৪৯তম বিসিএস ⎯ ফিন্যান্স ও ব্যাংকিং [৭১১]

Deposit management is one of the most critical functions of commercial banks.

Banks mobilize deposits from the public and deploy them into loans and investments.

The main challenge is to balance liquidity (ensuring enough cash is available to meet withdrawal demands at any time) with profitability (investing deposits in income-generating assets).

If a bank focuses too much on profitability, it may lend excessively and face liquidity shortages; if it focuses too much on liquidity, it may lose profitability.

Hence, effective deposit management ensures stability, customer trust, and sustainable profitability.

Source: M.S. Siddiqui, Banking and Financial Institutions in Bangladesh (2019).

Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital to its risk-weighted assets. Under Basel III, the global standard requires banks to maintain a minimum total CAR of 12.5%, which includes:

8% minimum regulatory capital

2.5% capital conservation buffer

Additional buffers in case of systemic risks

Bangladesh Bank also implements Basel III and requires all scheduled banks to comply with this ratio to protect depositors and ensure financial system stability. Maintaining strong capital reduces insolvency risk and builds resilience against financial crises.

Source: Bangladesh Bank, Guidelines on Risk-Based Capital Adequacy (Basel III) (2014).

Deposits (demand, time, and savings deposits) make up the largest share (70–80%) of commercial banks’ liabilities. Other sources like equity or borrowings exist, but they are relatively small.

Source: Bangladesh Bank, Annual Report; M.S. Siddiqui, Banking and Financial System.

Current account deposits are demand deposits (withdrawable anytime). 

Fixed, recurring, and term deposits are time deposits.

Source: Bangladesh Bank official website (www.bb.org.bd)

Deposits provide continuous inflow of funds at relatively low cost, making them stable and sustainable compared to borrowings or equity financing.

Source: Anupam Publication, Banking and Financial System.

Secondary sources include borrowings from Bangladesh Bank, interbank borrowings, bonds, and equity.

Loans and cheques are not sources of funds—they are uses of funds.

Source: Bangladesh Bank, Financial Stability Report.

CRR and SLR require banks to keep a portion of deposits as reserves with Bangladesh Bank, ensuring stability and liquidity.

Source: Bangladesh Bank, Monetary Policy Guidelines.

Banks only keep a fraction of deposits as reserves (CRR + SLR in Bangladesh). The rest is lent out.

If too many depositors demand withdrawals simultaneously, the bank cannot meet the demand even if its assets exceed liabilities.

This structural mismatch makes banks vulnerable to runs.

Source: Mishkin, Frederic S. The Economics of Money, Banking, and Financial Markets; Bangladesh Bank, Monetary Policy Report.

Deposit insurance (like the Deposit Insurance Act, 2013 in Bangladesh) assures depositors that even if a bank fails, they will recover up to a certain amount. This reduces panic and prevents mass withdrawals.

Interest rates or reducing loans may help liquidity but cannot stop panic psychology.

Source: Bangladesh Deposit Insurance Act, 2013

SLR and CRR ensure that banks keep a portion of deposits liquid with Bangladesh Bank, preventing complete depletion of funds during sudden withdrawal pressures.

While not eliminating the possibility of bank runs, they reduce the risk of immediate collapse.

Source: Bangladesh Bank, Banking Regulation Guidelines.

CET1 includes ordinary shares and retained earnings.

It is perpetual, easily available, and absorbs losses immediately, making it the strongest safeguard against insolvency.

Tier 2 (like subordinated debt) is supportive but not as robust.

Source: Basel Committee on Banking Supervision (2011), Basel III: A global regulatory framework for more resilient banks and banking systems.

Unlike subordinated debt or preference shares (which have fixed maturity or claims), CET1 is permanent equity.

It absorbs losses before any other claim, protecting depositors and creditors.

This makes it the best form of bank capital.

Source: Hull, John C. Risk Management and Financial Institutions (Wiley).

Losses are first absorbed by CET1 (retained earnings + common equity).

Only after CET1 is depleted would Tier 1 Additional Capital or Tier 2 capital play a role. Depositors’ funds are legally protected as liabilities, not capital.

