulture 564.9 580.9 624.9 649.0 660.4 664.3 689.4 698.3
2. Animal farming 113.5 116.2 119.1 122.2 125.5 128.9 132.6 136.7
3. Forest and related services 94.5 99.7 105.0 110.8 117.5 123.4 129.6 136.2
b) Fishing 196.9 206.6 216.1 230.5 242.8 257.8 274.2 291.8
ii. Industry 1356.3 1450.0 1552.0 1692.0 1851.6 2030.1 2195.7 2406.6
a) Mining and quarrying 80.0 88.4 95.6 99.1 105.9 115.8 121.3 130.3
b) Manufacturing 876.0 934.6 996.7 1096.5 1205.7 1329.9 1446.5 1595.8
i) Large and medium scale 703.3 749.3 796.3 884.8 980.0 1084.4 1185.4 1306.8
ii) Small scale 172.6 185.3 200.4 211.8 225.7 245.6 261.1 289.1
c) Power, gas and water supply 62.8 67.4 74.1 84.0 92.9 101.3 105.9 113.3
d) Construction 337.4 359.6 385.5 412.4 447.1 483.0 522.1 567.2
iii. Services 2865.2 3010.7 3177.2 3374.7 3596.6 3794.9 4008.4 4242.3
a) Wholesale and retail trade; repair of
motor vehicles, motorcycles and personal
and household goods 724.8 767.3 812.2 866.5 924.6 981.7 1047.8 1116.8
b) Hotel and restaurants 38.7 40.9 43.4 46.1 49.0 52.2 55.7 59.5
c) Transport, storage and communication 550.8 595.1 640.1 694.1 757.6 805.1 853.8 905.0
d) Financial intermediations 157.3 157.3 167.1 184.6 211.8 231.1 247.9 269.8
e) Real estate, renting and business activities 408.8 424.4 440.8 457.9 475.9 495.1 516.2 540.2
f) Public administration and defence 162.9 174.5 188.8 205.5 221.0 235.4 251.7 270.5
g) Education 116.1 122.9 129.3 136.6 147.2 156.5 167.8 180.6
h) Health and social work 103.2 106.3 113.6 120.8 125.4 131.4 138.0 145.9
i) Community, social and personal services 602.6 621.9 641.9 662.6 684.2 706.4 729.6 754.0
Total GVA at constant basic price 5191.2 5464.1 5794.3 6179.2 6594.3 6999.4 7429.8 7911.8
Tax less subsidy 283.2 286.5 276.7 284.2 290.6 299.6 311.6 333.6
GDP (at FY06 constant market prices) 5474.4 5750.6 6071.0 6463.4 6884.9 7299.0 7741.4 8245.3
P = Provisional.
237
Table-IV : Growth and Sectoral Share of GDP (at FY06 constant prices)
Sectors FY09 FY10 FY11 FY12 FY13 FY14 FY15P

1 2 3 4 5 6 7 8
Growth in percent
i. Agriculture 3.5 6.2 4.5 3.0 2.5 4.4 3.0
a) Agriculture and forestry 3.1 6.6 3.9 2.4 1.5 3.8 2.1
1. Crops and horticulture 2.8 7.6 3.9 1.8 0.6 3.8 1.3
2. Animal farming 2.4 2.5 2.6 2.7 2.7 2.8 3.1
3. Forest and related services 5.5 5.3 5.6 6.0 5.0 5.0 5.1
b) Fishing 4.9 4.6 6.7 5.3 6.2 6.4 6.4
ii. Industry 6.9 7.0 9.0 9.4 9.6 8.2 9.6
a) Mining and quarrying 10.5 8.2 3.6 6.9 9.4 4.7 7.5
b) Manufacturing 6.7 6.7 10.0 10.0 10.3 8.8 10.3
i) Large and medium scale 6.5 6.3 11.1 10.8 10.7 9.3 10.2
ii) Small scale 7.3 8.2 5.7 6.6 8.8 6.3 10.7
c) Power, gas and water supply 7.3 10.0 13.4 10.6 9.0 4.5 7.0
d) Construction 6.6 7.2 7.0 8.4 8.0 8.1 8.6
iii. Services 5.1 5.5 6.2 6.6 5.5 5.6 5.8
motor vehicles, motorcycles and
personal and household goods 5.9 5.9 6.7 6.7 6.2 6.7 6.6
b) Hotel and restaurant 5.9 6.0 6.2 6.4 6.5 6.7 6.9
c) Transport, storage and communication 8.1 7.6 8.4 9.2 6.3 6.1 6.0
d) Financial intermediations -0.03 6.3 10.4 14.8 9.1 7.3 8.8
e) Real estate, renting and other
business activities 3.8 3.9 3.9 3.9 4.0 4.3 4.7
f) Public administration and defence 7.1 8.2 8.8 7.5 6.5 6.9 7.5
g) Education 5.9 5.2 5.6 7.8 6.3 7.3 7.6
h) Health and social work 3.0 6.8 6.3 3.8 4.8 5.1 5.7
i) Community, social and personal services 3.2 3.2 3.2 3.3 3.3 3.3 3.4
GDP (at constant market prices) 5.1 5.6 6.5 6.5 6.0 6.1 6.5
Sectoral share (percent of GDP)
i. Agriculture 18.4 18.4 18.0 17.4 16.8 16.5 16.0
a) Agriculture and forestry 14.6 14.7 14.3 13.7 13.1 12.8 12.3
1. Crops and horticulture 10.6 10.8 10.5 10.0 9.5 9.3 8.8
2. Animal farming 2.1 2.1 2.0 1.9 1.8 1.8 1.7
3. Forest and related services 1.8 1.8 1.8 1.8 1.8 1.7 1.7
b) Fishing 3.8 3.7 3.7 3.7 3.7 3.7 3.7
ii. Industry 26.5 26.8 27.4 28.1 29.0 29.6 30.4
a) Mining and quarrying 1.6 1.7 1.6 1.6 1.7 1.6 1.7
b) Manufacturing 17.1 17.2 17.8 18.3 19.0 19.5 20.2
i) Large and medium scale 13.7 13.7 14.3 14.9 15.5 16.0 16.5
ii) Small scale 3.4 3.5 3.4 3.4 3.5 3.5 3.7
c) Power, gas and water supply 1.2 1.3 1.4 1.4 1.5 1.4 1.4
d) Construction 6.6 6.7 6.7 6.8 6.9 7.0 7.2
iii. Services 55.1 54.8 54.6 54.5 54.2 54.0 53.6
motor vehicles, motorcycles and
personal and household goods 14.0 14.0 14.0 14.0 14.0 14.1 14.1
b) Hotel and restaurant 0.8 0.8 0.8 0.7 0.8 0.8 0.8
c) Transport, storage and communication 10.9 11.1 11.2 11.5 11.5 11.5 11.4
d) Financial intermediations 2.9 2.9 3.0 3.2 3.3 3.3 3.4
e) Real estate, renting and other business activities 7.8 7.6 7.4 7.2 7.1 7.0 6.8
f) Public administration and defence 3.2 3.3 3.3 3.4 3.4 3.4 3.4
g) Education 2.3 2.2 2.2 2.2 2.2 2.3 2.3
h) Health and social work 2.0 2.0 2.0 1.9 1.9 1.9 1.8
i) Community, social and personal services 11.4 11.1 10.7 10.4 10.1 9.8 9.5
Total GVA at constant basic price 100.0 100.0 100.0 100.0 100.0 100.0 100.0
P = Provisional.
238
Table-V : Development of Government Budgetary Operation

