Bangladesh Bank

Bangladesh Bank Monogram

Headquarters Established Governor Central Bank of Currency

Dhaka 16 December 1971 Salehuddin Ahmed Bangladesh Taka

ISO 4217 Code Website Preceded by

BDT http://www.bangladeshbank.org.bd State Bank of Pakistan

Human resource Management and its practice in organization: - A Case Study of Bangladesh Bank

1. Introduction Central bank is the guardian of the banking system of a country. Central bank operates the economy system of a country in the best possible way to achieve economic development. Its main aim is to control the economic situation, determine the right way of development, maintaining stability in the economy, controlling the supply of money, for the betterment of the people of the country. Many prominent scholars have defined central bank from different point of view. Some of these definitions are given below: A bank which deals chiefly with other banks in holding the banking reserve of its country or district and normally government agencies or govt. related agencies and operated in the board public interest. The central banking is a banking system in which a single bank has either a completed or a residuary monopoly of note issue. A central bank is a bank to which it has been entrusted the duty of regulating the volume of currency and credit in the country. A central bank is the organ of government that undertakes the major financial operations of the govt. and by its conduct of these operations and by other means influences the behavior of financial institutions so as to support the economic policy of the govt. A central bank is a bank whose essential duty is to maintain stability of the monetary standard. A central bank is the principle bank of the country and which are assigned practically the following functions: a) History of Bangladesh

b) Objective of the Organization c) Function as the bank of government:

Bangladesh bank has to perform some work as the bank of government. These works are very much important for a country. Bangladesh bank works as the source of credit of the govt. Bangladesh is a developing country. For the last 37 years it has used deficit budget. As it is using deficit budget the govt. of Bangladesh has to take loan from different sources. At that point of time Bangladesh bank comes in rescue of the govt. The bank gives loan to the govt. when it is needed. The central bank of Bangladesh keeps the accounts of the governments money and other asset. They act as the accountant of the govt. and maintain the govt. fund with very much care and vigilance. It also keeps the account of governments income and expenditure. Bangladesh bank does all the internal and external transaction on behalf of the govt. of Bangladesh. For instance, if the govt. of Bangladesh pays taka to any country or any one within the country, Bangladesh bank will do the transaction. On the other hand if the govt. of Bangladesh receives any sum of money he will receive the money through Bangladesh bank. Bangladesh bank sells and purchases the foreign currency on behalf of the country. Bangladesh bank works as the advisor of the govt. The bank gives advice about economic plan, finance policy, and other related works. Revenue collection is the main source of governments income. Bangladesh bank collects all the revenue on behalf of the govt. of Bangladesh. Bangladesh bank establishes good relationship among the govt. of Bangladesh and other countries. This led to economic relation and for which some good economical relation may established. Bangladesh bank is governments bank. The bank work as the representative of the govt. To make a good image in the international level the bank performs some good work as the agent of the govt. Traditionally central bank serves as banker to the banks. In most countries, the commercial banks maintain accounts and entrust their surplus funds with their central banks. The centralization of cash reserves in the central bank has many advantages. In the first place, such reserves facilitate the settlement of the clearance difference between the banks. Secondly, the central bank can employ such reserves in the most effective manner during periods of seasonal and local monetary stringency. The other functions are given below: Bangladesh bank is the only institute which gives permission to open branches of an existing bank or open a new bank. The bank holds all the power in this purpose. The bank makes enrollment of the commercial bank which does want to be a member of the enlisted bank. Commercial banks enjoy many facilities provided by Bangladesh bank, although they had to be enlisted first.

