An

Assignment On

Legal formalities for writing and registration of a private bank in Bangladesh

Course Code :BUS-231

Course Title: Legal Environment of Business

Section: (A)

Batch:45th

Submitted To

Chowdhury Tabassum Shakila

Senior Lecturer
(Accounting)
Business Administration

Leading University, Sylhet.

Submitted By

Name ID
Abdur Rahim Tuhin 1711010015
Shormi Dev 1711010017
Farhana Akther Anipa 1711010003
Nusrat Tabassum 1711010028
Zawadul Haque Chowdhury 1711010020

Date of Submission: 11 October,2018

 Acknowledgment
First of all we would like to very thankful to our God ,Who is most beneficent and merciful to Us.

This assignment would not have been possible without the essential support and work of our all
group member.We also like to very thankful to our course teacher Chowdhury Tabassum
Shakila for teaching us ,and help to learn all the important thing about this assignment.

Finally, We would like to thank our family member’s and our friend’s for their understanding and
supports towards us for completing this assignment
 Table Of Content
No. Content Page

01 What is Private Bank 01

02 Characteristics of private bank 02-03

03 Registration of a private bank in Bangladesh 03-04

04 Difference and similarities between Private Bank and Public Bank 05

05 Conclusion 06

06 Reference 07
What is Private Bank
A private bank is a type of financial organization that offers specialized financial advice and wealth
management services to protect, grow and manage the financial wealth of the wealthy or high net-
worth clients of the organization. As part of the service, the financial organization encompasses a
comprehensive range of wealth management services to meet the individual and business needs of
their clients, who have access to a much more personal level of service than conventional retail
banking. In a private bank, clients will be given access to a vast number of services, ranging from
access to local investment expertise, real estate planning, customized financial solutions,
investment opportunities and wealth planning, which retail clients will not have access to. Clients
need to meet a certain minimum criteria to qualify for these services, which may differ in different
organizations and in different regions. Swiss private banks are also popular with several affluent
individuals because of the additional advantages they provide, like high levels of privacy and lower
risk.

Private Banks in Bangladesh

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Characteristics of private bank

1. Members– To start a Bank, a minimum number of 2 members are required and a

maximum number of 200 members as per the provisions of the Private Bank Act,
2013.

2. Limited Liability– The liability of each member or shareholders is limited. It means

that if a Bank faces loss under any circumstances then its shareholders are liable to

sell their own assets for payment. The personal, individual assets of the
shareholders are not at risk.

3. Perpetual succession– The Bank keeps on existing in the eyes of law even in the
case of death, insolvency, the bankruptcy of any of its members. This leads to

perpetual succession of the Bank. The life of the Bank keeps on existing forever.
4. Index of members– A private Bank has a privilege over the public Bank as they

don’t have to keep an index of its members whereas the public Bank is required to
maintain an index of its members.

5. A number of directors– When it comes to directors a private Bank needs to have

only two directors. With the existence of 2 directors, a private Bank can come into

operations.
6. Paid up capital– It must have a minimum paid-up capital of Rs 1 lakh or such
higher amount which may be prescribed from time to time.
7. Prospectus– Prospectus is a detailed statement of the Bank affairs which is issued

by a Bank for its public. However, in the case of private limited Bank, there is no
such need to issue a prospectus because in this public is not invited to subscribe

for the shares of the Bank.

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 8. Minimum subscription– It is the amount receive by the Bank which is 90% of the

shares issued within a certain period of time. If the Bank is not able to receive 90%
of the amount then they cannot commence further business. In case of private

limited Bank shares can be allotted to the public without receiving the minimum
subscription.

