🏦 Bank Officer Viva

• Current Account (চলতি হিসাব): No interest, unlimited transactions. For businesses, organizations. Minimum balance required. Overdraft facility available
• Savings Account (সঞ্চয়ী হিসাব): Earns interest, limited withdrawals per month. For individuals. Lower minimum balance
• Fixed Deposit (FDR / স্থায়ী আমানত): Lump sum deposited for a fixed term (3 months to 5 years). Higher interest. Penalty for early withdrawal
• DPS (Deposit Pension Scheme): Monthly fixed deposit for a term. Gets interest + maturity amount. Popular in Bangladesh
• Recurring Deposit: Monthly installments for a fixed period. Interest compounded quarterly
• Student Account: For students, low/no minimum balance, limited transaction amounts

Bangladesh Context: Bangladesh Bank mandates minimum interest rates on deposits. Banks offer various specialized schemes — millionaire scheme, lakhpati scheme under DPS.

CRR (Cash Reserve Ratio):

• Percentage of deposits banks must keep with Bangladesh Bank as cash
• Current CRR: 4% (as of 2024)
• Cannot be lent out — acts as safety net
• Bangladesh Bank uses CRR to control money supply

SLR (Statutory Liquidity Ratio):

• Percentage of deposits banks must maintain in liquid assets (cash, gold, govt securities)
• Current SLR: 13% (scheduled banks)
• Includes CRR + excess cash + unencumbered approved securities

Impact on Banking:

• CRR ↑: Less money to lend → higher interest rates → reduces inflation
• CRR ↓: More money to lend → lower interest rates → stimulates economy
• SLR ↑: Banks invest more in govt securities → less risky but lower profit

These are monetary policy tools used by Bangladesh Bank to manage liquidity and inflation.

Bangladesh Bank (বাংলাদেশ ব্যাংক) — established 1972, central bank of Bangladesh, headquartered in Dhaka.

Key Functions:

• Monetary Policy: Controls money supply, interest rates, and inflation through CRR, SLR, repo rate, reverse repo rate
• Note Issuance: Sole authority to issue currency notes (coins issued by govt)
• Banker to Government: Manages government accounts, public debt, foreign exchange reserves
• Banker's Bank: Acts as lender of last resort; maintains bank accounts of scheduled banks
• Regulatory & Supervisory: Licenses banks, conducts inspections, enforces banking regulations
• Foreign Exchange Management: Manages forex reserves, regulates exchange rate, oversees remittance channels
• Payment Systems: Oversees BACH (Bangladesh Automated Clearing House), BEFTN, RTGS
• Financial Inclusion: Promotes agent banking, mobile financial services, SME lending

Current Governor: Keep updated with the latest appointment.

Bangladesh Bank Loan Classification (BRPD Circular):

For Continuous & Demand Loans:

• Standard (STD): No overdue / overdue < 2 months — performing loan
• Special Mention Account (SMA): Overdue 2-3 months — early warning
• Substandard (SS): Overdue 3-9 months — requires 20% provision
• Doubtful (DF): Overdue 9-12 months — requires 50% provision
• Bad/Loss (BL): Overdue >12 months — requires 100% provision

For Term Loans: Classification based on overdue installments with similar progression.

Key Concepts:

• Provision: Amount bank sets aside to cover potential loss
• NPL (Non-Performing Loan): SS + DF + BL = classified loans
• NPL Ratio: NPL / Total loans — key health indicator of a bank
• Write-off: Removing bad loan from balance sheet (still recoverable)

Bangladesh Context: NPL ratio is a major concern — Bangladesh has one of the highest NPL ratios in South Asia.

The 5 Cs Framework:

• Character (চরিত্র): Borrower's reputation, credit history, integrity. Check CIB (Credit Information Bureau) report for existing liabilities and repayment track record
• Capacity (সক্ষমতা): Ability to repay from cash flow. Analyze income statements, cash flow projections, debt service coverage ratio (DSCR)
• Capital (মূলধন): Borrower's own investment in the project. Higher equity = lower risk. Debt-equity ratio, net worth analysis
• Collateral (জামানত): Security pledged against the loan. Property, FDR, stock, personal guarantee. Valuation and legal documentation
• Conditions (পরিস্থিতি): Industry outlook, market conditions, loan purpose, economic environment, regulatory changes

Modern Addition — 6th C:

• Compliance: Borrower's adherence to Bangladesh Bank regulations, AML/CFT compliance, trade license validity, environmental clearance

CIB Report: Mandatory for loans above Tk 50,000. Shows borrower's position across all banks — outstanding, classified status, write-off.

