Bangladesh Bank (BB)

Overview

The Bangladesh Bank (BB) is the central bank and apex regulatory body for Bangladesh's monetary and financial system. Established in 1971 following Bangladesh's independence, BB operates under the framework of the Bangladesh Bank Order, 1972 and serves as the primary authority for monetary policy, banking supervision, payment systems regulation, foreign exchange management, and anti-money laundering compliance.

Current Leadership

• Governor: Md Mostaqur Rahman (14th Governor, appointed February 2026) — first businessman-governor of Bangladesh Bank; cost and management accountant, corporate executive, and financial governance specialist
• Previous Governor: Dr. Ahsan H. Mansur (August 2024 – February 2026) — former IMF official with nearly three decades of international experience

Key Statistics

• Established: December 16, 1971 (reorganized from State Bank of Pakistan Dhaka branch)
• Headquarters: 107 Motijheel Commercial Area, Dhaka-1000
• Workforce: ~4,000+ employees
• Banking System Oversight: 60+ commercial banks, 35+ specialized development banks, 200+ non-bank financial institutions

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

Supervisory Authority

Bangladesh Bank exercises consolidated supervision over all licensed banks and financial institutions through:

• Banking Regulation Department: Issues licenses, conducts inspections, enforcement
• Off-Site Supervision Unit: Analyzes financial data and regulatory filings
• On-Site Examination Division: Conducts bank examinations and compliance audits

Prudential Regulatory Standards

BB has implemented Basel III standards for:

• Capital Adequacy: Minimum Capital-to-Risk-Weighted-Assets Ratio (CRAR) of 10% (12.5% by 2025)
• Liquidity Coverage Ratio (LCR): Minimum 100% requirement
• Net Stable Funding Ratio (NSFR): 100% compliance requirement
• Leverage Ratio: Non-risk-weighted capital requirement

Licensing Requirements

Banks must obtain BB authorization for:

• Domestic banking licenses (Schedule A, B, C banks)
• Foreign bank branches
• Non-bank financial institutions
• Payment Service Providers
• Mobile Financial Services operators
• Microfinance institutions

Regulatory Inspection and Enforcement

• Annual On-Site Examinations: Comprehensive compliance reviews
• Directed Inspections: Response to specific regulatory concerns
• Enforcement Actions: Warnings, monetary penalties, license restrictions, license revocation
• Maximum Penalties: Up to BDT 500 million for serious violations

Payment Systems and Infrastructure

Bangladesh Automated Cheque Processing System (BACH)

Launched: October 2010

BACH represents a major digitization initiative consisting of:

• Bangladesh Automated Cheque Processing System (BACPS): Digital cheque clearing system employing Cheque Imaging and Truncation technology for paperless cheque processing in batch mode
• Functionality: Enables inter-bank settlement of cheque-based payments through automated processing
• Participating Banks: All scheduled commercial banks participate in BACH clearing
• Daily Processing: Handles thousands of cheque transactions daily with standardized settlement

Bangladesh Electronic Funds Transfer Network (BEFTN)

Established: February 2011

BEFTN is Bangladesh's first paperless electronic inter-bank funds transfer system, featuring:

• Real-Time Processing: Enables instant credit transfers between banks
• Use Cases: Payroll processing, domestic and foreign remittances, social security payments, company dividends, bill payments, corporate payments, government tax payments, person-to-person (P2P) transfers
• Participating Banks: 60+ commercial and specialized banks
• Transaction Volume: Processes millions of transactions monthly
• Settlement: Intraday and end-of-day settlement cycles

Mobile Financial Services (MFS) Ecosystem

Bangladesh has emerged as a global leader in mobile money innovation, with 14 licensed MFS providers and approximately 70+ million registered users.