Source: Diamond & Dybvig (1983); Basel III Standards.

Bangladesh Bank guidelines define CET1 as common shares, retained earnings, statutory reserves, and other disclosed free reserves.

Supplementary items like subordinated debt or revaluation reserves are Tier 2, not CET1.

Source: Bangladesh Bank, Implementation of Basel III in Bangladesh (2014–2019).

Fixed deposits require higher interest payouts compared to demand deposits. While they enhance stability, they also increase cost of funds.

Demand deposits are cheaper but less predictable.

A bank must balance both to maintain profitability.

Source: Peter S. Rose, Commercial Bank Management (McGraw-Hill); Bangladesh Bank, Deposit Guidelines.

Urban corporate deposits are concentrated and volatile.

Rural and retail deposits, mobilized via agent and mobile banking, provide more stable, diversified funding.

This reduces dependency on large clients and minimizes liquidity shocks.

Source: Bangladesh Bank, Financial Inclusion Report; Karim & Rahman, Banking in Bangladesh.

CET1 ratio = 800 ÷ 10,000 = 8% (> 4.5% minimum)

Total capital = 800 + 300 + 200 = 1,300

CAR = 1,300 ÷ 10,000 = 13% (> 12.5%)

Thus, the bank is compliant.

Source: Bangladesh Bank, Basel III Implementation Guidelines (2014–2019).

CET1 comprises ordinary shares and retained earnings, which are permanent and loss-absorbing.

Tier 2 (like subordinated debt) can only absorb losses after Tier 1 is exhausted.

Hence, regulators prioritize CET1 for banking resilience.

Source: Hull, John C., Risk Management and Financial Institutions; Basel III Standards.

CRR requires banks to keep a percentage of deposits in cash with Bangladesh Bank.

SLR can be held in liquid assets like T-bills, T-bonds, or cash.

This ensures liquidity and financial discipline.

Source: Bangladesh Bank, Monetary Policy Circulars.

A higher CRR means banks must keep more cash idle with Bangladesh Bank, reducing funds available for lending.

This tightens liquidity and controls inflation but may slow credit growth.

Source: Mishkin, Frederic S., The Economics of Money, Banking, and Financial Markets.

Liquidity management ensures a bank can meet withdrawal demands without panic or asset fire-sales.

Even a solvent bank may collapse if liquidity is poor.

Proper reserve management and high-quality liquid assets (HQLA) are key.

Source: Basel Committee, Liquidity Coverage Ratio (LCR) Guidelines.

The LCR requires banks to hold enough HQLA to cover net cash outflows for 30 days under stress.

NSFR, on the other hand, measures long-term liquidity over a 1-year horizon.

Source: Basel Committee on Banking Supervision, Basel III: International framework for liquidity risk measurement.

Bangladesh Bank’s loan classification rules:

Substandard: 90–179 days overdue

Doubtful: 180–269 days

Bad/Loss: 270+ days

This classification ensures provisioning against NPLs.

Source: Bangladesh Bank, Prudential Guidelines for Loan Classification.

Secured advances (like mortgage-backed loans) protect banks in case of borrower default.

Collateral can be liquidated to recover dues, reducing credit risk.

Unsecured advances are riskier and often carry higher NPL rates.

Source: Rose & Hudgins, Bank Management and Financial Services.

নগদ টাকা (Cash in hand) – ব্যাংকের নিজের কাছে রাখা নগদ অর্থ।

স্বর্ণ (Gold) – আন্তর্জাতিক মানসম্পন্ন স্বর্ণ।

সরকারি অনুমোদিত সিকিউরিটিজ (Approved Government Securities):

ট্রেজারি বিল (Treasury Bills)
ট্রেজারি বন্ড (Treasury Bonds)
অন্যান্য সরকারি ঋণপত্র বা বন্ড

SLR = ব্যাংকের জমার একটি অংশ, যা নগদ + স্বর্ণ + সরকারি সিকিউরিটি আকারে রাখতে হয়।

Source: বাংলাদেশ ব্যাংক – Banking Regulation & Policy Department (BRPD) Circulars on CRR & SLR Requirements

SLR-এর প্রধান উদ্দেশ্য হলো:

ব্যাংকের স্থিতিশীলতা নিশ্চিত করা (liquidity cushion রাখা)

মুদ্রাস্ফীতি নিয়ন্ত্রণ করা (কেন্দ্রীয় ব্যাংক SLR বাড়ালে ঋণ দেওয়ার অর্থ কমে যায়, ফলে অর্থের যোগান কমে যায় এবং মূল্যস্ফীতি কমে আসে)

সরকারি অর্থায়ন নিশ্চিত করা (কারণ SLR-এর বড় অংশ রাখতে হয় সরকারি সিকিউরিটিজে)

Source: Bangladesh Bank Circulars; Rose & Hudgins, Bank Management and Financial Services.

SLR কেবলমাত্র নগদ অর্থ, স্বর্ণ, এবং অনুমোদিত সরকারি সিকিউরিটিজে রাখা যায়।

প্রাইভেট ডিবেঞ্চার বা কর্পোরেট বন্ড ঝুঁকিপূর্ণ ও কম তরল হওয়ায় এগুলোকে SLR-এর সম্পদ হিসেবে ধরা হয় না।

Source: Bangladesh Bank, Monetary Policy Guidelines; RBI Guidelines (similar structure followed).

SLR বাড়ানো মানে হলো ব্যাংকগুলোকে তাদের বেশি শতাংশ অর্থ নগদ, স্বর্ণ বা সরকারি সিকিউরিটিজে আটকে রাখতে হবে।

এর ফলে ঋণ প্রদানের জন্য অর্থ কমে যাবে → অর্থনীতিতে ক্রেডিট সংকট → বিনিয়োগ কমে যেতে পারে।

এটি কেন্দ্রীয় ব্যাংক সাধারণত মুদ্রাস্ফীতি কমানোর সময় ব্যবহার করে।

Source:
Bangladesh Bank, Monetary Policy Statements;
Frederic Mishkin, Economics of Money, Banking and Financial Markets.

রিজার্ভ কমলে কেন্দ্রীয় ব্যাংকের হাতে বিদেশি মুদ্রা কমে যায়।

যদি দেশকে আমদানি বা ঋণ পরিশোধ করতে বেশি বৈদেশিক মুদ্রা দরকার হয়, তবে মার্কেটে বৈদেশিক মুদ্রার সরবরাহ সীমিত হবে।

ফলে চাহিদা > সরবরাহ, এবং দেশীয় মুদ্রা তুলনামূলকভাবে দুর্বল হবে (depreciation)।

Source:
Mishkin, F. S., The Economics of Money, Banking, and Financial Markets;
IMF, Exchange Rate and Reserve Management Guidelines.

রিজার্ভ কমলে foreign currency supply কমে যায়। তাই আমদানি করার জন্য দেশের ব্যবসায়ীদের বেশি local currency খরচ করতে হবে। ফলে import cost বৃদ্ধি পাবে।

Source: Krugman & Obstfeld, International Economics; Bangladesh Bank Annual Reports.

nterest rate বৃদ্ধি করলে foreign investors higher return পায়। এতে foreign capital inflow বাড়ে, যা foreign currency supply বাড়ায় এবং local currency depreciation কমায়।

Source: Mishkin, Financial Markets and Institutions; IMF, Exchange Rate and Reserve Management.

রিজার্ভ কমলে foreign currency কম থাকে। আমদানি পণ্য কেনার জন্য বেশি local currency ব্যয় করতে হবে। তাই importers-এর জন্য চাপ বৃদ্ধি পায়, যা পণ্যের দাম বাড়ায়।

Source: IMF Balance of Payments Manual; Bangladesh Bank Circulars.

কম রিজার্ভ মানে বাজারে foreign currency supply কম। চাহিদা অপরিবর্তিত থাকলে, Taka depreciate করবে, অর্থাৎ USD ক্রয় করতে Taka বেশি খরচ হবে।

Source: Bangladesh Bank Annual Reports; IMF Exchange Rate Policy Guidelines.