(Billion Taka)
Description FY10 FY11 FY12 FY13 FY14 FY15R FY16

(Budget)
1 2 3 4 5 6 7 8
A. Revenue and foreign grants 791.2 950.5 1182.6 1350.1 1467.3 1690.5 2142.4
i. Revenues 759.1 929.9 1146.9 1281.3 1403.8 1633.7 2084.4
a) Tax revenue 624.9 795.5 952.3 1074.5 1160.3 1406.8 1822.4
b) Non-tax revenue 134.2 134.4 194.7 206.8 243.4 227.0 262.0
ii. Foreign grants 32.2 20.6 35.7 68.8 63.6 56.7 58.0
B. Expenditures 1016.1 1282.7 1524.3 1740.1 1882.1 2396.7 2951.0
i. Non-development revenue expenditure 670.1 774.7 893.0 993.8 1105.7 1273.7 1645.7
ii. Non-development capital expenditure 61.6 53.9 71.6 49.4 104.4 220.3 199.9
iii. Loans & advances (net) 9.3 72.5 140.6 169.6 77.2 96.4 77.6
iv. Annual Development Programme 255.5 332.8 375.1 494.7 553.3 750.0 970.0
v. Other expenditures 19.6 48.8 44.0 32.6 41.5 56.3 57.8
C. Overall deficit (excluding grants) 257.0 352.8 377.4 458.9 478.3 763.0 866.6
D. Overall deficit (including grants) 224.9 332.2 341.7 390.0 414.8 706.2 808.6
E. Financing 218.6 332.2 341.7 390.0 414.8 706.2 808.6
i. Foreign borrowing - net 60.4 26.3 36.3 58.1 33.5 159.1 243.3
Foreign borrowing 110.0 80.6 95.1 133.0 119.4 238.7 322.4
Amortisation -49.7 -54.3 -58.9 -74.9 -85.9 -79.6 -79.1
ii. Domestic borrowing - net 158.2 305.9 305.4 331.9 381.4 547.1 565.2
Borrowing from banking system (net) -20.9 252.1 271.9 274.6 181.7 317.1 385.2
Non-bank borrowing (net) 179.1 53.8 33.5 57.3 199.7 230.0 180.0
Memorandum item : GDP
(at current market prices)* 6905.7 7875.0 9147.8 10379.9 11810.0 15136.0 17167.0
R= Revised.
Source : Budget in brief 2010-11,2011-2012, 2013-14, 2014-15 and 2015-16.
239
Table-VI: Money and Credit

(Billion Taka)
Particulars FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15P

1 2 3 4 5 6 7 8 9
1. Broad money (M2)@ 2487.9 2965.0 3630.3 4405.2 5171.1 6035.1 7006.2 7876.1
2. Total domestic credit@ 2470.5 2868.5 3378.3 4308.9 5149.7 5717.4 6379.1 7015.3
A) Government sector 569.1 689.3 670.7 901.8 1070.7 1195.8 1302.7 1269.3
@@
i) Gvernment (net) 467.5 580.1 542.5 732.3 917.3 1101.2 1175.3 1102.6
ii) Other public sector 101.6 109.2 128.1 169.5 153.4 94.6 127.4 166.7
B) Private sector 1901.4 2179.3 2707.6 3407.1 4079.0 4521.6 5076.4 5746.0
3. Broad money as % of GDP*
(at current market prices) 45.6 48.2 52.3 48.1 49.0 50.3 52.1R 52.0P
Growth in percent
1. Broad money (M2)@ 17.6 19.2 22.4 21.3 17.4 16.7 16.1 12.4
@
2. Total domestic credit 20.1 16.1 17.8 27.5 19.5 11.0 11.6 10.0
A) Government sector 6.4 21.1 -2.7 34.5 18.7 11.7 8.9 -2.6
@@
i) Gvernment (net) 29.7 24.1 -6.5 35.0 25.3 20.1 6.7 -6.2
ii) Other public sector -41.8 7.5 17.3 32.3 -9.5 -38.4 34.7 30.9
B) Private sector 24.9 14.6 24.2 25.8 19.7 10.8 12.3 13.2
@ Figures correspond to end June.

@@ Includes adjustment of bonds issued by the Government.
Notes : (1) Govrnment securities and treasury bills are shown at cost price from June 2002 on wards.
P = Provisional, R = Revised.
Sources: (1) Statistics Department, Bangladesh Bank.
(2) Bangladesh Bureau of Statistics.
240
Table - VII : Consumer Price Index (CPI) and Rate of Inflation - National (base : FY96=100)
Twelve-month average basis Twelve-month point to point basis

General Food Non-food General Food Non-food
Period Annual Annual Annual Annual Annual Annual
Index rate of Index rate of Index rate of Index rate of Index rate of Index rate of
inflation inflation inflation inflation inflation inflation
Weight 100.00 58.84 41.16 100.00 58.84 41.16
FY06 164.21 7.16 170.35 7.76 156.56 6.40 169.32 7.54 176.82 8.81 159.86 5.73
FY07 176.04 7.20 184.16 8.11 165.79 5.90 184.89 9.20 194.19 9.82 173.19 8.34
FY08 193.54 9.94 206.78 12.28 176.26 6.32 203.45 10.04 221.57 14.10 179.32 3.54
FY09 206.43 6.66 221.64 7.19 186.67 5.91 208.02 2.25 222.13 0.25 189.98 5.94
FY10 221.53 7.31 240.55 8.53 196.84 5.45 226.11 8.70 246.29 10.88 199.94 5.24
FY11 241.02 8.80 267.83 11.34 205.01 4.15 249.11 10.17 277.11 12.51 211.39 5.73
FY12* 170.19 8.69 183.65 7.72 152.94 10.21 170.33 5.55 179.74 2.56 158.27 10.21
FY13* 181.73 6.78 193.24 5.22 166.97 9.17 184.04 8.05 194.58 8.26 170.53 7.75
FY14* 195.08 7.35 209.79 8.57 176.22 5.54 196.86 6.97 210.15 8.00 179.82 5.45
FY15* 207.58 6.40 223.80 6.68 186.79 5.99 209.17 6.25 223.43 6.32 190.88 6.15
FY15*
Jul-14 196.18 7.28 211.11 8.55 177.04 5.41 199.94 7.04 214.74 7.94 180.95 5.71
Aug-14 197.27 7.24 212.40 8.51 177.86 5.37 202.53 6.91 218.66 7.67 181.85 5.76
Sep-14 198.37 7.22 213.72 8.48 178.68 5.34 205.39 6.84 222.66 7.63 183.25 5.63
Oct-14 199.43 7.18 214.97 8.37 179.51 5.40 206.81 6.60 224.23 7.16 184.47 5.74
Nov-14 200.44 7.10 216.10 8.18 180.36 5.47 206.86 6.21 223.81 6.44 185.14 5.84
Dec-14 201.44 6.99 217.13 7.91 181.31 5.60 207.78 6.11 224.20 5.86 186.62 6.48
Jan-15 202.43 6.87 218.21 7.68 182.20 5.64 210.12 6.04 226.61 6.07 188.98 6.01
Feb-15 203.45 6.76 219.30 7.45 183.13 5.71 210.74 6.14 227.25 6.11 189.58 6.20
Mar-15 204.49 6.66 220.44 7.24 184.04 5.78 211.31 6.27 228.12 6.37 189.77 6.12
Apr-15 205.54 6.57 221.60 7.04 184.95 5.85 211.51 6.32 228.39 6.48 189.86 6.08
May-15 206.55 6.46 222.69 6.81 185.86 5.94 208.77 6.19 223.36 6.23 190.07 6.14
Jun-15 207.58 6.40 223.80 6.68 186.79 5.99 209.17 6.25 223.43 6.32 190.88 6.15
*= New Base FY06=100 with weights (food 56.18 and non-food 43.82).
241
Table-VIII : Quantum Index of Medium and Large-scale Manufacturing Industry (base: FY06=100)
SL. Major industry group Weight FY13 FY14 FY15
1. General index of manufacturing 100.00 195.19 213.22 236.11

2. Manufacture of food products 10.84 219.10 241.52 333.07
3. Manufacture of beverages 0.34 189.81 243.19 230.06
4. Manufacture of tobacco products 2.92 144.66 149.65 147.37
5. Manufacture of textile 14.07 142.41 139.68 122.81
6. Manufacture of wearing apparels 34.84 265.83 293.70 304.76
7. Manufacture of leather and related products 4.40 139.76 147.83 140.48
8. Manufacture of wood and products of wood and cork 0.33 238.81 243.39 269.88
9. Manufacture of paper and paper products 0.33 160.43 151.95 174.68
10. Printing and reproduction of recorded media 1.83 124.36 127.73 140.91
11. Manufacture of coke and refined petroleum products 1.25 101.54 92.76 96.79
12. Manufacture of chemicals and chemical products 3.67 84.62 80.41 77.49
13. Manufacture of pharmaceuticals and medicinal chemicals 8.23 178.79 230.60 290.98
14. Manufacture of rubber and plastic products 1.56 244.87 263.84 292.69
15. Manufacture of other non-metallic mineral products 7.12 139.51 144.18 182.78
16. Manufacture of basic metals 3.15 136.41 150.20 187.13
17. Manufacture of fabricated metal products except machinery 2.32 149.03 164.33 182.30
18. Manufacture of computer, electronic and optical products 0.15 99.00 105.46 148.37
19. Manufacture of electrical equipment 0.73 128.53 132.06 164.56
20. Manufacture of machinery and equipment n.e.c 0.18 155.86 172.68 204.89
21. Manufacture of motor vehicles, trailers and semi trailers 0.13 186.62 205.84 178.83
22. Manufacture of other transport equipment 0.73 138.21 152.88 340.12
23. Manufacture of furniture 0.88 109.14 101.12 116.35
242
Table-IX : Reserve Money and Its Components

