Bangladesh Development Bank Path to Progress and Challenges

The Bangladesh Development Bank has been a crucial player in the country's economic growth. It was established in 2009 to provide financial services to the underprivileged and small entrepreneurs.

The bank's main objective is to promote economic development and social welfare by providing credit facilities to the marginalized sections of society.

In its early years, the bank faced significant challenges in terms of funding and operational capacity. However, with the support of the government and international organizations, it has been able to make significant progress.

Today, the bank has a strong network of branches across the country, providing financial services to over 1 million customers.

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Bangladesh Development Bank has a rich history that dates back to 1972. On October 31st of that year, two Development Financial Institutions (DFIs) were established: Bangladesh Shilpa Bank (BSB) and Bangladesh Shilpa Rin Sangstha (BSRS).

The main objective of these institutions was to accelerate the industrial pace of the country by providing loans and equity to industrial projects.

BSB was established under the Bangladesh Shilpa Bank Order, 1972 (President's Order No. 129 of 1972), while BSRS was established under the Bangladesh Shilpa Rin Sangstha Order, 1972 (President's Order No. 128 of 1972).

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Bangladesh Development Bank PLC was incorporated on November 16, 2009, as a Public Company Limited by shares under the Companies Act, 1994.

The decision to form BDBL was made by the Government, which led to the amalgamation of two Development Financial Institutions (DFIs) in the public sector: Bangladesh Shilpa Bank (BSB) and Bangladesh Shilpa Rin Sangstha (BSRS).

Bangladesh Shilpa Bank (BSB) was established on October 31, 1972, to accelerate the industrial pace of the country by providing loans and equity to industrial projects.

Bangladesh Shilpa Rin Sangstha (BSRS) was also established on October 31, 1972, with the same objective as BSB.

A banking license was issued by Bangladesh Bank on November 19, 2009, to carry on the business of BDBL.

Two Vendors’ Agreements were signed between the Government of the People’s Republic of Bangladesh and BDBL on December 31, 2009, to acquire and take over the assets, benefits, rights, and liabilities of BSB and BSRS.

BDBL formally embarked on its journey as a Public Limited Company on January 3, 2010.

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Developmental banking is a key aspect of BDBL's mission to support the country's growth and development. The bank focuses on industrial loans under syndicated arrangements for sectors like power, energy, and telecommunications.

BDBL also supports Public-Private Partnership (PPP) projects in areas such as port development and transport infrastructure, including roads, waterways, and airways. This helps to boost the country's infrastructure and facilitate economic growth.

The bank's emphasis on PPP projects is a significant step towards achieving the country's development goals. By partnering with the private sector, BDBL can leverage expertise and resources to deliver large-scale projects.

Some of the key areas of focus for BDBL's developmental banking initiatives include financing for SMEs, loans for agro-based entrepreneurs, and green banking initiatives. These initiatives aim to promote sustainable development and support the growth of small and medium-sized enterprises.

BDBL offers a range of loan products to support its developmental banking initiatives, including cash credit, working capital loans, and secured loans. These loan products are designed to meet the specific needs of different sectors and entrepreneurs.

Here are some of the loan products offered by BDBL:

The Bangladesh Development Bank PLC (BDBL) offers a wide range of services to cater to its customers' diverse needs. Its services are categorized into Commercial Banking, SME Banking, and Contribution to Loan Disbursement Activities.

One of the key services provided by BDBL is Foreign Trade, which includes export financing solutions such as Export Cash Credit, Packing Credit, and Purchase of Documentary Bills. The bank also offers Import Trade Loans, Loans Against Trust Receipts, and Foreign Exchange Business.

BDBL serves as a development partner to both the public and private financial sectors by providing Long Term, medium term, and Short term loans. It also offers Working capital financing for industrial units and Equity capital facilities.

The bank provides Commercial banking services, including Promissory note management, Foreign exchange repatriation, and Loan repayment assistance. It also offers industrial loans, equity capital supply programs, and capital market participation.

BDBL's SME Banking services cater to the needs of small and medium-sized enterprises, providing them with the necessary financial support to grow and develop.

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Bangladesh Development Bank (BDBL) has a clear focus on financing projects that benefit the environment and the economy.

BDBL prioritizes financing environmentally friendly and renewable energy projects, waste management, and low-carbon industries.

The bank also supports agro-based industries, small-scale power generation, science and technology, transport, and infrastructure development projects.

BDBL has set financing limits ranging from 2 crore to 15 crore, with the option to participate in syndicate loans for amounts exceeding 15 crore.

To help entrepreneurs make informed decisions, BDBL provides advisory services on selecting profitable industrial investment areas and establishing industrial plants.

BDBL's five-year business strategy plan aims to promote industrial investment and accelerate socio-economic development through various key areas of activity.

These key areas of activity include term loans, medium- and long-term industrial financing, SME loans, foreign exchange trading, and capital market development.

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Bangladesh Development Bank has achieved some impressive milestones. In 2014, they won two awards for presenting the best annual report, a testament to their commitment to transparency and good governance.

Their annual report was recognized by ICAB and ICMAB, two reputable organizations in the field. This achievement highlights their dedication to maintaining high standards in corporate governance.

BDBL has also made a notable ranking, coming in second in the government bank category.

BDBL has achieved numerous milestones in the past decade, but one notable achievement is winning two awards in 2014 for presenting the best annual report.

These awards were given by ICAB and ICMAB in recognition of corporate governance, a testament to the bank's commitment to transparency and accountability.

BDBL is ranked 2nd in the government bank category, a reflection of its strong performance and stability.

The bank has also made significant strides in digital banking, launching various e-services such as Mobile App, Internet Banking, and 24/7 ATM services.

Additionally, BDBL has successfully implemented a Walk-in customer fund Transfer system and online account opening, making banking more convenient for its customers.

BDBL has no capital and provision deficit, a significant achievement in the banking sector.

The BDBL has consistently maintained high default rates, with its default rate rising from 46 per cent in 2018 to 42 per cent in 2023.

The bank's default rate has been a major concern, with default loans amounting to Tk 8.89 billion in 2018 and Tk 9.82 billion in 2023.

Despite efforts to recover from these default loans, the bank has not seen significant success.

The bank's deposit base has seen fluctuations, decreasing from Tk 28.31 billion in 2018 to Tk 24.21 billion in 2020, before increasing to Tk 30 billion in 2023.

The total disbursed loans have also shown a trend, rising from Tk 19.3 billion in 2018 to Tk 24.79 billion in 2022, before decreasing slightly to Tk 23.13 billion in 2023.

Multiple officials of the BDBL have attributed the bank's struggles to its aggressive banking nature and inexperienced manpower.