In financial economics, a financial institution acts as an agent that provides financial services for its clients.

Financial institutions generally fall under financial regulation from a government authority.

 Common types of financial institutions include

Issurance

Banks

Co.

Investment Co.
Mutual Funds

 A bank is a commercial or state institution that

provides financial services, including issuing money in various forms, receiving deposits of money, lending money and processing transactions and the creating of credit.

Central Bank

1. 2. 3.

4. 5. 6.

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 its objectives and perform its functions. 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. To regulate and supervise banking companies and financial institutions.

 A commercial bank accepts deposits from customers

and in turn makes loans, even in excess of the deposits; a process known as fractional-reserve banking. Currently we have 52 Commercial Banks.

Bank Types SCBs PCB

Number of Banks 4 30

No. of Branches 3404 2810

Total assets 1384.3 2854.6

% of industry asset 28.5 58.8

Deposits % of deposits 1044.9 2266.5 28.1 60.9

Bank Types
SCBs PCB

Number of Banks
4 30

No. of Branches
3437 3055

Total assets
1629.2 3524.2

% of industry asset
27.8 60.0

Deposits % of deposits
1235.6 2787.5 27.4 61.8

 A savings bank is a financial institution whose

primary purpose is accepting savings deposits. It may also perform some other functions.

Islamic Banks

 Islamic banking refers to a system of banking or

banking activity that is consistent with Islamic law (Sharia) principles and guided by Islamic economics. In particular, Islamic law prohibits usury, the collection and payment of interest, also commonly called riba in Islamic discourse. There are 7 Islami Shariah based PCBs in Bangladesh

Particulars

Islamic banks 2011 2010 7 627.6 587.2 93.6

Dual Banking 2011 16 56.2 45.8 81.4 2010 16 48 41.6 86.7

Islamic Banking sectors 2011 23 818.9 738.8 90.2 2010 23 675.6 628.7 93.1

All Banking Sector 2011 47 4484.4 3642.3 79.5 2010 47 3858.9 3297.5 85.5

No of Banks Deposits Investments Investment Deposit Ratio Liquidity

7 751.2 693 90.9

31.0

25.5

0.5

0.5

31.5

26.0

358.5

211.8

Specialized Banks

Specialized Banks (SDBs): 5 specialized banks are now operating which were established for specific objectives like agricultural or industrial development. These banks are also fully or majorly owned by the Government of Bangladesh

1. 2.

3.
4.

5.

Bangladesh Krishi Bank Rajshahi Krishi Innayan Bank Bangladesh Develpoment Bank Ltd. BASIC Bank Limited(Bangladesh Small Industries and Commerce Bank Limited) Probashi Kollan Bank

Non-bank financial institutions (NBFIs) also known as a non-bank , are financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license.

 however they are typically not allowed to take deposits

from the general public and have to find other means of funding their operations such as issuing debt instruments.

 Generally, an "investment company" is a company

(corporation, business trust, partnership, or limited liability company) that issues securities and is primarily engaged in the business of investing in securities.

 An investment company invests the money it receives

from investors on a collective basis, and each investor shares in the profits and losses in proportion to the investors interest in the investment company.

 Non-bank institutions frequently acts as suppliers of

loans and credit facilities, supporting investments in property, providing services relating to events within peoples lives such as funding private education, wealth management and retirement planning

 A lease or tenancy is the right to use or occupy

personal property or real property given by a lessor to another person (usually called the lessee or tenant) for a fixed or indefinite period of time, whereby the lessee obtains exclusive possession of the property in return for paying the lessor a fixed or determinable consideration (payment).

Insurance Companies

 Insurance companies may be classified as

1. Life insurance companies, which sell life insurance, annuities and pensions products. 2. Non-life or general insurance companies, which sell other types of insurance.

Mutual Funds

An investment which is comprised of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market securities and similar assets.

Mutual funds are operated by money mangers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

Brokerage Firm

Stock brokers assist people in investing, online only companies are called 'discount brokerages', companies with a branch presence are called 'full service brokerages' or 'private client services.

Role of Financial Institutions

Act as Financial Intermediary

Providing safekeeping, accounting, and payments mechanisms for resources

Providing Liquidity

Diversifying Risk

17 March 2005-9th August 2013

Total =

513

Banks failed

1) Capital Adequacy

2)Asset Quality -Loans -Investment

3) Management

Incompetency

Dishonesty

Pen Square Bank of Oklahoma City Failed in 1982 Continental Illinois Bank (7th Largest Bank in US) Failed in 1984 Seattle First National Bank Michigan National Bank Chase Manhattan Bank

Regulators

Should we let the bank fail???

1) Limit the License

Limit Competition for deposits

Loan Diversification

Sensitivity