(Billion Taka)
Year Currency notes Balances of scheduled Balances of other
Cash in tills of the
and coins with banks with the financial institutions with Reserve money
(End June) scheduled banks
the public Bangladesh Bank* the Bangladesh Bank
1 2 3 4 5 6=(2+3+4+5)
1999 86.9 10.3 50.3 - 147.5

2000 101.8 10.9 58.0 - 170.7
2001 114.8 13.5 61.0 - 189.3
2002 125.3 13.5 66.8 0.1 205.7
2003 139.0 14.4 60.8 0.1 214.3
2004 158.1 14.8 65.6 0.2 238.7
2005 185.2 18.1 70.4 0.4 274.1
2006 228.6 20.3 90.1 0.5 339.5
2007 266.4 21.4 105.7 0.7 394.2
2008 326.9 29.6 118.1 1.1 475.6
2009 360.5 34.0 231.6 1.4 627.5
2009 461.6 43.1 234.7 2.1 741.4
2011 548.0 57.3 290.1 2.0 897.3
2012 584.2 64.8 326.6 2.4 978.0
2013 675.5 78.2 368.0 3.1 1124.9
2014 769.1 85.8 440.0 3.9 1298.8
2015 879.4 102.1 498.4 4.9 1484.8
* Balances of DMBs with BB excluding foreign curency cleaning account balances since June'2002 and
Reserve Money has been revised accordingly.
Source: Statistics Department, Bangladesh Bank.
243
Table-X : Reserve Money and Its Sources

(Billion Taka)
Bangladesh Bank's claims on
Year Other official Net Other Reserve
(End June) Government Scheduled entities and Private foreign assets money
financial Total
(net) banks sectors assets (net)
institutions
1 2 3 4 5 6=(2+3+4+5) 7 8 9=(6+7+8)
1999 63.6 46.2 13.7 8.1 131.6 46.2 -30.3 147.5

2000 81.0 42.9 13.2 9.0 146.1 56.7 -32.1 170.7
2001 101.1 43.7 13.0 9.9 167.7 48.1 -26.5 189.3
2002 128.3 47.3 12.8 10.1 198.5 72.3 -65.1 205.7
2003 73.5 48.5 12.8 11.4 146.2 118.1 -49.9 214.4
2004 118.5 58.5 12.4 12.4 201.8 135.4 -98.5 238.7
2005 156.7 61.3 11.1 13.4 242.5 146.9 -115.3 274.1
2006 249.8 63.4 10.1 14.3 337.6 186.4 -184.5 339.5
2007 259.3 64.4 9.9 15.8 349.4 287.7 -242.9 394.2
2008 259.3 73.3 9.5 17.0 359.1 328.1 -211.6 475.6
2009 284.7 68.5 8.5 20.2 381.9 432.3 -186.7 627.5
2010 214.7 66.1 8.3 25.9 315.0 611.8 -185.4 741.4
2011 317.1 186.1 7.8 31.4 542.4 613.4 -258.5 897.3
2012 378.5 226.3 11.8 36.0 652.6 689.3 -363.9 978.0
2013 270.7 102.2 13.5 41.8 428.2 1032.5 -335.8 1124.9
2014 38.4 62.8 12.0 42.7 156.0 1475.0 -332.2 1298.8
2015 8.1 56.6 21.6 46.4 132.7 1774.0 -421.9 1484.8
244
Table-XI : Deposits of Public and Private Sector

(Billion Taka)
Demand deposits1/ Time deposits1/
Year
(End June) Public2/ Private Total Public2/ Private3/ Total
1 2 3 4 5 6 7
1999 20.5 79.4 99.9 106.3 386.2 492.5
2000 23.7 89.7 113.4 117.3 471.3 588.6
2001 26.4 100.9 127.3 131.8 557.0 688.8
2002 23.7 108.2 131.9 134.9 653.3 788.2
2003 26.5 118.1 144.6 157.3 763.9 921.2
2004 27.1 136.0 163.1 184.2 865.9 1050.1
2005 35.2 158.9 194.1 223.3 1008.4 1231.7
2006 38.1 183.9 222.0 255.1 1212.9 1468.0
2007 42.2 218.8 261.0 298.7 1409.8 1708.5
2008 49.5 254.9 304.4 364.8 1647.6 2012.4
2009 57.5 280.3 337.8 442.7 2005.6 2448.3
2010 61.8 393.0 454.8 537.1 2374.5 2911.6
2011 87.8 439.3 527.1 677.0 2900.4 3577.4
2012 103.4 471.0 574.4 845.1 3480.7 4325.8
2013 112.1 517.8 629.9 954.8 4144.2 5099.0
2014 115.3 600.2 715.5 1080.9 4828.4 5909.3
2015 119.2 683.6 802.8 1376.5 5283.7 6660.2
Share in Percent
1999 20.5 79.5 100 21.6 78.4 100
2000 20.9 79.1 100 19.9 80.1 100
2001 20.7 79.3 100 19.1 80.9 100
2002 18.0 82.0 100 17.1 82.9 100
2003 18.3 81.7 100 17.1 82.9 100
2004 16.6 83.4 100 17.5 82.5 100
2005 18.1 81.9 100 18.1 81.9 100
2006 17.1 82.9 100 17.4 82.6 100
2007 16.2 83.8 100 17.5 82.5 100
2008 16.3 83.7 100 18.1 81.9 100
2009 17.0 83.0 100 18.1 81.9 100
2010 13.6 86.4 100 18.4 81.6 100
2011 16.7 83.3 100 18.9 81.1 100
2012 18.0 82.0 100 19.5 80.5 100
2013 17.8 82.2 100 18.7 81.3 100
2014 16.1 83.9 100 18.3 81.7 100
2015 14.8 85.2 100 20.7 79.3 100
1/ Exclude inter-bank items.
2/ Include government deposit.
3/ Include wage earners' deposits.
245
Table-XII : Selected Statistics of Scheduled Banks

(Billion Taka)
Particulars 30 30 30 30 30 30 30 30
June June June June June June June June
2008 2009 2010 2011 2012 2013 2014 2015
1 2 3 4 5 6 7 8
1. Bank deposits (exclude inter-bank items) 2317.3 2786.8 3368.7 4104.8 4900.4 5729.7 6625.7 7463.4
(A) Demand deposits 265.2 302.3 416.2 481.1 510.6 557.4 643.4 723.8
(B) Time deposits 1894.8 2300.7 2750.4 3374.2 4073.8 4799.0 5589.8 6268.0
(C) Restricted deposits 0.5 0.7 0.3 0.3 0.2 0.8 0.3 0.4
(D) Government deposits 156.8 183.1 201.8 249.2 315.7 372.5 392.2 471.2
2. Borrowings from the Bangladesh Bank 66.8 61.0 58.5 178.3 216.6 94.4 55.3 48.2
3. Cash in tills 29.6 34.0 43.1 57.3 64.8 78.2 85.8 102.1
4. Balances with the Bangladesh Bank
including FCD 167.1 287.7 294.2 384.0 472.4 453.4 558.5 568.5
5. Balances with other banks in Bangladesh 55.9 74.4 94.1 104.3 120.2 159.4 168.8 159.3
6. Money at call and short notice 22.3 20.8 36.5 29.4 57.4 53.0 49.9 25.3
7. Total investment@ 385.4 480.8 552.2 754.3 967.3 1361.1 1698.8 1744.3
(A) Government securities & treasury bills* 357.0 442.8 487.9 639.1 831.7 1208.1 1493.3 1524.2
(B) Others 28.4 38.0 64.3 115.3 135.5 153.0 205.5 220.1
8. Bank credit (exclude inter-bank items
and foreign bills) 1926.2 2198.4 2720.6 3409.3 4056.6 4372.0 4882.2 5533.4
(A) Advances in Bangladesh ** 1791.0 2081.3 2579.9 3198.9 3818.1 4172.9 4688.7 5333.1
(B) Inland bills purchased and discounted 135.3 117.2 140.7 210.4 238.5 199.0 193.5 200.3
9. Credit/deposit ratio
(excluding specialised banks) 0.8 0.8 0.8 0.8 0.8 0.8 0.7 0.7
@ Include T bills/bonds issued by the government and all other investment (share/debenture, reverse repo, etc.)
* Government securities and treasury bills are shown at cost price.
** Advances are on gross basis.
246
Table-XIII : Movements in Selected Interest Rates* (end period)
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

