Environmental Analysis :

Banking sector of
Bangladesh

Prepared by KNIGHTS

Group name: KNIGHTS

Members name

ID

Tasnia Zannat

1315

Md. Mazharul Islam

1336

Md. Monirul Islam

1339

Md. Mahfuzur Rahman

1347

Rabbir Rashedin Tirno

1349

Group Leader: Mahedi Akbar

(1359)

Mahedi Akbar
ID-1359

Banking in Bangladesh
After the independence (1971) - 6 nationalized commercialized

banks
1980s - entrance of private banks
Population per branch:
57,700 in 1972, 19,800 in 1991, 21,300 in 2001

Four major categories:

Nationalized Commercial Banks (NCBs)
Specialized Banks (SPBs)
Private Commercial Banks (PCBs)
Trans-National Banks (TNBs)

OWNERS
Shareholder are the owner of bank
Minority

shareholders have less or no influence on

managerial decision
Majority shareholders may influence the transactions,

and more importantly elect the board of members.

Thus they directly or in directly influence
Management salaries
Dividends
Cash out public shareholders
Amending rules or selling assets

EMPLOYEES
Internal environmental factor
Most crucial and valuable resource (HR)
Could be achieved Competitive advantage through

intensive HR programs & employee development

Directly influences the success by productivity and

efficiency
Dissatisfaction in job may rise if they disagree with

working condition, pay or policies.

Organizational culture
System of shared assumptions, values, and beliefs which

governs how people behave in organizations.

Org. culture
depends on.....

Nature of the
employee
Nature of the
business
Goals and
objectives
Management
and its style

Organizat
ional
culture
Impacts..
Performance
Engagement
Retention
Org. effectiveness

Organizational
culture
Work life balance
Giving more time to

family
Ensuring Social life

Management Style
Participation in decision making process

Woman empowerment
Increasing number of female employees
Participation in top management
Positive attitude toward female employees

Md. Mahfuzur Rahman

ID-1347

Customers
Government
Government Organizations
Private Firms
SMEs
NGOs
Educational Institutions
Clubs and Social

Organizations
Retail Customers (Individual

Customers)

Suppliers

Vendors Providing SWIFT (Society for Worldwide Interbank

Financial Telecommunications) Service

Example: 37 Banks are using SWIFT Service Bureau Services being provided by
Xchanging Solutions Ltd. and supported by SYSCOM Information Systems Limited

Vendors Supplying ATM Facilities

Example: IT Consultant Limited, authorized Local
Representative of Wincor Nixdorf in Bangladesh has helped
installing ATM service in more than 35 banks in Bangladesh

More SUPPLIERS
Vendors Supplying Computer

Software and Hardware

Vendors Supplying Office Furniture

Vendors Supplying Air-conditioning

Vendors Supplying Stationaries

Competition
Why Competition:
Increased number of
banks
Lot of Branches
Less entry barrier
Depositors cost of
switching banks is low

Impacts:
Increase the quality of
banking services
More capital available
Able to meet the
unfulfilled demand for
credit by the private sector
Provides loan without
authentication
Increased loan defaulter

Environmental Factors
Climate Change:
Impact of climate change on banks
is indirect
Need for capital investment in new
technologies &
infrastructure

Natural calamity
Flood
Earthquake

Tasnia Zannat
ID-1315

REGULATORY FACTORS
Regulator of Banks: Bangladesh
Bank(BB)
Established with the
Bangladesh Bank Order, 1972
(with effect from 16th
December, 1971)
Head Office: Motijheel, Dhaka
Governor: Fazle Kabir
Governs through a set of acts,
laws, regulations and guidelines
enacted from time to time

Some important acts include:

Bank Company Act, 1991
The Negotiable Instruments Act,

1881
Foreign Exchange Regulations Act,
1947
Financial Reporting Act, 2015
Bank Deposit Insurance Act, 2000
Micro Credit Regulatory Authority
Act, 2006
Money Laundering Prevention
Act,2012
Anti-terrorism Act, 2009

REGULATORY FACTORS REGARDING

HUMAN RESOURCE MANAGEMENT (HRM)

All Banks in Bangladesh has to comply

with Bangladesh Labor Law, 2006
regarding Human Resources (HR)
Policies.
BB also issues different circulars
from time to time which include orders
for sound HRM practices in the banks.