Being the holder of the balances of the commercial banks, the central bank is especially qualified to act as a bank of central clearance. The plan of clearance house is to offset interbank indebtedness by effecting transfers in the accounts kept by the various banks with the central bank of the country. In Bangladesh central bank promotes and run the clearance system in the cities and towns where it has branches. In smaller towns the clearance system is organized by the Sonali bank. This is the most important function of Bangladesh bank; even it is true for all the banks doing the function of central bank all over the country. The central bank extends financial accommodation mainly through rediscount of first class bills of exchange, government securities and their eligible papers. In addition to these normal financial accommodations the central bank of Bangladesh is often has to perform the unpleasant task of rescuing the banks sliding into difficulties. To prevent the banks from running into difficulties the central bank conducts its monetary policy and bank supervisory function in such a manner that banks do not run into liquidity constraints by overextending their lending activities beyond what is warranted by present and future cash flow. The bank lays down certain prudential regulations such as cash reserve ratio, liquidity ratio, adequate capital and provision against classified loans. In spite of all these precautions a bank may find itself deep into the liquidity crunch due to unforeseen circumstances or heavy withdrawal of depositors money triggered by loss of confidence on the bank. Here is when the central bank may step in to restore public confidence to avoid its failure. For, a failure of a bank may undermine public confidence on other banks and the weaker among them may also run into difficulties. This is a duty which the central bank would like to avoid but is rather forced to perform it in the greater national interest. In fact, many commercial banks who pursue reckless policies in managing their affairs have survived the scare of a run on them because of the implied public perception about the central banks readiness to rescue the dying entities. It certainly serves to protect public interest but encourages reckless lending and financial regularities. Bangladesh bank keeps a vigilant eye on commercial bank so that the commercial bank cant do any illegal activities which will be against public interest. Some commercial bank may give excessive loan to increase their income from interest which is their main source of income; trafficking money is another illegal act could be done by a commercial bank. The central bank has some method to control these illegal activities. Bangladesh bank examines the accounts of commercial banks and provides the necessary advice to those banks. All the enlisted commercial bank has to keep a portion of their deposited money in the central bank. This reserve is statutory reserve. The central bank has made it mandatory for all the commercial banks to make this statutory reserve. As it is stated earlier, that central bank is like parent for the commercial banks. The central bank works as the agent for those commercial banks. But the bank has to get enlisted. Bangladesh bank gives necessary advice to the commercial banks in case of loan giving and recovery of given loan. The bank also provides necessary assistance in case of loan recovery. Besides doing all that activities Bangladesh bank
5

does some other functions. They do some research work, supply information, transfers money, and ensure the best use of loan. To innovate new ways of developing industry, to draw new plans, to impose and implement those plans Bangladesh bank does some research work. Bangladesh bank supply necessary and adequate information to the dept. it is needed whether it is at home or abroad. It transfers money according to the direction of the government. In Bangladesh the central bank is looked upon as surrogate mother to play its parts in a wide range of subjects relevant to economic development. The central bank has extended substantial financial and organizational help in the shape of refinance, counter-finance or even to finance equity. Many credit lines from the donors are also channeled through the central bank. Most Bangladeshis earn their living from agriculture. Although rice and jute are the primary crops, wheat is assuming greater importance. Tea is grown in the northeast. Because of Bangladesh's fertile soil and normally ample water supply, rice can be grown and harvested three times a year in many areas. Due to a number of factors, Bangladesh's labor-intensive agriculture has achieved steady increases in food grain production despite the often unfavorable weather conditions. These include better flood control and irrigation, a generally more efficient use of fertilizers, and the establishment of better distribution and rural credit networks. With 2000000.2 million metric tons produced in 1999, rice is Bangladesh's principal crop. National sales of the classes of insecticide used on rice, including granular carbofuran, synthetic parathyroid, and Malathion exceeded 13,000 tons of formulated products in 2003. The insecticides not only represent an environmental threat, but are a significant expenditure to poor rice farmers. The Bangladesh Rice Research Institute (BRRI) is working with various NGOs and international organizations to reduce insecticide use in rice. In comparison to rice, wheat output in 1999 was 1.9 million metric tons. Population pressure continues to place a severe burden on productive capacity, creating a Food deficit, especially of wheat. Foreign assistance and commercial imports fill the gap. Underemployment remains a serious problem, and a growing concern for Bangladesh's agricultural sector will be its ability to absorb additional manpower. Finding alternative sources of employment will continue to be a daunting problem for future governments, particularly with the increasing numbers of landless peasants who already account for about half the rural labor force.As in developing countries agriculture is given the most priority, Bangladesh doesnt go beyond that. Bangladesh bank observes directly the agricultural development of the country. As the bank make it mandatory for commercial bank to give loan against minimum condition and less interest. The stock market capitalization of the Dhaka Stock Exchange in Bangladesh crossed $ 10 billion in November 2007. The earliest strategy of the Bangladeshi government was to promote industrialization by making funds available for businessmen through subsidies and national banks. But this plan went awry, as the government lacked the political will to stop financing poorly-performing companies. As a result, the national banks had built large heaps of 'non-performing' loans which are unlikely to be ever repaid. The failure of the national banks discouraged investments by the emerging private financial sector. Currently, Bangladeshi
6

entrepreneurs generally suffer from lack of funding as many banks are reluctant to invest in industry and have instead turned their attention to consumer credit.In developing countries industrial sector is given importance besides other sector. So, to increase interest among people and to encourage them central bank of Bangladesh gives assistance and loan. The bank also give order to other commercial bank to give loans in this purpose. The Bangladesh Garments Manufacturers and Exporters Association (BGMEA) has predicted textile exports will rise from US$7.90 billion earned in 2005-06 to US$15 billion by 2011. In part this optimism stems from how well the sector has fared since the end of textile and clothing quotas, under the Multifibre Agreement, in early 2005. Knitwear posted the strongest growth of all textile products in 200506, surging 35.38 per cent to US$2.82 billion. On the downside however, the sector's strong growth came amid sharp falls in prices for textile products on the world market, with growth subsequently dependent upon large increases in volume. So, Bangladesh bank takes necessary steps to increase external trade.