1 2 3 4 5 6 7 8 9
Bank rate 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
Treasury bill rates
28-day 73 - - - - - - -
91-day 7.6 6.8 2.2 5.6 5.7 8.4 6.9 5.4
182-day 7.9 7.8 3.6 5.5 6.2 10.2 7.5 6.4
364-day 8.5 8.3 4.6 6.2 6.2 10.4 8.0 6.8
Call money rates
Borrowing 9.7 1.7 6.6 10.9 15.0 7.2 6.3 5.8
Lending 9.7 1.7 6.6 10.9 15.0 7.2 6.3 5.8
Scheduled banks rates
Deposits 7.0 7.0 6.0 7.3 8.2 8.5 7.8 6.8
Advances 12.3 11.9 11.3 12.4 13.8 13.7 13.1 11.7
*= Weighted average, except bank rate.
Source: 1) Monetary Policy Department, Bangladesh Bank.
2) Statistics Department, Bangladesh Bank.
247
Table-XIV : Government Borrowing Position from the Banking System

(Billion Taka)
Outstanding Outstanding
Sl. No. Particulars Objective as on as on
30 June 2014R 30 June 2015p
1 2 3 4 5
Bangladesh Bank
1. Ways and Means Advances To increase Government cash balance 0.0 24.4
2. Overdraft 0.0 0.0
3. Overdraft Block 131.5 86.9
4. Devolvement 38.3 1.1
a) Treasury Bills 3.6 0.0
b) Treasury Bonds 34.7 1.1
5. Government Currency Liabilities 8.2 8.2
6. Advances to Autonomous and Semi-autonomous Bodies 0.0 0.0
7. Accured InterestR 0.8 0.03
8. Government Deposits@/(-) -41.4 -1.4
A. Total : (1 +...+ 8) 137.4 119.2
B. Deposit Money Banks (DMBs)
1. Government Treasury Bills 403.5 305.4
i) Treasury Bills (Less than 1 year) To increase Government cash balance 403.5 305.4
2. Bangladesh Govt. Treasury Bonds (BGTB) 816.1 924.8
i) 2-years Bangladesh Govt.Treasury Bonds1/ 58.1 87.4
ii) 5-years Bangladesh Govt.Treasury Bonds To increase long-term investment of 245.0 265.5
iii) 10-years Bangladesh Govt.Treasury Bonds different banks, non-bank financial 326.8 352.3
iv) 15-years Bangladesh Govt.Treasury Bonds institutions and employees GF of 111.5 128.6
v) 20-years Bangladesh Govt.Treasury Bonds different companies 74.7 91.0
3. Other Special Treasury Bonds (a+b) 150.9 143.3
a) 1 Year and above but less than 5 years (Specialised Bonds) 4.1 2.0
i) 3-Years interest free Frozen Food To repay the loan of Frozen Food Industries
6/
Treasury Bond 2014 0.1 0.0
ii) 3-Years and 4-years (BPC) Treasury To repay the loan of Bangladesh
Bond bearing 7.0 percent interest2/ Petroleum Corporation 4.0 2.0
b) 5 Years and above (Specialised Bonds) 146.8 141.3
i) 6, 7 &10-years (BJMC&BTMC) interest free To repay the loan of BJMC & BTMC
Treasury Bond-2016, 2017 &2020 6.8 6.8
ii) 25-years (Jute)Treasury Bond-2018 To compensate for the liquidation
7/
bearing 5.0 percent interest of jute sector credit 1.0 0.8
iii) 25-years (Jute) Treasury Bond-2019 To compensate for the liquidation
bearing 5.0 percent interest8/ of jute sector credit 0.7 0.5
248
Table-XIV (Contd.) : Government Borrowing (net) from the Banking System

(Billion Taka)
Outstanding Outstanding
Sl. No. Particulars Objective as on as on
30 June 2014 30 June 2015p
R
1 2 3 4 5
iv) 25-years (Jute) Treasury Bond-2020 To reimburse one-third of the debt due to jute
bearing 5.0 percent interest3/ mills' loan write-off by the private banks. 0.2 0.1
v) 7-years to 15-years (BPC) Treasury To repay the loan of Bangladesh
Bond bearing 5.0 percent interest4/ Petroleum Corporation 36.2 31.2
vi) 5-years and 6-years (BPC) Treasury To repay the loan of Bangladesh
Bond bearing 7.0 percent interest Petroleum Corporation 21.0 21.0
vii) 5-years to 13-years BJMC Treasury To repay the loan of BJMC
Bond bearing 5.0 percent interest 21.5 21.5
viii) 7-years SPTB-2020 bearing
7.0 percent interest 20.0 20.0
ix) 8-years SPTB-2021 bearing To increase Government cash balance
x) 10-years SPTB-2023 bearing
4. Sub-Total : (1+2+3) 1370.5 1373.5
5. Prize Bond/Income Tax Bond 0.3 0.3
6. Government's other Securities 0.02 0.03
7. Advances to Food Ministry 6.1 5.9
8. Advances to Other Ministries 10.6 11.8
9. Advances to Auto./Semi-Autonomous Bodies 10.9 15.7
10. Accrued Interest 31.7 33.4
11. Deposits of Ministries and Departments (-) -148.9 -176.2
12. Deposits of Auto./Semi-Autonomous Bodies (-) -243.3 -295.0
B. Total : (4++12) 1037.9 969.4
Grand Total : A+B 1175.2 1088.6
Notes: @/ Including other deposits.

1/ 2 year Bangladesh Government Treasury Bond was introduced in May 2013.
2/ 3 year (BPC) Treasury Bond matured on 5 October, 2014; an amount of Taka 2.00 billion.
3/ An amount of Taka 0.027 billion was paid in July 2014 against the outstanding of Taka 0.171 billion in June 2014.
4/ An amount of Taka 5 billion was paid in September 2014 against the outstanding of 36.2 billion in June 2014.
6/ 3 year interest free Frozen Food Treasury Bond matured on 5 October, 2014; an amount of Taka 0.045 billion.
7/ An amount of Taka 0.237 billon was paid in November 2014 against the outstanding of Taka 1.005 billion in June 2014.
8/ An amount of Taka 0.164 billion was paid in June 2015 against the outstanding of Taka 0.697 billion in June 2014.
R = Revised, P=Provisinal.
Source: Debt Management Department, Statistics Department, Bangaldesh Bank (Figures of Treasury Bills and Bonds
(Including Special Bonds) are collected from DMD).
249
Table-XV : Government Borrowing from Other than Banks

(Billion Taka)
R
FY14 FY15P
Sl. Particulars
Sale Repayment Net Sale Repayment Net
No.
Principal Interest Sale Principal Interest Sale
1 2 3 4 5 6 = (3-4) 7 8 9 10 = (7-8)
NSD Instruments
1. Defence Savings Certificate 0.0 0.2 0.2 -0.2 0.0 0.1 0.1 -0.1
2. 5-year Bangladesh Savings Certificate 33.7 21.4 10.6 12.3 64.8 34.3 17.4 30.5
3. Bonus Savings Certificate 0.0 0.0 0.0 0.0 0.0 0.004 0.0 -0.004
4. 6-month interest bearing Savings Certificate 0.0 0.001 0.01 -0.001 0.0 0.1 0.03 -0.1
5. Family Savings Certificate 83.4 9.7 24.6 73.7 150.7 10.2 34.0 140.5
6. 3-month interest bearing Savings Certificate 56.1 29.5 13.5 26.6 113.2 29.3 18.3 83.9
7. Jamanat Savings Certificate 0.0 0.002 0.0 -0.002 0.0 0.001 0.0 -0.001
8. Pensioner Savings Certificate 10.4 12.9 8.7 -2.5 19.6 16.5 8.2 3.1
9. Post Office Savings Bank 49.3 44.2 11.3 5.1 65.3 41.7 10.1 23.6
a) General Account 11.4 11.2 0.4 0.2 13.2 12.1 0.5 1.1
b) Fixed Account 37.9 33.0 10.9 4.9 52.1 29.6 9.6 22.5
c) Bonus Account 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
10. Postal Life Insurance 0.8 0.7 0.1 0.1 0.9 0.9 0.0 0.0
11. Prize Bond 0.6 0.4 0.1 0.2 0.7 0.5 0.1 0.2
12. Wage Earners' Development Bond 5.4 4.1 7.8 1.3 8.2 4.0 9.1 4.2
13. 3-year National Investment Bond 0.0 0.2 0.05 -0.2 0.0 0.01 0.003 -0.01
14. USD Premium Bond 0.7 0.5 0.2 0.2 0.4 0.3 0.2 0.1
15. USD Investment Bond 2.7 2.2 0.7 0.5 2.7 1.5 0.7 1.2
16. Total : (1+...+15) 243.1 126.0 77.9 117.2 426.5 139.3 98.2 287.1
Outstanding as on Net Outstanding as on Net