উচ্চ foreign reserves থাকলে কেন্দ্রীয় ব্যাংক চাহিদা–সরবরাহের চাপে local currency depreciation নিয়ন্ত্রণ করতে পারে। এটা একটি sustainable long-term solution।

Source: IMF, Reserve Management Guidelines; Mishkin, Money, Banking and Financial Markets.

কম reserves + উচ্চ import demand → foreign currency scarcity → importers বেশি local currency ব্যয় করবে → imported goods দাম বৃদ্ধি পাবে। এটি import-led inflation.

Source: Krugman & Obstfeld, International Economics; IMF Reports.

IMF থেকে ঋণ পেলে foreign reserves বাড়ে। এটি market intervention করার ক্ষমতা দেয় → local currency depreciation কমায়।

Source: IMF, Reserve Adequacy and Exchange Rate Management.

Interest rate বৃদ্ধি করলে foreign investors higher return পায়। এর ফলে capital inflow বৃদ্ধি পায়, foreign currency supply বাড়ে, এবং local currency depreciation কমে।

অন্য বিকল্পগুলো সরাসরি exchange rate stability এর জন্য কম কার্যকর।

Source: Mishkin, Economics of Money, Banking, and Financial Markets; IMF, Monetary and Exchange Rate Policy Guidelines.

তারল্য ব্যবস্থাপনার মূল উদ্দেশ্য হলো ব্যাংক যে কোনো সময় গ্রাহক এবং সংস্থার চাহিদা মেটাতে সক্ষম হোক। অর্থাৎ ব্যাংক অবশ্যই তার current liabilities (যেমন: demand deposits, short-term borrowings) সময়মতো পূরণ করতে পারবে।

যদি ব্যাংক তারল্য কম রাখে → liquidity risk বাড়ে → panic withdrawal বা solvency crisis হতে পারে।

অতিরিক্ত liquid assets রাখলে ব্যাংক লাভ কমায় কারণ short-term cash বা government securities থেকে সুদের হার তুলনামূলকভাবে কম।

Source:
Mishkin, F. S., The Economics of Money, Banking, and Financial Markets; 
Rose & Hudgins, Bank Management and Financial Services.

Liquidity management-এর উদ্দেশ্য হলো সুষ্ঠু ভারসাম্য বজায় রাখা। সব সম্পদ দীর্ঘমেয়াদী এবং illiquid আকারে রাখা বিপজ্জনক, কারণ তাত্ক্ষণিক liquidity demand পূরণ করা কঠিন হবে।

সঠিক প্র্যাকটিস: cash, SLR-approved securities এবং short-term assets রাখতে হবে।

Source: Hull, John C., Risk Management and Financial Institutions; Bangladesh Bank, Prudential Guidelines on Liquidity Management.

ব্যাংকগুলো সাধারণত cash + government securities রাখে যাতে unexpected withdrawals পূরণ করা যায়।

এটি ব্যাংকের financial stability এবং depositor confidence বজায় রাখে।

অতিরিক্ত রাখলে লাভ কমে, কিন্তু কম রাখলে liquidity risk বাড়ে।

Source:
Rose & Hudgins, Bank Management and Financial Services;
Bangladesh Bank Liquidity Guidelines.

CRR: ব্যাংককে NDTL(Net Demand and Time Liabilities)-এর একটি অংশ Bangladesh Bank-এ নগদ রাখার নির্দেশ দেয় → short-term liquidity management।

SLR: ব্যাংককে NDTL-এর নির্দিষ্ট অংশ নগদ, স্বর্ণ, সরকারি সিকিউরিটিজে রাখতে হবে।

উভয়ই তারল্য নিশ্চিত করার প্রধান সরঞ্জাম।

Source:
Bangladesh Bank Monetary Policy Circulars;
Mishkin, The Economics of Money, Banking, and Financial Markets.

Liquidity management-এর মূল লক্ষ্য হলো unexpected demand shocks মোকাবিলা করা।

Bank যদি cash + government securities পর্যাপ্ত রাখে, তাহলে panic withdrawal বা bank run-এর সময় solvency বজায় রাখা সম্ভব হয়।

Source:
Diamond & Dybvig (1983), Bank Runs, Deposit Insurance, and Liquidity;
Rose & Hudgins, Bank Management and Financial Services.