Major MFS Operators

bKash

• Market leader with 60%+ transaction share in P2P payments
• 70+ million registered users (as of 2025)
• 330,000+ agent network
• First Bangladesh unicorn (valued over $1 billion)
• Services: P2P transfers, merchant payments, bill payments, utility payments
• Partnership: Collaboration with international remittance providers

Nagad

• Second-largest MFS provider
• 30+ million registered users
• Specialized in merchant payments and small business financing
• Strong government transaction processing integration
• NPSB interoperable payment system clearance (2024)

Other Major Operators

• Rocket (Dhaka Bank): 20+ million users
• Upay (Unified Payments): Growing merchant payment focus
• bKash, Nagad, Rocket, Upay collectively control 95%+ of MFS market

MFS Regulatory Framework

BB issues directives governing:

• Know Your Customer (KYC) and Customer Due Diligence (CDD) requirements
• Transaction limits by account tier
• Fraud prevention and transaction monitoring
• Security and data protection standards
• AML/CFT compliance for MFS operators

Emerging Interoperability

• National Payment Switch Bangladesh (NPSB): Operator clearance issued 2024-2025 for interoperable payment infrastructure
• Multi-Rail Settlement: NPSB extending clearing and real-time settlement functions to include MFS and payment service providers alongside banks
• Bank-to-MFS Transfers: Initiated November 2024 with standardized pricing (BDT 15 transaction fee cap for transfers up to BDT 50,000)
• MFS-to-Bank Connectivity: Full interoperability framework under implementation

Regulatory Role

BB oversees microfinance institutions (MFIs) through:

• Licensing Framework: Registration and licensing of NGO-MFIs and Grameen Bank
• Prudential Standards: Capital adequacy, loan loss provisioning, liquidity norms
• Consumer Protection: Interest rate ceilings, transparent pricing, complaint resolution

Microfinance Landscape

• Licensed MFIs: 1,000+ registered institutions
• Borrowers: 30+ million microfinance clients
• Primary Focus: Rural lending for agriculture, small business, women's economic empowerment
• Regulatory Development: BB actively strengthens MFI supervision through examination programs and policy development

Bangladesh Financial Intelligence Unit (BFIU)

Establishment: Founded as Anti-Money Laundering Department of Bangladesh Bank (June 2002); renamed BFIU (January 25, 2012)

Authority: Empowered under Money Laundering Prevention Act (MLPA) 2012 and Anti-Terrorism Act (ATA) to serve as the national financial intelligence unit.

AML/CFT Legal Framework

Key Legislation:

• Money Laundering Prevention Act, 2012: Criminalized money laundering; established suspicious transaction reporting requirements
• Anti-Terrorism Act, 2009 (as amended): Combats terrorist financing
• Financial Transactions Reporting Act, 2009: Framework for financial transaction reporting

Regulatory Requirements and Guidelines

BB has issued comprehensive AML/CFT guidelines covering:

• Know Your Customer (KYC): Customer identification, verification, beneficial ownership disclosure
• Customer Due Diligence (CDD): Enhanced CDD for high-risk customers and Politically Exposed Persons (PEPs)
• Suspicious Transaction Reporting (STR): Requirements for reporting suspicious activities to BFIU
• Cash Transaction Reporting (CTR): Large cash transaction reporting thresholds
• Sanctions Screening: UNSC sanctions list screening and blocking procedures
• Record-Keeping: 5-year retention requirements for transaction records
• Compliance Training: Annual AML/CFT training mandates

BFIU Functions and Responsibilities

• Intelligence Collection: Receives and analyzes Suspicious Transaction Reports (STRs) and Cash Transaction Reports (CTRs)
• Dissemination: Shares financial intelligence with law enforcement and regulatory authorities
• Policy Development: Issues guidelines and directives to reporting agencies
• International Cooperation: Exchanges information with foreign Financial Intelligence Units through established channels

Enforcement and Penalties

Criminal Penalties (MLPA and ATA):

• Individuals: Up to 7 years imprisonment and/or fines up to BDT 10 million
• Organizations: Administrative fines ranging from BDT 50,000 to BDT 5 million depending on severity and frequency

Regulatory Sanctions:

• License restrictions or conditions
• Mandatory remediation programs
• License suspension or revocation
• Enhanced supervision and increased examination frequency

AML/CFT Supervision Strategy

BFIU and Bangladesh Bank coordinate:

• Risk-Based Supervision: Targeting high-risk financial institutions and sectors
• Compliance Examinations: Annual on-site inspections for AML/CFT compliance
• Targeted Inspection Programs: Focused audits of specific risk areas (correspondent banking, cash-intensive businesses, cross-border transfers)

Current Regulatory Priorities and Challenges (2024-2026)