30 June 2014 Changes 30 June 2015 Changes
17. Govt. Treasury Bills/Bonds 176.3 36.4 235.8 59.5

i) Government Treasury Bills 0.7 0.2 8.8 8.1
ii) Bangladesh Govt. Treasury Bonds (BGTBs) 175.5 36.1 226.9 51.4
a) 2-year Bangladesh Government Treasury Bonds 4.9 4.1 8.7 3.8
b) 5-year Bangladesh Government Treasury Bonds 50.2 9.6 58.7 8.5
c) 10-year Bangladesh Government Treasury Bonds 62.3 10.0 88.2 25.9
d) 15-year Bangladesh Government Treasury Bonds 21.5 4.2 28.6 7.1
e) 20-year Bangladesh Government Treasury Bonds 36.7 8.2 42.8 6.1
18. Total Non-bank Government Borrowing (net) : (16+17) 153.5 346.8
Notes: R = Revised P = Provisional.

Sources: National Savings Directorate, Debt Management Department, Bangladesh Bank.
250
Table-XVI : Balance of Payments*

(Million US Dollar)
Items FY09 FY10 FY11 FY12 FY13 FY14R FY15P
1 2 3 4 5 6 7 8
Trade balance -4710 -5155 -9935 -9320 -7009 -6794 -9917
Export f.o.b.(including EPZ) 15581 16233 22592 23989 26567 29777 30768
Of which : Readymade garments (RMG) 12348 12497 17914 19090 21516 24492 25491
Import f.o.b (including EPZ) 20291 21388 32527 33309 33576 36571 40685
Services -1616 -1233 -2612 -3001 -3162 -4099 -4628
Credit 1832 2478 2573 2694 2830 3115 3017
Debit 3448 3711 5185 5695 5992 7214 7645
Primary income -1484 -1484 -1454 -1549 -2369 -2635 -2995
Credit 95 52 124 193 120 131 74
Debit 1579 1536 1578 1742 2489 2766 3069
Of which : Official interest payments 238 215 345 373 476 427 404
Secondary Income 10226 11596 12315 13423 14928 14934 15894
Official transfers 72 127 103 106 97 83 74
Private transfers 10154 11469 12212 13317 14831 14851 15820
of which: Workers' remittances 9689 10987 11513 12734 14338 14116 15170
Current account balance 2416 3724 -1686 -447 2388 1406 -1645
Capital account 451 512 642 482 629 598 483
Capital transfers 451 512 642 482 629 598 483
Financial account -825 -651 651 1436 2770 2855 5308
Foreign direct investment (net) 961 913 775 1191 1726 1474 1830
Portfolio investment -159 -117 109 240 368 937 618
Other investment -1627 -1447 -233 5 676 444 2860
MLT loans (excluding suppliers credit) 1204 1589 1032 1539 2085 2404 2472
MLT amortization payments 641 687 739 789 906 1018 910
Other long term loans (net) -70 -151 -101 79 -150 477 -33
Other short term loans (net) -169 62 531 242 -193 -838 -161
Other assets -650 -902 -661 --- --- --- ---
Trade credit (net) -1277 -1043 -135 -1118 -250 -340 690
Commercial Bank -24 -315 -160 52 90 -241 802
Assets 129 410 452 443 396 898 86
Liabilities 105 95 292 495 486 657 888
Errors and omissions 16 -720 -263 -977 -659 624 228
Overall balance 2058 2865 -656 494 5128 5483 4373
Reserve assets -2058 -2865 656 -494 -5128 -5483 -4373
Bangladesh Bank -2058 -2865 656 -494 -5128 -5483 -4373
Assets 1883 3616 -481 293 5196 5933 4249
Liabilities -175 751 175 -201 68 450 -124
* This classification is based on BPM6 manual.
--- Other assets has been discontinued from FY12 and onwards as per recommendation of IMF.
Note: Customs record is used to calculate Import f.o.b from FY11 and onwards. Banking channel data was used for
calculating Import f.o.b. for FY10 and backwards.
251
Table-XVII : Category-wise Exports

(Million US Dollar)
Items FY08 FY09 FY10 FY11 FY12 FY13 FY14R FY15P
1 2 3 4 5 6 7 8 9
A. Frozen food 534.1 454.5 445.2 625.0 598.4 543.8 638.2 568.1
1. Fish 88.7 101.4 89.1 133.5 108.1 58.0 52.5 49.1
2. Shrimps 445.4 353.1 348.3 477.8 471.7 454.9 550.1 509.7
3. Others 0.0 0.0 7.8 13.7 18.6 30.9 35.6 9.3
B. Agricultural products 176.1 267.4 242.4 333.9 402.7 535.7 615.1 586.1
1. Vegetables 60.5 44.7 46.8 71.7 77.4 110.3 147.6 103.2
2. Tobacco 22.4 40.5 52.3 70.9 68.7 60.2 58.7 68.5
3. Cut flower 56.0 32.5 39.8 42.9 50.5 41.4 39.3 11.4
4. Fruits --- 6.0 17.4 37.7 57.2 71.9 61.8 38.5
5. Others 37.2 143.7 86.1 110.7 148.9 251.9 307.7 364.5
C. Manufactured products 13400.6 14843.3 15517.1 21969.3 23300.8 25947.8 25923.3 30054.7
1. Petroleum bi-products 185.1 142.0 301.2 260.7 275.4 314.0 162.3 77.6
2. Chemical products 215.8 237.1 102.9 104.8 103.0 93.0 93.2 111.9
3. Plastic products --- 37.4 50.6 68.8 88.7 84.5 85.7 100.6
4. Leather 284.4 178.2 226.1 297.8 330.2 399.7 505.5 397.5
5. Cotton & cotton products --- 55.2 95.2 135.0 113.0 125.0 115.6 107.0
6. Raw jute 165.1 148.2 196.3 357.3 266.3 229.9 126.4 111.6
7. Jute goods 318.3 324.9 591.7 757.7 701.1 800.7 698.1 757.0
8. Specialised textiles 179.5 208.9 186.0 164.6 138.8 124.5 108.8 107.0
9. Knitwear 5532.5 6427.3 6483.3 9482.1 9486.4 10475.9 12049.8 12426.8
10. Woven garments 5167.3 5918.5 6013.4 8432.4 9603.3 11039.9 12442.1 13064.6
11. Home textile 291.4 313.5 539.3 788.8 906.1 791.5 792.5 804.3
12. Footwear 169.6 186.9 204.1 297.8 335.5 419.3 171.6 189.5
13. Engineering products 219.7 181.3 311.1 309.6 375.5 367.5 366.6 447.0
14. Others 671.9 483.9 215.9 512.0 577.5 676.7 1215.1 1352.3
Total (A+B+C) 14110.8 15565.2 16204.7 22928.2 24301.9 27027.4 30186.6 31208.9
Of which exports from EPZ 1729.5 1900.3 2150.5 2800.9 3425.5 3828.8 4480.3 4957.8
Source : Export Promotion Bureau.
252
Table-XVIII : Category-wise Imports