9. Name– It is mandatory for all the private Bank to use the word private limited after
its name.

Registration of a private bank in Bangladesh

The requirements for private limited Bank registration are:

1. Members- A minimum number of two and a maximum number of 200 members or

shareholders are required as per the Bank’ act 2013 before registration of the Bank
2. Directors- A minimum number of two directors is required for registering the private
limited Bank. Each of the directors should have DIN i.e. director identification number
which is given by the ministry of corporate affairs. One of the directors must be a resident
of Bangladesh which means he/she should have stayed in Bangladesh for not less than 182
days in a previous calendar year.
3. Name- It is one of the major components for a private limited Bank. The name of the Bank
contains three parts i.e. the name, the activity and private limited Bank. It is necessary for
all private Bank to use the word private limited Bank at the end of its Bank name. Every
Bank has to send 5-6 names for approval to the registrar of the Bank and all the names
should be unique and expressive. The name for approval should not resemble with any
other Bank name. So choosing the right Bank name is an important component is it will
stay with the Bank throughout its life.
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4. Registered office address- While going for the registration of the Bank, the owner should
provide the temporary address of the Bank until it does not get register. However when the
Bank has been registered then its permanent address of its registered office should be suited
with the registrar of the Bank. The Registered office of the Bank is where Bank main affairs
are been conducted and where all the documents are placed.
5. Obtaining digital signature certificate- In today’s modern world everything is done
online. All documents are submitted electronically and for that, every Bank must obtain
a digital signature certificate which is used to verify the authenticity of the documents.
A digital signature is obtained by all the directors which are marked on all the documents
by every director.

6. Professional certification- In a Bank there are many professionals which have required
for many purposes. For incorporating a private limited Bank certification by these
professionals are necessary.Various professionals such as Bank secretary, chartered
accountant, cost accountant etc are required to make their certification at the time of
Bank incorporation.

4
Difference and similarities between Private Bank and Public Bank

The points given below explain the differences between public sector and private sector banks:

1. Public Sector Banks are the banks, whose maximum shareholding is with the government.
On the other hand, Private Sector Banks are the one whose maximum shareholding is with
individuals and institutions.

2. At present, there are 27 public sector banks in India, whereas there are 22 private sector
banks and four local area private banks.

3. Public Sector banks dominate the Indian banking system, by the total market share of
72.9%, which is followed by Private sector banks, by 19.7%.

4. Public sector banks are established since long, while private sector banks emerged a few
decades ago, and so the customer base of public sector banks is greater than the private
ones.

5. Transparency in terms of interest rate policies can be seen in the public sector. The interest
rate on deposits offered by the public sector banks to its customers is slightly higher than
the private sector banks.

6. When it comes to promotion of employees, public sector banks consider seniority as a base.
Conversely, merit is the basis of private sector banks, to promote employees.

7. If we talk about growth opportunities in a public sector banks is quite slow in comparison
to a private sector bank.

8. Job security is always present in a public sector bank, but private sector bank job is secure
only when the performance is good because performance is everything in a private sector.

9. Along with job security, one more pro, of a public sector bank is the after retirement
benefit, i.e. pension. On the contrary, pension scheme is not provided by private sector
banks to its employees. However, other retirement benefits like gratuity, etc. are offered
by the bank.

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Conclusion
Both private and public bank is essential in terms of an economy. Private Banks play a great role
in economic development of a country. Bangladesh is at least developing country and its economy
is agro-base. Poverty is the main problem in this country. In this situation private helps to remove
poverty in our country. As a result, banks collect money from large number of people, which is
made for the commerce and industry for meeting the requirements. Public banks are providing all
types of services to the people like Savings and Current accounts, money transfer through Demand
Draft, Pay Order, Mail Transfer, and Telegraphic Transfer etc. They have lots of Deposit schemes,
and also Credit Schemes where loans are given to help the permanent Government employees,
Semi Government employees, Autonomous and recognized bodies. They also have Rural Credit
Scheme for the 85% of the population living in rural areas where 75% of the people earning living
from agriculture which is boosting the growth of the economy. There is another scheme called
Microcredit which is for the poor people living below the poverty level who can only afford to
take small loans. This is very beneficial for those people and about 20 projects under this scheme
is in progress. So those are the basic difference between private and public bank and these two are
essential for a economy.

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Reference
1. http://www.kepler.digital/banking-system-of-bangladesh/
2. https://www.academia.edu
3. https://www.bb.org.bd/
4. https://www.thedailystar.net
5. https://www.dhakatribune.com/

Thank You