EXAMPLES OF SOME RECENT BB

CIRCULARS REGARDING HUMAN
RESOURCES
According to a BB circular issued on 28 May, 2015

not allowed to force their

employees particularly the female staff to
stay at bank at the end of working day after
6.00 pm
Banks are

&

ensure proper
pay compensation

The banks will have to

security

and
to any
female staff if she has to stay at bank after office
hours due to special official requirement

EXAMPLES OF SOME RECENT BB

CIRCULARS REGARDING HUMAN
Amend service rules
RESOURCES
regarding resignation,
termination
or have
The same circular also states
that all banks
dismissal, post
to
Maintain

professionalism while
recruiting employees

retirement financial
benefits in line with the

International Labor
Provide proper training

to improve the skills of

employees
Stop arbitrary

dismissal of employees

Organization
Conventions
Bangladesh Labor law,
2006
Bangladesh Bank
directives form time to
time

EXAMPLES
OF SOME
RECENT BB
CIRCULARS
REGARDING
HUMAN
RESOURCES

Another circular issued

on June 17, 2015
stressed that
Banks have to take into
consideration the female
employees LAST YEARS
PERFORMANCE
/AVERAGE
PERFORMANCE OF LAST
THREE YEARS (whichever
is better) while evaluating
their annual performance
DURING MATERNITY
LEAVE

Md. Monirul Islam

ID-1339

Political factors affecting

banking industry
To what degree a government intervenes

in the economy.
Tax policy, labor law, environmental
law, trade restrictions,
tariffs and political stability.

Focus

on
regulation:

government

legislature and framing policy

Budget

and

budget

measure:
open new window of banking
change the policy of bank
maintain financial flow of market

Foreign direct investment

limits:
Hinder

the

activities

industry
Increase competition

of

banking

Unstable political condition:

Inconsistency between policy
Political instability

High level of corruption

Absence of rule of law
Tax policy

Md. Mazharul Islam

ID-1336

Technological Influence
Banking industry is highly responsive to the

technological advancement
People prefer to get services at ease and they have
easy access to phone and internet connection
Customers preferring
o Mobile Banking
o Pay utility bill using phone
o Shopping using Debit and
Credit cards Online Currency
( BitCoin, Paypal etc)
o And so many

Biometrics :Future in
Banking
According to BBC HSBC
is Launching
voice and
touch recognition security
services in the UK. This will be available
for up to 15 million HSBC banking
customers. (February 19, 2016)
Radical Change in
banking industry
Instalment of
Biometrics system
Security perimeter
for Personal
biometric data will
be a major priority .

Technological Challenge for Banking

Industry
Response to rapid technology shift
Cutting down the Employee size
Establishing Strong Security Perimeter
Prevent unauthorized access to the confidential data

Rabbir Rashedin Tirno

ID-1349

Economic Factors

Economic Factors
Basically 5 major economic factors
$
$
$
$
$

Economic level of the country

Inflation Rates
Economic & Macroeconomic policies
Exchange Rates
Laws
and
regulations
regarding
Economic system

Economic
Factors

Economic level of the country

It goes without saying that banks thrive under

economic boom as compared to recession times.

Income flows in a country affect banks in terms of

the amount of capital they can access and clients

that are ready to bank with them.

Economic
Factors

Economic level of the country

Income also determines spending and borrowing

limits hence is a crucial factor within the banking

sector

Economic
Factors

Inflation Rates

When inflation is high,

banks tend to suffer.

Apart from liquidity

structures and processes,

inflation causes instability
in currencies.

Economic
Factors

Economic & Macroeconomic

policies

If a country makes unfavorable policies, the

banking sector is bound to lose

sound macroeconomic policies can make all the

difference and enable a countrys banks to

actually grow.

Economic
Factors

Exchange Rates

Exchange rates across the world also affect banks

all over the globe

When the exchange rates for currency fall, the

banking sectors can experience problems.

Economic
Factors

Laws and regulations regarding

Economic system

Every country has in place specific regulatory

framework for financial institutions to either

provide guidance, supervisory or monitoring roles
for these institutions
Determinant of major decisions such as interest

rates, banking services, loan regulations and even

minor aspects of banking such as opening and
closing hours

Economic
Factors

Laws and regulations regarding

Economic system

A country with strict laws and regulations for the

banking sector can actually curtail business

A

liberal regulator is also quite dangerous

because some banks can easily lose focus in the
bid to make higher profits

Thank you