(Million US Dollar)
Items FY11 FY12 FY13 FY14R FY15P
1 2 3 4 5 6
A. Food Grains 2058.2 822.0 576.6 906.2 1490.7
1. Rice 867.5 226.8 15.7 102.8 508.1
2. Wheat 1190.7 595.2 560.9 803.4 982.6
B. Other Commodities 34034.2 36162.8 36713.2 39710.2 43699.5
1. Milk & cream 216.6 224.1 230.1 280.3 277.2
2. Spices 101.0 87.5 78.8 107.0 182.4
3. Oil seeds 96.2 258.6 358.0 453.6 374.0
4. Edible oil 2598.3 3526.8 3016.9 2946.3 2743.5
5. Pulses (all sorts) 234.4 275.7 485.9 318.6 434.3
6. Sugar 723.0 1349.1 779.5 852.2 788.7
7. Clinker 530.6 532.0 569.3 633.2 638.4
8. Crude petroleum 289.3 304.0 60.7 72.3 316.0
9. POL 2445.5 2972.9 3005.5 3371.5 4742.5
10. Chemicals 1225.7 1334.8 1411.6 1577.5 1723.7
11. Pharmaceutical products 199.9 185.0 197.5 210.8 136.9
12. Fertiliser 1530.7 1370.0 1265.2 940.9 1338.9
13. Dyeing and tanning materials 351.0 378.1 445.3 543.1 599.0
14. Plastics and rubber articles thereof 1359.9 1508.8 1577.3 1822.2 2052.3
15. Raw cotton 2589.3 1966.2 2255.4 2464.3 2295.5
16. Yarn 2065.3 1495.5 1675.4 1816.9 1851.2
17. Textile & textile articles thereof 3942.7 4382.3 5071.1 5360.5 5742.0
18. Staple fibre 700.2 779.4 877.9 1010.1 1078.0
19. Iron, steel & other base metals 2184.7 2586.4 2865.2 2899.4 3265.0
20. Capital machinery 3085.0 2394.3 2250.0 2819.1 3320.5
21. Others 7564.9 8251.3 8236.6 9210.4 9799.5
Total Imports c.i.f. 36092.4 36984.8 37289.8 40616.4 45190.2
Total Imports f.o.b. 32527.0 33309.0 33576.0 36571.0 40685.0
Of Which Import by EPZ 1985.1 2115.7 2444.7 3077.0 3138.1
R = Revised, P = Provisional
Source: Compiled by Statistics Department of Bangladesh Bank using the data of National Board of Revenue (NBR).
253
Table-XIX : Sector-wise Comparative Statement of Opening, Settlement and Outstanding of Import LCs
(Million US Dollar)
FY14 FY15 % Changes during FY15

over FY14
Fresh Settlement Outstanding Fresh LCs Settlement Outstanding Outstanding
Sectors/ Commodities LCs LCs at the LCs at the Fresh LCs Settlement LCs at the
of LCs end of opening of LCs end of opening of LCs end of
opening the year the year the year
1 2 3 4 5 6 7 8 9 10
A. Consumer goods 4597.8 4586.6 1614.5 5168.1 4749.6 1712.2 12.4 3.6 6.1
(% of Total) (11.0) (12.3) (7.6) (12.0) (12.4) (7.7)
a) Food grains (rice & wheat) 1317.1 1409.8 242.0 1736.9 1498.0 373.4 31.9 6.3 54.3
b) Other than food grain 3280.7 3176.8 1372.5 3431.1 3251.6 1338.7 4.6 2.4 -2.5
B. Intermediate goods 3054.4 2836.3 1302.3 3690.0 3354.3 1472.5 20.8 18.3 13.1
(% of Total) (7.3) (7.6) (6.1) (8.6) (8.7) (6.6)
C. Industrial raw materials 15548.3 14724.6 7260.0 16144.6 15181.3 7017.8 3.8 3.1 -3.3
(% of Total) (37.3) (40.9) (36.8) (37.3) (39.8) (35.1)
D. Capital machinery 3878.2 2518.3 4184.6 4354.8 3096.8 5131.7 12.3 23.0 22.6
(% of Total) (9.3) (6.8) (19.7) (10.1) (8.1) (23.1)
E. Machinery for 4609.2 3522.4 2603.3 4057.2 3772.0 2069.1 -12.0 7.1 -20.5
miscellaneous industry
(% of Total) (11.0) (9.5) (12.3) (9.4) (9.8) (9.3)
F. Petroleum and 5023.6 4577.4 1489.1 3372.8 3462.4 1111.0
Petroleum products
(% of Total) (12.0) (12.3) (7.0) (7.8) (9.0) (5.0) -32.9 -24.4 -25.4
G. Others 5107.1 4423.3 2781.4 6281.3 4838.8 3679.0 23.0 9.4 32.3
% of Total (12.2) (11.9) (13.1) (14.6) (12.6) (16.6)
Total 41818.6 37188.9 21235.1 43068.8 38455.0 22193.3 3.0 3.4 4.5
Of which, back to back 6237.7 6152.1 3032.2 6830.8 6201.8 3026.1 9.5 0.8 -0.2
Source: Foreign Exchange Operation Department, Bangladesh Bank.
254
Table-XX : Foreign Exchange Reserves
Year Total reserves

(End June) Million Taka Million US Dollar
1 2 3
1998 80,266 1,739
1999 73,650 1,523
2000 81,466 1,602
2001 73,831 1,307
2002 90,858 1,583
2003 141,753 2,470
2004 163,241 2,705
2005 186,769 2,930
2006 242,914 3,484
2007 349,314 5,077
2008 421,377 6,149
2009 515,945 7,471
2010 747,121 10,750
2011 809,996 10,912
2012 848,071 10,364
2013 1190,896 15,315
2014 1669,665 21,508
2015 1946,601 25,021
Source : Accounts & Budgeting Department, Bangladesh Bank.
255
Table-XXI : Period Average Taka-US Dollar Exchange Rates
Year Taka per US Dollar

1 2
FY98 45.46
FY99 48.06
FY00 50.31
FY01 53.96
FY02 57.43
FY03 57.90
FY04 58.94
FY05 61.39
FY06 67.08
FY07 69.03
FY08 68.60
FY09 68.80
FY10 69.18
FY11 71.17
FY12 79.10
FY13 79.93
FY14 77.72
FY15 77.68
256
Table-XXII : Country-wise Workers` Remittances

(Million US Dollar)
Countries FY09 FY10 FY11 FY12 FY13 FY14 FY15
1 2 3 4 5 6 7 8
Saudi Arabia 2859.09 3427.05 3290.03 3684.36 3829.45 3118.88 3345.23
UAE 1754.92 1890.31 2002.63 2404.78 2829.40 2684.86 2823.77
UK 789.65 827.51 889.60 987.46 991.59 901.23 812.34
Kuwait 970.75 1019.18 1075.75 1190.14 1186.93 1106.88 1077.78
USA 1575.22 1451.89 1848.51 1498.46 1859.76 2323.32 2380.19
Italy 186.90 182.19 215.58 244.75 233.23 269.59 260.16
Qatar 343.36 360.91 319.36 335.26 286.89 257.53 310.15
Oman 290.06 349.08 334.31 400.93 610.11 701.08 915.26
Singapore 165.13 193.46 202.33 311.46 498.79 429.11 443.44
Germany 19.32 16.50 25.64 34.99 25.81 26.94 21.16
Bahrain 157.43 170.14 185.93 298.46 361.70 459.39 554.34
Japan 14.12 14.74 15.21 22.16 21.18 17.06 16.30
Malaysia 282.22 587.09 703.73 847.49 997.43 1064.68 1381.53
Other countries 281.09 497.35 541.71 582.72 728.87 867.76 975.27
Total : 9689.26 10987.40 11650.32 12843.42 14461.14 14228.31 15316.92
Source : Foreign Exchange Policy Department, Bangladesh Bank.
257
Table-XXIII : List of Scheduled Banks

(As on 30 June 2015)
State owned/government controlled banks (6+2=8)
State owned commercial banks (6)

Sonali Bank Limited
Janata Bank Limited
Agrani Bank Limited
Rupali Bank Limited
Bangladesh Small Industries and Commerce Bank Limited
Bangladesh Development Bank Limited
Specialised banks DFIs (2)

Bangladesh Krishi Bank
Rajshahi Krishi Unnayan Bank
Private commercial banks (39)