E) Organizational Structure

To uphold the vision and in pursuant with the Bangladesh Bank Order of 1972, Bangladesh Banks mission is to promote and maintain macroeconomic and price stability through: Formulating and implementing appropriate monetary policy consistent with the countrys national development goals Pursuing prudent policies to ensure stable internal and external value of Taka; -Identifying policy priorities for implementation by the Government through assessing the transmission channels and the interactions of monetary policy with fiscal, exchange rate, and other macroeconomic policies and their impact on the economy;-Proposing necessary legislative measures to attain the central banks objectives and perform its functions including strategies and regulations for and supervision of banking companies and financial institutions with the aim to providing efficient financial intermediation and financial services to large, medium, small, and micro enterprises and to pro-poor activities ;Promoting, regulating and ensuring a secure and efficient payment system, including the issue of Bank Notes; Giving advice to the Government on the interaction of monetary policy with fiscal and exchange rate policies, on the impact of various policy measures on the economy; Analyzing priority macroeconomic issues for policy advice and dissemination of information to attain the central banks social responsibility.The Bangladesh Bank (BB), through ensuring the quality of services and the competence of its staff, shall operate as a modern, dynamic, effective, and forward-looking central bank to manage the countrys monetary and financial system with a view to stabilizing the internal and external value of Bangladesh Taka conducive to rapid growth and
7

2. Research Methodology
A) Rational of the study

B)Objective of the study

C)Data Collection This work based on both secondary and primary Source .The secondary source of Data include Books and research articles written on Bangladesh bank .Most of the data required for the study where collected From Primary Source though Face to face interview. The survey was conducted using a self-administered Interview. D)Area Survey This study confined to Dhaka City .The Motijil Area of Dhaka city has been selected for our research. And my selected organization was Bangladesh Bank Situated in Motijil area. Time and cost where other important consideration for such decision. E) Selection of Sample There was a huge response from the firm and for that I use conveyance method. So 30 employees of Destiny were taken as a sample. F) Analysis of Data All the collect Data were Edited, Coded and classified by the by me, before making the final analysis. We well use Ms Word for Data entry.

G) Scope of Research
1. National innovative capacity : modeling, measuring and comparing national capacities 2. Designing efficient incentive systems for invention and innovation : intellectual property rights, prizes, public subsidies 3. New models of innovation : open, distributed systems and the role of users 4. Other issues to be developed

H) Limitation of Research
The research may play important rules to find out the important of practice human resource management in business. I will be glad to think my self as a pat of the research .But other way it
8

is a true fact that every actions have some limitations, so the research work will not be different from others .the limitations are a) b) c) d) It is a time consuming matter. It may critical to find responses from the respondent It is a cost consuming matter .The cost of the research may be quite bother-able. The sample size of the respondent is not sufficient to find out the true findings.

3) Findings and analysis A) Brief Disprove the Bangladesh bank

Acquintence with bangladesh bank:

In present days every country has a central bank to operate the economic system. Like Federal Reserve system is the central bank of England, the name of the central bank of Sweden is Risk bank of Sweden. Indias central banks name is Reserve Bank of India. Like all other Bangladesh also has a central bank which is Bangladesh bank.

Bangladesh bank is a typical central bank of a third world country with a medley of tasks on its agenda. These agenda include not merely issuing notes and controlling supply of money but also the responsibility to act as the holder of gold and currency reserves banker to the govt., lender of the last resort, supervisor of the
9

banking system, overseer of national credit policy, promoter of credits to agricultural and other important socio-economic sector and administrator of exchange control.

Bangladesh bank was born amidst chaos and great uncertainty following the nine month war with Pakistani army. The end of war on December 16, 1971 saw the countrys leadership in the midst of an immediate need to reorganize the countrys banking system which lay in shambles. The central directorate of the erstwhile state bank of Pakistan was in Karachi. It had only a few branches in the former East Pakistan and operated strictly under the guidance of the central directorate. These branches did not take part in framing policy concerning monetary policy, credit control, exchange control, issue of notes etc.