Secured Loans: Backed by collateral that the bank can seize if borrower defaults.

• Lower interest rates (less risk for bank)
• Higher loan amounts possible
• Examples: Home loan (property as security), car loan (vehicle), SOD against FDR, overdraft against stock
• Types of charge: Mortgage (land/building), Hypothecation (moveable assets, possession with borrower), Pledge (moveable assets, possession with bank), Lien (FDR, bonds)

Unsecured Loans: No collateral required — based on borrower's creditworthiness.

• Higher interest rates (higher risk)
• Lower loan amounts
• Examples: Personal loan, credit card, education loan, some SME loans
• Approval based on income, credit score, employment stability

Bangladesh Practice: Banks prefer secured lending. For SME loans, Bangladesh Bank encourages collateral-free lending up to certain limits with Credit Guarantee Scheme support.

Letter of Credit (LC / ঋণপত্র) — a written commitment by a bank (issuing bank) to pay the seller (beneficiary) a specified amount, provided the seller presents compliant documents.

LC Process:

• 1. Buyer and seller agree on trade terms (Incoterms)
• 2. Buyer applies to their bank (Issuing Bank) to open LC
• 3. Issuing Bank sends LC to seller's bank (Advising/Confirming Bank)
• 4. Seller ships goods and presents documents to Advising Bank
• 5. Documents sent to Issuing Bank for examination (UCP 600 — 5 banking days)
• 6. If compliant, Issuing Bank authorizes payment and releases documents to buyer
• 7. Buyer clears goods from port with documents

Types of LC:

• Sight LC: Payment upon presentation of compliant documents
• Deferred/Usance LC: Payment after a specified period (30/60/90/180 days)
• Back-to-Back LC: New LC opened against a master export LC (common in RMG sector)
• Revolving LC: Automatically renews for recurring shipments

Key Documents: Bill of Lading, Commercial Invoice, Packing List, Certificate of Origin, Insurance Certificate.

Incoterms (International Commercial Terms) — published by ICC, define buyer and seller responsibilities for delivery, risk, and costs in international trade. Current version: Incoterms 2020.

Key Terms Used in Bangladesh:

• FOB (Free On Board): Seller delivers goods on board the vessel. Risk transfers when goods are on ship. Seller pays export clearance. Buyer arranges/pays freight and insurance. Most common for Bangladesh exports (RMG)
• CFR (Cost and Freight): Seller pays freight to destination port. Risk transfers when goods are on ship at origin. Buyer pays insurance
• CIF (Cost, Insurance, Freight): Seller pays freight + insurance to destination. Risk still transfers at origin port. Most common for Bangladesh imports
• EXW (Ex Works): Buyer bears all costs from seller's premises
• DDP (Delivered Duty Paid): Seller bears all costs including import duty

Bangladesh Practice: Most RMG exports are FOB. Most imports (machinery, raw materials) are CIF or CFR. Bank officers must verify Incoterm matches LC terms.

Foreign Exchange (Forex/বৈদেশিক মুদ্রা): The broader concept of converting one currency to another. Includes all international financial transactions — trade, investment, remittance, tourism.

Remittance (প্রবাসী আয়): Specific type of forex transaction — money sent by workers abroad to their home country.

Bangladesh Remittance Context:

• Bangladesh is among top remittance-receiving countries globally
• Major sources: Saudi Arabia, UAE, USA, Malaysia, UK, Qatar
• Channels: Banks, Mobile Financial Services (bKash, Nagad), exchange houses
• Bangladesh Bank provides 2.5% incentive on inward remittance
• Unauthorized channels (hundi/hawala) are illegal

Forex Operations in a Bank:

• Import: Open LC, make payments in foreign currency
• Export: Negotiate export documents, receive foreign currency
• Remittance: Receive and disburse inward remittance; send outward remittance for education, medical, travel
• Treasury: Buy/sell foreign currency in interbank market

Exchange Rate: Bangladesh uses managed floating exchange rate system. Bangladesh Bank intervenes to prevent extreme volatility.