AB Bank Limited
Al-Arafah Islami Bank Limited
Bangladesh Commerce Bank Limited
Bank Asia Limited
BRAC Bank Limited
Dhaka Bank Limited
Dutch-Bangla Bank Limited
Eastern Bank Limited
Export Import (EXIM) Bank of Bangladesh Limited
First Security Islami Bank Limited
International Finance Investment and Commerce (IFIC) Bank Limited
Islami Bank Bangladesh Limited
ICB Islamic Bank Limited
Jamuna Bank Limited
Mercantile Bank Limited
Meghna Bank Limited
Midland Bank Limited
Modhumoti Bank Limited
Mutual Trust Bank Limited
National Bank Limited
National Credit and Commerce Bank Limited
NRB Bank Limited
NRB Commercial Bank Limited
NRB Global Bank Limited
* In December 1986, it was decided to transform Rupali Bank into a Public Limited Company, keeping 51 percent ownership in
the government sector. Subsequently, the above bank's ownership in the government sector was raised to 90 percent as on 30
June 2015.
258
Table-XXIII (contd.) : List of Scheduled Banks

One Bank Limited

Prime Bank Limited
Pubali Bank Limited
Shahjalal Islami Bank Limited
Social Islami Bank Limited
South Bangla Agriculture and Commerce Bank Limited
Southeast Bank Limited
Standard Bank Limited
The City Bank Limited
The Premier Bank Limited
The Farmer's Bank Limited
Trust Bank Limited
United Commercial Bank Limited
Uttara Bank Limited
Union Bank Limited
Foreign commercial banks (9)

Bank Alfalah Limited
Citibank N.A
Commercial Bank of Ceylon PLC
Habib Bank Limited
National Bank of Pakistan
Standard Chartered Bank
State Bank of India
The Hongkong and Shanghai Banking Corporation (HSBC) Limited
Woori Bank
259
Table-XXIV : List of Financial Institutions*

Agrani SME Financing Company Limited

Bangladesh Finance and Investment Company Limited
Bangladesh Industrial Finance Company Limited
Bangladesh Infrastructure Finance Fund Limited
Bay Leasing and Investment Limited
Delta Brac Housing Finance Corporation Limited
Fareast Finance & Investment Limited
FAS Finance & Investment Limited
First Finance Limited
GSP Finance Company (Bangladesh) Limited
Hajj Finance Company Limited
IDLC Finance Limited
Industrial and Infrastructure Development Finance Company Limited
Industrial Promotion and Development Company of Bangladesh Limited
Infrastructure Development Company Limited
International Leasing and Financial Services Limited
Islamic Finance and Investment Limited
Lanka Bangla Finance Limited
Meridian Finance and Investments Limited**
MIDAS Financing Limited
National Finance Limited
National Housing Finance and Investment Limited
People's Leasing and Financial Services Limited
Phoenix Finance and Investments Limited
Premier Leasing & Finance Limited
Prime Finance & Investment Limited
Reliance Finance Limited
Saudi-Bangladesh Industrial and Agricultural Investment Company
UAE-Bangladesh Investment Company Limited
Union Capital Limited
United Finance Limited
Uttara Finance and Investments Limited
* Licensed by the Bangladesh Bank under Financial Institutions Act, 1993.

** Newly licensed FI, not yet in operation.
260
Table-XXV : List of Major Publications
ANNUAL
1. Annual Report
2. Export receipts
3. Import payments
4. Balance of payments
HALF YEARLY
1. Financial Sector Review
2. Monetary Policy Review
3. Foreign Direct Investment in Bangladesh
4. Monetary Policy Statement (MPS)
5. Financial Stability Report
QUARTERLY
1. Scheduled Bank Statistics
2. Bangladesh Bank Quarterly
MONTHLY
1. Economic Trends
2. Bangladesh Bank Parikroma
261
Appendix-4
Banking Performance Indicators
(Table: I-XIII)
263
Appendix-4
Table I: Structure of Banking System Structure
(billion Taka)
2015 (June)
Bank
Number Number Total Percent of Percent of
type of banks of branches assets industry assets Deposits deposits
SCBs 6 3669 2755.7 28.4 2105.4 28.4
DFIs 2 1405 289.4 2.9 226.1 3.1
PCBs 39 3982 6130.5 63.3 4743.5 64.1
FCBs 9 75 518.2 5.4 331.5 4.4
Total 56 9131 9693.8 100 7406.5 100
Table II: Capital to Risk Weighted Assets Ratio by Type of Banks

(Percent)
Bank type 2007 2008 2009 2010 2011 2012 2013 2014 2015
June
SCBs 7.9 6.9 9.0 8.9 11.7 8.1 10.8 8.3 4.9
DFIs -5.5 -5.3 0.4 -7.3 -4.5 -7.8 -9.7 -17.3 -18.1
PCBs 10.6 11.4 12.1 10.1 11.5 11.4 12.6 12.5 11.8
FCBs 22.7 24.0 28.1 15.6 21.0 20.6 20.2 22.6 24.1
Total 9.6 10.1 11.6 9.3 11.4 10.5 11.5 11.3 10.3
Table III: NPL Ratios by Type of Banks

(Percent)
Bank type 2007 2008 2009 2010 2011 2012 2013 2014 2015
June
SCBs 29.9 25.4 21.4 15.7 11.3 23.9 19.8 22.2 21.9
DFIs 28.6 25.5 25.9 24.2 24.6 26.8 26.8 32.8 25.5
PCBs 5.0 4.4 3.9 3.2 2.9 4.6 4.5 4.9 5.7
FCBs 1.4 1.9 2.3 3.0 3.0 3.5 5.5 7.3 8.2
Total 13.2 10.8 9.2 7.3 6.1 10.0 8.9 10.0 9.7
265
Appendix-4 Banking Performance Indicators
Table IV: Ratio of Net NPL to Total Loans by Type of Banks

(Percent)
Bank type 2007 2008 2009 2010 2011 2012 2013 2014 2015 June
SCBs 12.9 5.9 1.9 1.9 -0.3 12.8 1.7 6.1 9.4
DFIs 19.0 17.0 18.3 16.0 17.0 20.4 19.7 25.5 9.2
PCBs 1.4 0.9 0.5 0.0 0.2 0.9 0.6 0.8 1.1
FCBs -1.9 -2.0 -2.3 -1.7 -1.8 -0.9 -0.4 -0.9 -0.4
Total 5.1 2.8 1.7 1.3 0.7 4.4 2.0 2.7 2.8
Table V: Amount of NPLs

(billion Taka)
Bank type 2007 2008 2009 2010 2011 2012 2013 2014 2015 June
SCBs 137.9 127.6 117.5 107.6 91.7 215.2 166.1 227.6 224.0
DFIs 37.2 37.3 42.1 49.7 56.5 73.3 83.6 72.6 58.3
PCBs 49.2 57.0 61.7 64.3 72.0 130.4 143.1 184.3 223.5
FCBs 1.9 2.9 3.5 5.5 6.3 8.5 13.0 17.1 19.4
Total 226.2 224.8 224.8 227.1 226.5 427.3 405.8 501.6 525.2
Table VI: Required Provision and Provision Maintained-all Banks

(billion Taka)
All banks 2007 2008 2009 2010 2011 2012 2013 2014 2015 June
Amount of NPLs 226.2 224.8 224.8 227.1 226.4 427.3 405.8 501.5 525.2
Required provision 127.2 136.1 134.8 149.2 148.2 242.4 252.4 289.6 300.4
Provision maintained 97.1 126.2 137.9 142.3 152.7 189.8 249.8 281.7 275.6
Excess (+)/ shortfall(-) -30.1 -9.9 3.1 -6.9 4.6 -52.6 -2.6 -7.9 -24.8
Provision maintenance ratio (%) 76.3 92.7 102.3 95.4 103.04 78.3 99.0 97.2 91.7
Table VII: Comparative Position of Provision Adequacy

(billion Taka)
Year Items SCBs SBs PCBs FCBs
2015
Provision maintained 96.7 31.2 130.6 17.2
June
Provision maintenance ratio (%) 76.6 100 103.2 106.2
266
Banking Performance Indicators Appendix-4
Table VIII: Writing-off Bad Debts in Bank Categories

(billion Taka)
Bank 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June
type 07 08 09 10 11 12 13 14 15
SCBs 42.8 48.4 64.5 70.5 82.4 72.9 107.2 154.8 210.3
SBs 30.4 31.0 31.8 31.8 32.0 24.5 32.6 34.2 5.6
PCBs 45.5 49.4 54.7 69.6 77.1 64.9 109.7 127.7 155.5
FCBs 1.6 1.7 2.0 2.1 2.4 2.6 3.7 4.4 5.1
Total 120.3 130.5 153.0 174.0 193.9 164.9 253.3 321.1 376.5
Table IX: Expenditure-Income Ratio by Type of Banks