In this vacuum the government of Bangladesh tried to lay the foundation of the countrys central bank through an omnibus order of the acting President Bangladesh bank (temporary) order, 1971 (acting presidents order no. 2 of 1972). This order in effect merely amounted to renaming state bank of Pakistan as Bangladesh bank.

Bangladesh bank was instituted with the following objectives: -To regulate currency issuance and to keep foreign exchange reserves. -To manage the monetary and credit system of Bangladesh with a view to stabilizing domestic monetary value. -To preserve the par value of the Bangladesh Taka. -To promote and maintain a high level of production, employment and real income in Bangladesh; and to foster growth and development of the country's productive resources.

10

Functions of Bangladesh Bank Bangladesh Bank performs all the functions, which a central bank of any country is expected to perform, and such functions include maintaining the price stability, supporting the economic and monetary policies of the central government, managing the countrys foreign exchange and the gold reserve. Like all other central bank across the world, Bangladesh Bank is both the Governments banker and the bankers bank, a Lender of the Last Resort. Bangladesh Bank, like most of the central banks of different countries, exercises monopoly over the issue of currency and the banknotes. Except for the 1 and 2 taka notes, it issues all other denominations of Bangladeshi Taka. It also regulates the commercial Banks and other financial institutions of Bangladesh.

Main functions of Bangladesh bank are:

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.

11

The main businesses and functions of the Bangladesh bank are as follows:
Accepting deposits and the collect money for the government, foreign governments, domestic and foreign banks, domestic and foreign financial institutions and local authorities with or without interest, Purchase, sale and rediscount of bills of exchange and promissory notes drawn on and payable in Bangladesh bank The purchase, sale and rediscount of such government guaranteed debentures issued by a public company or corporation established by or under any law for the time being in force as the bank may from time to time approve in this behalf; to guarantee, to the extent the bank deems fit, issue of loans and debentures by the scheduled banks or financial institutions to rural credit institutions; The purchase and sale of approved foreign exchange; The purchase, sale and rediscount of bills of exchange including treasury bills drawn in or on any place in countries, The keeping of balances with banks in countries whose currency has been declared as approved foreign exchange; The making to the government of advances repayable in each case not later than three months from the date of the making of the advance; The making to institutions or banks, specially established for the purpose of promoting agricultural or industrial development in the country or cooperative banks of advances and loans for such amounts and on such terms and conditions as the board may decide from time to time; The issue and purchase of telegraphic transfers, demand drafts and other kinds of remittances make payable at its own branches, offices or agencies; The making and issue of bank notes subject to the provisions of this order; The bank shall sell to or buy from any authorized dealer in Bangladesh approved foreign exchange at such rates of exchange and on such conditions as it may determine; Pursuant to its monetary and exchange rate policy, the bank shall have the sole right to issue bank notes made payable to bearer on demand in Bangladesh;

12

 The bank shall issue taka coin on demand in exchange for bank notes and bank notes on demand in exchange for coin which is legal tender in Bangladesh. The bank shall in exchange for bank notes of ten taka or upwards supply bank notes of lower value or coins which are legal tender in Bangladesh under the Bangladesh coinage order, 1972 Every scheduled bank shall maintain with the bank a balance the amount of which shall not be less than such portion of its total demand and time liabilities as may be prescribed by the bank; The bank shall, by notification, in the official Gazette declare any bank to be scheduled bank which is carrying on the business of banking in Bangladesh.

Core functions of Bangladesh bank:

Like a central bank in any developing country, Bangladesh bank performs both the traditional and developmental functions to achieve macro-economic goals. Because of the different types of characteristics Bangladesh bank has to perform different types of functions. The functions performed by Bangladesh bank could be divided into following parts: a. b. c. d. e. General functions Unction as the bank of govt. Function as the banker of all other banks Functions as development Other functions

General functions include:

13

Issuing of notes and coins Guardian of the money market Creation of easy medium of exchange. Credit control. Maintaining the value of currency.

General functions

Foreign exchange control. Maintaining stability in price. Developing the banking. Maintaining foreign exchang reserve. Creating opportunity for employment. Maintaining gold standard. Supervision of govt. borrowing

Functions as Governments bank include:

Functions as the bank of Government

Handle Purchase govt. Source Maintaiand sale of ning govt. of credit. transacforeign tion fund currency

Advisor

Revenue collection

Coordinator

Representative of the govt.

Functions as the banker of all other banks includes:

14

Enlistment of banks.