Digitalization and Payment Innovation

• Accelerating digital payment adoption beyond cash-based economy
• Integrating MFS into formal financial system oversight
• Developing real-time gross settlement (RTGS) infrastructure
• Regulatory sandbox for fintech experimentation

Financial Stability

• Managing inflation within target bands while supporting growth
• Monitoring credit growth in key sectors
• Addressing asset quality concerns in banking system
• Managing foreign exchange volatility

Capital Account Liberalization

• Gradual loosening of exchange controls to support international business
• Facilitating foreign direct investment inflows
• Managing portfolio capital flows

Basel III Implementation

• Completing transition to full Basel III standards
• Strengthening capital adequacy and liquidity ratios
• Implementing countercyclical buffers

Climate Risk and Green Finance

• Integrating climate risk into prudential framework
• Supporting green bonds and sustainable finance initiatives
• Managing environmental and social risks in loan portfolios

Regulatory Powers

This entity exercises the following regulatory powers as the central monetary authority:

Regulatory Role and Function

Legal Foundation

Primary Legislation

Bangladesh Bank Order, 1972 (President's Order No. 127 of 1972)

• Foundational statute establishing Bangladesh Bank as the central bank
• Mandates the Bank to manage the monetary and credit system with a view to stabilizing domestic monetary value and maintaining a competitive external parity of the Bangladesh Taka
• Grants authority to formulate and implement monetary policy
• Empowers the Bank to regulate and supervise the banking and financial system

Key Legal Amendments and Regulations

• Banking Regulation Act, 1991: Governs banking operations and licensing
• Bank Company Act, 1991: Framework for bank licensing, operation, and supervision
• Money Laundering Prevention Act, 2012: Anti-money laundering authority and enforcement
• Payment Systems Act, 2015: Provides regulatory framework for payment system operators
• Financial Institution Regulation Framework: Multiple circulars and guidelines issued under Banking Regulation Act authority
• Risk Management Guidelines, 2009: Credit risk, market risk, operational risk frameworks

Monetary Policy Framework

Section 47 of Bangladesh Bank Order 1972 establishes the Monetary Policy Committee (MPC) responsible for:

• Formulating and implementing monetary policy decisions
• Setting policy rates quarterly
• Managing inflation within 4-6% medium-term target
• Supporting sustainable economic growth

Licensing and Authorization Relevance

The Bangladesh Bank (BB) is a key licensing authority in Bangladesh's financial system:

The licensing process typically involves assessment of capital adequacy, fitness and propriety of management, business plan viability, AML/CFT compliance frameworks, and IT systems readiness.

Payments and Money Movement Relevance

Policy Objectives

Bangladesh Bank's monetary policy framework is designed to achieve:

1. Price Stability: Maintaining inflation within the 4-6% target range
2. Financial System Stability: Ensuring soundness of banking and financial sectors
3. Full Employment: Supporting productive resource utilization
4. Sustainable Growth: Fostering development of the economy

Monetary Policy Transmission Mechanisms

• Policy Rate: Bangladesh Bank sets the Policy Rate (repo rate), currently the primary instrument
• Open Market Operations (OMO): BB conducts buy and sell operations in government securities to manage liquidity
• Reserve Requirements: Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) requirements
• Refinancing Facilities: BB provides refinancing facilities to banks for priority sectors (agriculture, SMEs, renewable energy)

Current Monetary Policy Stance (2024-2026)

• Inflation management in post-pandemic environment
• Supporting Bangladesh's digital economy transition
• Maintaining foreign exchange reserve strength
• Managing cross-border capital flows

Authority and Responsibility

Bangladesh Bank, under Bangladesh Bank Order 1972, holds sole authority for:

• Managing Bangladesh's official foreign exchange reserves (currently ~$20 billion USD)
• Implementing foreign exchange policy and intervention strategies
• Regulating authorized dealers and money changers
• Managing the Bangladesh Taka's external par value

Foreign Exchange Regulation Framework

Foreign Exchange Regulation Act, 1947 (as amended)

• Controls all foreign currency transactions
• Requires authorization for cross-border payments
• Licenses Authorized Dealers (banks) for forex transactions

Key Policy Areas:

• Trade-Related FX: Controls on imports/exports
• Remittance Inflows: Encourages inbound worker remittances; maintains preferential settlement rates
• Capital Controls: Managed float exchange rate regime; restrictions on capital account transactions
• International Reserves: Holds reserves in USD, EUR, GBP, SDR, and gold

Current Exchange Rate Regime

• System: Managed float against basket of currencies with Bangladesh Taka as reference
• Intervention: BB intervenes to maintain stability and competitiveness
• Official Rate: Published daily by authorized dealers
• Market Rate: Market-determined for retail transactions within permitted bands

Payment Systems Governed or Overseen

The BB operates and/or oversees the national payment and settlement infrastructure of Bangladesh. Specific systems include:

[Further detail on specific system names requires verification from official sources]

Relationship to Other Regulators

Multilateral Organizations

• International Monetary Fund (IMF): Regular surveillance and technical assistance
• World Bank: Financial system development projects
• Asian Development Bank (ADB): Regional development initiatives
• Basel Committee on Banking Supervision: Implements standards and best practices
• Financial Action Task Force (FATF): Complies with AML/CFT recommendations

Regional Cooperation

• South Asian Association for Regional Cooperation (SAARC): Regional payment and settlement initiatives
• SAARC Development Fund: Participates in regional financial stability arrangements
• Asian Clearing Union: Participates in regional payment clearing

Bilateral Relationships

• Swap Arrangements: Currency swap lines with Reserve Bank of India, central banks of other trading partners
• Correspondent Banking: Relationships with major international banks for international transactions
• Technical Assistance: Programs with advanced economy central banks (Bank of England, Federal Reserve, ECB)

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Bangladesh Bank Headquarters

Address: 107 Motijheel Commercial Area, Dhaka-1000, Bangladesh

Website: www.bb.org.bd

Key Departments:

• Department of Banking Regulation and Supervision
• Foreign Exchange Reserve Management Department
• Payment Systems Department
• Anti-Money Laundering Department

Bangladesh Financial Intelligence Unit (BFIU)

Website: www.bfiu.org.bd

Reporting: [email protected]

8. BANGLADESH PAYMENT SYSTEMS & INFRASTRUCTURE

8.1 Electronic Clearing & Settlement Systems

8.2 Mobile Financial Services (MFS) — 204 Million+ Accounts

Market Overview:

• Total MFS Accounts: 204 million+
• Daily Transactions: Tk 3,500 crore
• Top 3 players control: 80% of market
• Account types: Savings, Current, Merchant accounts

MFS Market Leaders (2025-2026):

Cash-Out Fees (2024-2025):

• bKash: Tk 20/1000 (traditional) → competitive rates in app
• Nagad: Tk 9.99-15/1000 (competitive entry pricing)
• Rocket: Tk 15-20/1000
• Industry Standard: Tk 2-20 per 1000 range

8.3 NPSB (National Payment Switch Bangladesh) — Interoperability

Launch Date: November 1, 2025

Features:

• Bank-to-MFS transfers: Maximum fee 0.15% (Tk 1.50 per Tk 1,000)
• PSP-to-MFS transfers: 0.20% (Tk 2 per Tk 1,000)
• MFS-to-Bank transfers: Up to 0.85% (Tk 8.50 per Tk 1,000)

Participating Institutions (as of Nov 2025):

• Major Banks: All commercial banks, all specialized development banks
• MFS: Rocket (LIVE Nov 1), Nagad (LIVE Nov 1), bKash (deferred), SureCash, Upay
• Status: Partial rollout; bKash requested extension to Jan 31, 2026 (security concerns)

8.4 Card-Based Payment Systems

RuPay Partnership: Bangladesh Bank exploring RuPay adoption for domestic scheme (2024-2026 discussions)

Existing Schemes:

• Mastercard: International cards issued by BD banks
• Visa: International cards issued by BD banks
• Domestic debit/credit cards: Bank-specific schemes

8.5 Regulatory Framework

Key Legislation:

• Regulatory Framework for Mobile Financial Services (2011, updated 2018)
• Payment Systems Act provisions (under Banking Regulation Act, 2015)
• Anti-Money Laundering Rules: Mandatory KYC for MFS accounts >Tk 10 lakh

Licensing Authority: Bangladesh Bank — FSD (Financial Services Division)

Notes on Naming and Language