(Percent)
Bank type 2007 2008 2009 2010 2011 2012 2013 2014 2015
June
SCBs 100.0 89.6 75.6 80.7 62.7 73.2 84.1 84.1 85.9
DFIs 107.7 103.7 112.1 87.8 88.6 91.2 94.8 99.5 120.4
PCBs 88.8 88.4 72.6 67.6 71.7 76.0 77.9 75.8 75.5
FCBs 72.9 75.8 59.0 64.7 47.3 49.6 50.4 46.8 49.6
Total 90.4 87.9 72.6 70.8 68.6 74.0 77.8 76.1 78.3
Table X: Profitability Ratios by Types of Banks
(Percent)
Return on assets (ROA) Return on equity (ROE)

Bank
types
2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015
June June
SCBs 0.0 0.7 1.0 1.1 1.3 -0.6 0.6 -0.6 -0.6 0.0 22.5 26.2 18.4 19.7 -11.9 10.9 -13.6 -22.5
DFIs -0.3 -0.6 0.4 0.2 0.1 0.1 -0.4 -0.7 -1.5 -3.4 -6.9 -171.7 -3.2 -0.9 -1.1 5.8 -5.97 -8.2
PCBs 1.3 1.4 1.6 2.1 1.6 0.9 1.0 1.0 0.9 16.7 16.4 21.0 20.9 15.7 10.2 9.8 10.3 9.7
FCBs 3.1 2.9 3.2 2.9 3.2 3.3 3.0 3.4 3.1 20.4 17.8 22.4 17.0 16.6 17.3 16.9 17.7 15.7
Total 0.9 1.2 1.4 1.8 1.5 0.6 0.9 0.6 0.5 13.8 15.6 21.7 21.0 17.0 8.2 11.0 8.1 6.6
267
Appendix-4 Banking Performance Indicators
Table XI: Net Interest Income by Types of Banks

(billion Taka)
Bank type 2007 2008 2009 2010 2011 2012 2013 2014 2015 June
SCBs 7.4 7.9 12.1 19.8 34.3 14.9 -5.4 39.7 19.4
DFIs 1.4 1.9 1.9 6.2 4.9 4.7 3.8 2.1 1.9
PCBs 36.1 48.5 56.7 82.8 91.4 114.7 118.2 205.8 105.0
FCBs 9.9 12.6 10.7 13.0 16.1 19.6 15.8 26.6 14.1
Total 54.8 70.9 81.5 121.9 146.7 153.8 132.3 274.2 140.3
Table XII: Liquidity Ratio by Type of Banks

(Percent)
Liquid assets Excess liquidity

Bank
type
2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015
June June
SCBs 24.9 32.9 25.1 27.2 31.3 29.2 44.3 42.0 39.3 6.9 14.9 17.6 8.2 12.3 10.2 25.3 23.9 26.4
DFIs 14.2 13.7 9.6 21.3 6.9 11.5 15.3 6.6 0.0 5.6 4.9 7.1 2.3 1.3 1.4 4.2 6.6 0.0
PCBs 22.2 20.7 18.2 21.5 23.5 26.3 28.0 28.2 20.8 6.4 4.7 5.3 4.6 6.6 9.5 11.3 11.0 11.9
FCBs 29.2 31.3 31.8 32.1 34.1 37.5 46.2 56.9 51.1 11.2 13.3 21.8 13.2 15.3 18.7 27.4 37.6 38.9
Total 23.2 24.8 20.6 23.0 25.4 27.1 32.5 32.7 26.8 6.9 8.4 9.0 6.0 8.4 9.9 15.4 15.7 16.9
Table XIII: Branch, Deposit and Advance in The Banking System-Rural and Urban
(billion Taka)
Number of branch* Deposit** Advance**
Year Rural Urban Total Rural Urban Total Rural Urban Total
2000 3659 2460 6119 160.6 549.2 709.8 100.1 493.5 593.6
2001 3680 2502 6182 160.2 656.3 816.5 97.2 590.6 687.8
2002 3693 2538 6231 177.6 753.2 930.8 100.0 667.7 767.7
2003 3694 2526 6220 190.8 883.3 1074.1 102.5 744.8 847.3
2004 3724 2579 6303 192.0 1023.8 1215.8 103.4 847.9 951.3
2005 3764 2638 6402 218.3 1197.6 1415.9 117.6 999.7 1117.3
2006 3834 2728 6562 241.5 1445.8 1687.3 128.4 1163.3 1291.7
2007 3894 2823 6717 263.0 1689.1 1952.1 130.1 1335.6 1465.7
2008 3981 2905 6886 306.2 2009.8 2316.0 148.5 1667.0 1815.5
2009 4136 3051 7187 369.9 2424.0 2793.9 169.6 1920.9 2090.5
2010 4393 3265 7658 436.9 2942.3 3379.2 206.9 2367.5 2574.4
2011 4551 3410 7961 536.0 3579.9 4115.9 254.5 2958.3 3212.8
2012 4760 3562 8322 853.1 4011.0 4864.1 405.6 3453.7 3859.3
2013 4962 3723 8685 1117.1 4988.2 6105.3 450.6 3987.8 4438.4
2014 5150 3890 9040 1326.0 5605.2 6931.1 505.1 4571.2 5076.3
2015** 5187 3944 9131 1452.0 6004.0 7456.0 536.2 4825.2 5361.4
Note: *As of end December, **As of end June.
268

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(July 2014-June 2015)

(Dr. Atiur Rahman)

Dr. Atiur Rahman Chairman

Mr. Md. Abul Quasem Director

Dr. Mustafa Kamal Mujeri Director

Prof. Sanat Kumar Saha Director

Dr. Sadiq Ahmed Director

Prof. Hannana Begum Director

Mr. Md. Ghulam Hussain Director

Dr. M. Aslam Alam Director

Mr. Mahbub Ahmed* Director

Mr. Md. Nojibur Rahman** Director

Mr. Ahmed Jamal Secretary

Change Management Adviser

Executive Directors/Economic Adviser

Md. Ahsan Ullah Md. Abdur Rahim

*As per alphabetical arrangement. ** As of 30 June 2015.

Barisal Nurul Alam Kazi, General Manager

*As per alphabetical arrangement.

Chapter-1 Macroeconomic Performance and Prospects 1

Chapter-2 The Real Economy 10

Chapter-3 Price and Inflation 15

Global Inflation Scenario 15

Chapter-4 Money and Credit 21

Chapter-10 Public Finance 87

Chapter-13 Administration 116

Chapter-14 Bangladesh Bank's Accounts for 2014-2015 121

1.1 Overview of the World Economic Outlook projections 1

1.1 Domestic savings and investment 4

6.3 Sector-wise CSR expenditure of NBFIs : FY15 54

Appendix-4 Banking Performance Indicators 263

Macroeconomic Performance and Prospects

Global Economic Outlook Table 1.1 Overview of the World Economic

weaker growth, several emerging market economic activity, particularly in services

domestic foreign exchange market by

decreased to 3.0 percent in FY15 from 4.4

General Food Non-food

from 6.6 percent in FY14 to 6.9 percent in 0

domestic savings-investment gap as a 4,000

percentage of GDP increased to 6.7 percent 2,000

in FY15 from 6.5 percent in FY14. 0

the actual 11.6 percent growth in FY14. The 4

lower growth in domestic credit resulted from 3

the lower investment demand for several 2

reasons. The credit to public sector recorded 1

a negative growth of 2.5 percent in FY15, 0

which was much low compared with the target -1

Public Finance Chart 1.7 Export and import growth

During the same time total import payments

environmentally sustainable growth, further BB remains active in support of a market-

The Real Economy

Economic Growth Table 2.1 Sectoral GDP growth

Manufacturing growth increased to 10.3 Table 2.3 GDP by expenditure groups

Private 2374.2 2607.5 2960.0 3340.1

Statistical discrepancy 79.1 104.0 6.3 289.0

manufacturing of motor vehicles, trailers and Total

communication sub-sectors grew by 6.6 and Chart 2.2 Domestic Savings

6.7 and 6.1 percent respectively in FY14. 20

and community, social and personal services