Clearing house. Lender of the last resort.

Functions as the banker of all other banks

Controlling the functions of commercial banks.

Examining the books of accounts.

Maintainance of statutory.

Representative of other banks.

Recovery of loans.

Functions as development bank involves:

Function as development bank

Agricultural Industrial Developing development development. foreign trade

15

Basic/general function of Bangladesh bank:

There are some functions that every central bank has to perform. Those functions could be said as general or basic function. General functions of Bangladesh bank are given below:

Issuing of notes and coins:

The most important function of Bangladesh is the issue of legal tender currency or issuing of notes and currency. The central bank is the all in all of issuing notes and currency. Bangladesh bank enjoys monopoly of note issue. The main reasons for providing monopoly of note issue to a central bank are uniformity in the note circulation of a country and avoiding the incidence of over issue. Central bank eyes the demand of currency in money market and supplies or issue currency as per needs which are very important to maintain stability in the economy. It is much needed in the economy of a developing country like Bangladesh.

Coins
In 1973, coins were introduced in denominations of 5, 10, 25 and 50 poisha. 1 poisha coins followed in 1974, with 1 taka coins introduced in 1975. The 1, 5 and 10 poisha were struck in aluminium, with the 25 and 50 poisha struck in steel and the 1 taka in cupro-nickel. The 5 poisha were square with rounded corners, whilst the 10 poisha were scalloped. Steel 5 taka were introduced in 1994, whilst a steel 2 taka coin followed in 2004. 1 and 5 poisha coins are rarely found in circulation. 10, 25, and 50 poisha coins do not circulate widely. Only the 1, 2 and 5 taka are regularly found in circulation.

16

1973 Series Image Value Composition Reverse Obverse Obverse Reverse Description Date of first minting

5 poisha Aluminium 10 poisha National emblem

1973

25 poisha Steel 50 poisha 1974 Series (FAO) 1 poisha 5 poisha

Rohu

Ornamental design, floral patterns

Aluminium National emblem 1974

10 poisha

25 Steel poisha

17

1 taka Various

Four human figures, slogan "Planned family - 1975 Food for All"

1977 Series (FAO) 5 poisha Aluminium 10 poisha National emblem 25 poisha Steel 50 poisha Hilsha fish, Chicken, Pineapple, Banana Royal Bengal Tiger A man and a woman seated on 2 back steeds facing each other 1977

Plough, Industrial wheel

Newer Issues 2 taka Steel 5 taka National emblem Education 2004

Jamuna Multipurpose Bridge

1994

18

Guardian of the money market:

Bangladesh bank performs its action as the guardian of the money market and the only controller of the money. This is one of the main functions of Bangladesh bank and the bank performs this operation with very much care and vigilance.

Creation of easy medium of exchange:

Central bank usually creates an easy medium of exchange by introducing currency in the economy. Some other medium of exchange could be bill, hundi other than money.

Credit control:
Closely linked to the issue of currency is the central banks function of credit control. The central banks control over money supply could be undermined by the commercial banks mechanism of credit creation. The total amount of money in circulation has a relationship with the creation of credit. Of course, commercial bankers are not the only people having this power. There are other forms of credit. Businessmen and industrial enterprises can acquire goods and services without paying for them immediately. The modern credit cards, debit cards and other forms of electronic money play a part in creation of money. A modern central bank, therefore, try to control credits to supplements its broad objectives of monetary control. Bangladesh bank adopts some methods to control the credit. These methods take different forms depending on circumstances. The methods of credit controlling are given below: Bank rate policy, involves the variation of discount rates to influence the market rate of interest, which plays a crucial role in the creation of credit. Open market operations, involving the purchase and sale of securities, government or central banks own in the open market to influence the quantum of money circulation. Variable reserve system, involving the variation of the minimum reserves, which the commercial banks are required to keep with the central bank, to curtail or enlarge the power of the commercial banks to create credit.

19

 Selective credit controls, involving directional control to influence the flow of credit in particular channels. Credit rationing, involving the shortening of the currency of hills eligible for rediscount and the limiting of the amounts made available to the individuals banks to allocate funds among financially sound credit aspirants in accordance to the definite plan. It may also involve setting limits on the individual banks credit in a specific period, say a quarter, half year or a year. Margin restriction involves setting the level up to which the bank would provide finance for the underlying goods, services or the projects. In relations to letters of credit the margin restriction implies rates of a margin a bank should retain before the letter of credit is opened. Moral suasion, involving friendly persuasion and advice to influence the lending policy of commercial banks. Direct action involving coercive measures against individual banks to penalize recalcitrant units of the banking system.