AML (Anti-Money Laundering) / CFT (Combating Financing of Terrorism)

Money Laundering Stages:

• Placement: Introducing illegal money into financial system (cash deposits, smurfing)
• Layering: Moving money through complex transactions to obscure origin (shell companies, multiple transfers)
• Integration: Money re-enters economy as legitimate (real estate, business investment)

Bank's AML/CFT Obligations:

• KYC (Know Your Customer): Verify identity, profession, source of funds, expected transaction pattern
• CDD (Customer Due Diligence): Risk-based approach — enhanced due diligence for PEPs (Politically Exposed Persons)
• Transaction Monitoring: Flag suspicious transactions — unusual amounts, frequent cash transactions, rapid movement of funds
• STR/SAR Reporting: Report Suspicious Transaction Reports to BFIU (Bangladesh Financial Intelligence Unit)
• CTR: Cash Transaction Report for transactions above Tk 10 lakh
• Record Keeping: Maintain records for minimum 5 years

Legal Framework: Money Laundering Prevention Act 2012, Anti-Terrorism Act 2009, FATF recommendations.

Basel III — international regulatory framework for banks, developed by Basel Committee on Banking Supervision (BCBS) after the 2008 financial crisis.

Three Pillars:

• Pillar 1 — Minimum Capital Requirements:
  • Minimum CAR (Capital Adequacy Ratio): 10% in Bangladesh (12.5% including buffer)
  • CAR = (Tier 1 + Tier 2 Capital) / Risk-Weighted Assets
  • Tier 1 (Core Capital): Paid-up capital, retained earnings, reserves
  • Tier 2 (Supplementary): Subordinated debt, general provisions, revaluation reserves
• Pillar 2 — Supervisory Review: Banks must assess their own risk (ICAAP), and regulators review through SREP
• Pillar 3 — Market Discipline: Banks must disclose risk and capital information publicly for transparency

Key Basel III Additions:

• Capital Conservation Buffer: 2.5% extra capital above minimum
• Leverage Ratio: Minimum 3% (Tier 1 Capital / Total Exposure)
• LCR (Liquidity Coverage Ratio): Enough liquid assets for 30-day stress scenario
• NSFR (Net Stable Funding Ratio): Long-term stable funding for long-term assets

Digital Banking — delivery of banking services through digital channels without requiring physical branch visits.

Digital Banking Channels in Bangladesh:

• Internet Banking: Account access, fund transfer, bill payment via web
• Mobile Banking (App): Full banking on smartphone — most banks have apps
• MFS (Mobile Financial Services): bKash, Nagad, Rocket — USSD-based, works on feature phones
• Agent Banking: Banking through authorized agents in underserved areas. 14,000+ agents nationwide
• ATM/CDM: Cash withdrawal/deposit machines — shared network (Q-Cash, DBBL Nexus)
• POS/QR Payment: Card/QR-based merchant payments

Bangladesh Bank Initiatives:

• Digital Bank licensing framework (2023) — fully digital banks without physical branches
• National Payment Switch Bangladesh (NPSB) — interbank transaction routing
• RTGS for high-value real-time transfers
• PromothKashi — digital transformation roadmap

Impact: Financial inclusion (50M+ MFS accounts), reduced transaction costs, 24/7 availability, paperless operations, green banking.

Agent Banking (এজেন্ট ব্যাংকিং) — banking services through third-party agents (retail shops, post offices) in areas where branches are not viable.

Services Offered:

• Account opening (no-frills accounts)
• Cash deposit and withdrawal
• Fund transfer and remittance disbursement
• Loan disbursement and repayment collection
• Utility bill payment
• Government allowance disbursement (old age, freedom fighter, widow)

How It Works:

• Agent uses biometric device + POS terminal connected to bank's core banking system
• Agent maintains a cash float and bank account
• Transactions are real-time, reflected in customer's bank account instantly
• Agent earns commission per transaction

Bangladesh Progress:

• 30+ banks operating agent banking
• 14,000+ agents across 64 districts
• Over 15 million accounts opened
• Particularly impactful in rural remittance disbursement

Regulatory Framework: Bangladesh Bank Agent Banking Guidelines define eligibility, permitted activities, risk management, and consumer protection requirements.