December 30, 2009

THE ordinary definition of a bank is a dealer in credit. The bank accepts deposits from the depositors in exchange of certain profit and lends it out to the borrowers at a rate of interest profitable to it. The deposited money cannot be kept idle in the vault as the depositors will demand their profit or interest after expiry of a certain period. Usually the bank prefers to invest the same in the productive sectors to create employment opportunities as well as to facilitate a higher growth of gross domestic product (GDP).

Prior to liberation of Bangladesh, there were few banks operating in the then East Pakistan. These banks were much conservative to lend money in a bigger way. Moreover, due to limitation of branches, the banks could not spread their business to rural areas. The big loans were centered on big industrial groups.Bangladesh came into being in 1971 with a big burden of loans of left-away industries.