Maintaining the value of currency:

Bangladesh bank maintains the value of currency and the purchasing power by controlling money supply in the money market. Again it preserves the value of the national currency in the international market by controlling exchange rate.

Foreign exchange control:

Bangladesh bank controls the value of taka against foreign currency and takes the necessary steps to create respective exchange rate. Efficiency in controlling foreign exchange rate determines whether the transaction balance of the country will be in favor or not. So, Bangladesh bank controls the incoming & outgoing of foreign currency with a strong hand.

Maintaining stability in price:

One of the major functions of Bangladesh bank is to maintain stability in price level of products in the internal market. Instability in price level has negative impact on countrys savings, investment and productivity. If the price level increases suddenly the purchasing power of people of the country also decreases.
20

As a result normal life of people gets interrupted. So, Bangladesh bank controls the money supply with strong hand to maintain stability in the market.

Developing the banking:

As the guardian of all banks one of the main functions of central bank is to develop the banking system. For this they draw a plan. Bangladesh bank work to accomplish the plan. The bank gives permission to open new branches of commercial bank. The bank sometimes draws new policy and gives suggestion to enlisted commercial bank to accomplish the plan.

Maintaining foreign exchange reserve:

To develop the economy one of the major condition is good import and export and for this foreign exchange rate should be in favor of the country. For this enough foreign exchange reserve is needed. For this purpose, Bangladesh bank got to have strong foreign currency reserve. The bank knows if the bank fails to do this the economy may face difficulties.

Creating opportunity for employment:

The bank (Bangladesh bank) encourages instituting new banks and opening new branches by giving new and lucrative opportunity. Bangladesh bank also takes some developing plans and by implementing the plan the bank creates new employment opportunity. People can also have job in the new opened branches and banks.

Maintaining gold standard:

Maintaining the gold standard is another important function of Bangladesh bank. Bangladesh bank supplies notes and currency on the reserve of gold in the banks volt. So, as the bank issues notes and currency on the basis of gold and bronze, maintaining the gold and bronze standard is very important matter.

Supervision of govt. borrowing:

Bangladesh bank monitors the governments borrowings and ensures the best possible use of the borrowed mon
21

Function as the bank of government:

Bangladesh bank has to perform some work as the bank of government. These works are very much important for a country.

Source of credit:
Bangladesh bank works as the source of credit of the govt. Bangladesh is a developing country. For the last 37 years it has used deficit budget. As it is using deficit budget the govt. of Bangladesh has to take loan from different sources. At that point of time Bangladesh bank comes in rescue of the govt. The bank gives loan to the govt. when it is needed.

Maintain govt. fund:

The central bank of Bangladesh keeps the accounts of the governments money and other asset. They act as the accountant of the govt. and maintain the govt. fund with very much care and vigilance. It also keeps the account of governments income and expenditure.

Handle govt. transaction:

Bangladesh bank does all the internal and external transaction on behalf of the govt. of Bangladesh. For instance, if the govt. of Bangladesh pays taka to any country or any one within the country, Bangladesh bank will do the transaction. On the other hand if the govt. of Bangladesh receives any sum of money he will receive the money through Bangladesh bank.

Purchase and sell of foreign currency:

Bangladesh bank sells and purchases the foreign currency on behalf of the country.

Advisor:
Bangladesh bank works as the advisor of the govt. The bank gives advice about economic plan, finance policy, and other related works.

22

Revenue collection:
Revenue collection is the main source of governments income. Bangladesh bank collects all the revenue on behalf of the govt. of Bangladesh.

Coordinator:
Bangladesh bank establishes good relationship among the govt. of bangladeh and other countries. This led to economic relation and for which some good economical relation may established.

Representative of the govt.:

Bangladesh bank is governments bank. The bank work as the representative of the govt. To make a good image in the international level the bank performs some good work as the agent of the govt.

Functions as a banker of all other banks:

Traditionally central bank serves as banker to the banks. In most countries, the commercial banks maintain accounts and entrust their surplus funds with their central banks. The centralization of cash reserves in the central bank has many advantages. In the first place, such reserves facilitate the settlement of the clearance difference between the banks. Secondly, the central bank can employ such reserves in the most effective manner during periods of seasonal and local monetary stringency. The other functions are given below:

Enlistment of banks:
Bangladesh bank is the only institute which gives permission to open branches of an existing bank or open a new bank. The bank holds all the power in this purpose. The bank makes enrollment of the commercial bank which does want to be a member of the enlisted bank. Commercial banks enjoy many facilities provided by Bangladesh bank, although they had to be enlisted first.