বেশি liquid assets রাখলে ব্যাংক অনেক বেশি cash বা government securities রাখে, যা সাধারণত কম return দেয়।
কম liquidity হলে short-term obligations পূরণ করতে সমস্যা → liquidity risk বৃদ্ধি।

সুতরাং, একটি optimum liquidity level বজায় রাখা গুরুত্বপূর্ণ।

Source:
Hull, John C., Risk Management and Financial Institutions;
Mishkin, F.S., Financial Markets and Institutions.

Liquidity management নিশ্চিত করে যে, deposit withdrawals ও other liabilities মিটানো হবে। এর ফলে ব্যাংক নিরাপদে long-term loans এবং advances করতে পারে।

যদি liquidity না থাকে → lending capacity কমে এবং ব্যাংক credit crunch face করতে পারে।

Source:
Rose & Hudgins, Bank Management and Financial Services;
Bangladesh Bank Liquidity Guidelines.

LCR = ব্যাংককে high-quality liquid assets (HQLA) রাখতে নির্দেশ দেয় যা 30 দিনের stress period-এ net cash outflows মেটাতে সক্ষম। এটি liquidity management-এর মূল অংশ।

NSFR দীর্ঘমেয়াদী ( more than 1-year) liquidity measure.

Source: Basel Committee on Banking Supervision, Basel III: Liquidity Coverage Ratio Guidelines.

Liquidity mismanagement → bank short-term obligations পূরণ করতে পারবে না → depositor panic → bank run।
এটি solvency crisis পর্যন্ত পৌঁছে দিতে পারে।

Source: Diamond & Dybvig (1983); Mishkin, Financial Markets and Institutions.

Optimum cash + SLR → ensures immediate liquidity

Asset-liability management → balances maturities of loans and deposits

এভাবে ব্যাংক short-term obligations পূরণ করতে পারে এবং একই সাথে profitability বজায় রাখে।

Source:
Hull, John C., Risk Management and Financial Institutions;
Bangladesh Bank Prudential Guidelines.

Commercial banks are financial institutions whose core function is to accept deposits from individuals, businesses, and other entities. These deposits form the base from which the bank can extend credit in the form of loans and advances. 

Accepting deposits allows banks to mobilize funds, which are then lent to borrowers to finance personal, business, or industrial activities.

Other options like printing currency or regulating monetary policy are functions of the central bank (e.g., Bangladesh Bank), not commercial banks.

Managing government debt is also primarily a government function, often facilitated by central banks.

In short, accepting deposits is central to a commercial bank’s role in the financial system because it ensures liquidity in the market and supports credit creation.

Source:
Khan, M. Y. Indian Financial System. Tata McGraw-Hill, 2020.
Bangladesh Bank. Annual Report 2023.

The Loan-to-Deposit Ratio (LDR) is a financial metric that indicates the proportion of a bank’s deposits that are lent out as loans.

For example, an LDR of 80% means that 80% of deposits are used for lending purposes, while the remaining 20% may be held as reserves or used for other investments.

A higher LDR can indicate aggressive lending, which could increase profit but also elevate risk of liquidity shortages if many depositors withdraw funds simultaneously.

Conversely, a low LDR may indicate conservative lending, leading to lower profitability but higher liquidity safety.

Regulators often monitor LDR to maintain a balance between liquidity and credit risk.

Source:
Saunders, A., & Cornett, M. Financial Institutions Management: A Risk Management Approach, McGraw-Hill, 2022.
Bangladesh Bank, Financial Stability Report 2023.

Interest rates on loans are influenced by multiple factors.

Borrower’s creditworthiness is critical because higher-risk borrowers may attract higher interest rates to compensate for potential default.

The bank’s liquidity position also affects pricing; a bank with excess funds may offer lower rates.

Additionally, macroeconomic factors such as inflation, central bank policy rates, and market interest rates play a major role in determining the cost of borrowing.

A holistic evaluation ensures the bank balances profitability, risk management, and competitiveness in the market.

Source: 
Mishkin, F. The Economics of Money, Banking, and Financial Markets, Pearson, 2021. 
Bangladesh Bank, Monetary Policy Statement 2023.