Role of Banking Sector in Economic Development of Bangladesh

Economic development of a country largely depends on investments made by its citizens, its government and foreign countries. And each and every investor likes a safety for their investment which can be guaranteed by the banking sector of a country. At present, there are in total 64 banks in our country. They can be classified into 2 kinds. They are-

1. 57 Scheduled banks.
2. 7 Non-Scheduled banks.

Scheduled banks can be classified into following types:

1. There are 6 state owned commercial banks which are fully or majorly owned by the government of Bangladesh.
2. 2 specialized banks, they are also majorly owned by the government of Bangladesh.
3. There are 40 private commercial banks which are majorly owned by private entities.
4. There are 8 Islami Shariah based banks.
5. 9 Foreign commercial banks are also operating in Bangladesh.

There are 7 non-scheduled banks in our country and last of them is Simanta bank.

The role of banking sector in development of Bangladesh is very important. Although the dominance of the banking sector makes the financial sector vulnerable on the one hand, but highlights the crucial importance of the sector in resource mobilization and economic growth, on the other. The role of the banking sector in accelerating economic growth is discussed below: 

1. Banking sector has played a vital role in economy by providing credit for performing different economic activities of Bangladesh. The positive impact of banking sector on our everyday life in economic activities is remarkable.According to the budget of the fiscal year 2017-18 banks provide 2.91% of our GDP.
2. Service sector is the greatest contributor of GDP in Bangladesh. According to the budget of 2017-18 it provides about 52.73% of our GDP. Bank is one of the greatest tools of service sector in Bangladesh.
3. Industrial sector acts as a main sector of GDP in the developed countries but unfortunately, this sector's performance is very weak in our country and participation of GDP in this sector is 32.48% (according to the budget of 2017-18). This sector gets the highest credit from commercial banks.
4. Agriculture is the main economic sector of our country. According to the 2017-18 budget, it provides about 14.79% of our GDP. Banks can help to develop agriculture, fishery and forestry sectors by providing credit facility.
5. Business is extremely important to a country's economy because businesses provide both goods and services and jobs. Businesses are also the means by which many people get their jobs. Business sector has become major role playing sector in our economy. Banking sector provides necessary capital for the business sector.
6. Bank is one of the main means of government by which government can implement different types of steps for eradicating poverty. As the branches of banks are available everywhere from downtown area to the remotest rural area government uses this channel to provide any financial benefit quickly. 

Banking sector must be robust, resilient and sound for efficient inter-mediation of financial resources. Lack of any one or all these prerequisites would not only bring disaster for the country but also cost the real sector. Our government has taken various steps to reform programs from time to time making banking system more effective so that positive impact of banking system on our everyday life in economic activities can be more realized.