Clearing house:
23

Being the holder of the balances of the commercial banks, the central bank is especially qualified to act as a bank of central clearance. The plan of clearance house is to offset interbank indebtedness by effecting transfers in the accounts kept by the various banks with the central bank of the country. In Bangladesh central bank promotes and run the clearance system in the cities and towns where it has branches. In smaller towns the clearance system is organized by the Sonali bank. This is the most important function of Bangladesh bank; even it is true for all the banks doing the function of central bank all over the country.

Lender of the last resort:

The central bank extends financial accommodation mainly through rediscount of first class bills of exchange, government securities and their eligible papers. In addition to these normal financial accommodations the central bank of Bangladesh is often has to perform the unpleasant task of rescuing the banks sliding into difficulties. To prevent the banks from running into difficulties the central bank conducts its monetary policy and bank supervisory function in such a manner that banks do not run into liquidity constraints by overextending their lending activities beyond what is warranted by present and future cash flow. The bank lays down certain prudential regulations such as cash reserve ratio, liquidity ratio, adequate capital and provision against classified loans. In spite of all these precautions a bank may find itself deep into the liquidity crunch due to unforeseen circumstances or heavy withdrawal of depositors money triggered by loss of confidence on the bank. Here is when the central bank may step in to restore public confidence to avoid its failure. For, a failure of a bank may undermine public confidence on other banks and the weaker among them may also run into difficulties. This is a duty which the central bank would like to avoid but is rather forced to perform it in the greater national interest. In fact, many commercial banks who pursue reckless policies in managing their affairs have survived the scare of a run on them because of the implied public perception about the central banks readiness to rescue the dying entities. It certainly serves to protect public interest but encourages reckless lending and financial regularities.

Controlling the functions of commercial bank:

24

Bangladesh bank keeps a vigilant eye on commercial bank so that the commercial bank cant do any illegal activities which will be against public interest. Some commercial bank may give excessive loan to increase their income from interest which is their main source of income; trafficking money is another illegal act could be done by a commercial bank. The central bank has some method to control these illegal activities.

Examining the books of accounts:

Bangladesh bank examines the accounts of commercial banks and provides the necessary advice to those banks.

Maintenance of statutory:
All the enlisted commercial bank has to keep a portion of their deposited money in the central bank. This reserve is statutory reserve. The central bank has made it mandatory for all the commercial banks to make this statutory reserve.

Representative of other banks:

As it is stated earlier, that central bank is like parent for the commercial banks. The central bank works as the agent for those commercial banks. But the bank has to get enlisted.

Recovery of loan:
Bangladesh bank gives necessary advice to the commercial banks in case of loan giving and recovery of given loan. The bank also provides necessary assistance in case of loan recovery.

Function as a development bank:

In Bangladesh the central bank is looked upon as surrogate mother to play its parts in a wide range of subjects relevant to economic development. The central bank
25

has extended substantial financial and organizational help in the shape of refinance, counter-finance or even to finance equity. Many credit lines from the donors are also channeled through the central bank.

Agricultural development:
Most Bangladeshis earn their living from agriculture. Although rice and jute are the primary crops, wheat is assuming greater importance. Tea is grown in the northeast. Because of Bangladesh's fertile soil and normally ample water supply, rice can be grown and harvested three times a year in many areas. Due to a number of factors, Bangladesh's labor-intensive agriculture has achieved steady increases in food grain production despite the often unfavorable weather conditions. These include better flood control and irrigation, a generally more efficient use of fertilizers, and the establishment of better distribution and rural credit networks. With 2000000.2 million metric tons produced in 1999, rice is Bangladesh's principal crop. National sales of the classes of insecticide used on rice, including granular carbofuran, synthetic parathyroid, and Malathion exceeded 13,000 tons of formulated products in 2003. The insecticides not only represent an environmental threat, but are a significant expenditure to poor rice farmers. The Bangladesh Rice Research Institute (BRRI) is working with various NGOs and international organizations to reduce insecticide use in rice. In comparison to rice, wheat output in 1999 was 1.9 million metric tons. Population pressure continues to place a severe burden on productive capacity, creating a food deficit, especially of wheat. Foreign assistance and commercial imports fill the gap. Underemployment remains a serious problem, and a growing concern for Bangladesh's agricultural sector will be its ability to absorb additional manpower. Finding alternative sources of employment will continue to be a daunting problem for future governments, particularly with the increasing numbers of landless peasants who already account for about half the rural labor force. As in developing countries agriculture is given the most priority, Bangladesh doesnt go beyond that. Bangladesh bank observes directly the agricultural development of the country. As the bank make it mandatory for commercial bank to give loan against minimum condition and less interest.

26

Industrial development:
The stock market capitalization of the Dhaka Stock Exchange in Bangladesh crossed $ 10 billion in November 2007. The earliest strategy of the Bangladeshi government was to promote industrialization by making funds available for businessmen through subsidies and national banks. But this plan went awry, as the government lacked the political will to stop financing poorly-performing companies. As a result, the national banks had built large heaps of 'non-performing' loans which are unlikely to be ever repaid. The failure of the national banks discouraged investments by the emerging private financial sector. Currently, Bangladeshi entrepreneurs generally suffer from lack of funding as many banks are reluctant to invest in industry and have instead turned their attention to consumer credit. In developing countries industrial sector is given importance besides other sector. So, to increase interest among people and to encourage them central bank of Bangladesh gives assistance and loan. The bank also give order to other commercial bank to give loans in this purpose.

Developing foreign trade:

The Bangladesh Garments Manufacturers and Exporters Association (BGMEA) has predicted textile exports will rise from US$7.90 billion earned in 2005-06 to US$15 billion by 2011. In part this optimism stems from how well the sector has fared since the end of textile and clothing quotas, under the Multifibre Agreement, in early 2005. Knitwear posted the strongest growth of all textile products in 200506, surging 35.38 per cent to US$2.82 billion. On the downside however, the sector's strong growth came amid sharp falls in prices for textile products on the world market, with growth subsequently dependent upon large increases in volume. So, Bangladesh bank takes necessary steps to increase external trade.

Other functions:
Besides doing all that activities Bangladesh bank does some other functions. They do some research work, supply information, transfers money, and ensure the best use of loan.

27

To innovate new ways of developing industry, to draw new plans, to impose and implement those plans Bangladesh bank does some research work. Bangladesh bank supply necessary and adequate information to the dept. it is needed whether it is at home or abroad. It transfers money according to the direction of the government.

VISION
The Bangladesh Bank (BB), through ensuring the quality of services and the competence of its staff, shall operate as a modern, dynamic, effective, and forwardlooking central bank to manage the countrys monetary and financial system with a view to stabilizing the internal and external value of Bangladesh Taka conducive to rapid growth and development of the economy.

MISSION
To uphold the vision and in pursuant with the Bangladesh Bank Order of 1972, Bangladesh Banks mission is to promote and maintain macroeconomic and price stability through: -Formulating and implementing appropriate monetary policy consistent with the countrys national development goals; -Pursuing prudent policies to ensure stable internal and external value of Taka; -Identifying policy priorities for implementation by the Government through assessing the transmission channels and the interactions of monetary policy with fiscal, exchange rate, and other macroeconomic policies and their impact on the economy; -Proposing necessary legislative measures to attain the central banks objectives and perform its functions including strategies and regulations for and supervision of banking companies and financial institutions with the aim to providing efficient financial intermediation and financial
28

services to large, medium, small, and micro enterprises and to pro-poor activities ; -Promoting, regulating and ensuring a secure and efficient payment system, including the issue of Bank Notes; -Giving advice to the Government on the interaction of monetary policy with fiscal and exchange rate policies, on the impact of various policy measures on the economy; -Analyzing priority macroeconomic issues for policy advice and dissemination of information to attain the central banks social responsibility.

Conclusion:
The Bangladesh bank is entrusted with the usual powers and responsibilities of traditional central banks of developing countries, especially those in the subcontinent. By and large it inherited most of the functions, work ethos and general ambience from its predecessor-state bank of Pakistan. It enjoys reasonable authority under the law but this authority is somewhat tempered by directives from the government in pursuit of the latters stated socio-economic objectives. In particular, it is asked with a number of functions that strictly speaking do not fall within the ambit of traditional central banking functions but has nevertheless been imposed on it apparently in the absence of more appropriate or sufficiently strong institutions. The bank carries the responsibility for some activities that are not core to its central banking function. These include the sectoral allocation of resources through a
29

number of special funds supplanted by creation of high powered money, the credit information bureau, the clearing house, the deposit insurance fund. The Bangladesh bank also does not have the autonomy to set its own salary levels, performs many of these functions well there is need to explore the need for and feasibility of hiving them off to alternative channels to enable it concentrates on its core functions.

B) Human resource practice in the organization C) Benefit of HRM practice how present HRM should be practice 4) Conclusion and Suggestions Conclution Suggesstions

30