functions of Bangladesh Bank PDF

SHOFI UDDIN SHEIKH
18THM036
Question no.-1: What is the Central Bank ? What are the functions of Bangladesh Bank
being a Central Bank of the country?
Answer
A central bank is a state institution that usually has the power to regulate commercial banks,
create monetary policy, and provide financial services. They help stabilize the currency of the
nation , prevent inflation, and keep unemployment low.
Central bank were established as a bulwark against financial crisis. As the institution that
controls a nation`s monetary policy, central banks have the ability to both boost and slow the
growth of the economy.
According to Mr. Rakibul Islam(lecturer of BSMRSTU), Central Bank is apex regulatory body
for the country`s monetary and financial system. Central Bank monitors controls and supervises
the banking system of a country.

The functions of Bangladesh Bank being a Central Bank of the country: Every central bank
has some functions which makes it known as central bank. Bangladesh Bank will be known as
Central Bank only when it follows the below mentioned functions. The major functional areas
include:
Managing a deposit insurance scheme
Implementation of the Foreign exchange regulation Act
Collection and furnishing of credit information
Money Laundering Prevention
Acting as banker of the government
Regulation and supervision of the payment system
 Issuance of currency notes
Management of the country`s international reserves
Formulation and implementation of monetary and credit policies
Regulation and supervision of banks and non-bank financial institutions, promotion and
development of domestic financial markets.
-------------○------------
Question no.-2: "How does Bangladesh Bank control the credit? Explain"
Answer
Credit control refers to the ability of a commercial bank to create credit by the central bank. In
other words, it is a strategy used by the central bank to limit the amount of loans in the economy
to the desired level. The central bank alone has the power to control this credit.
We can also say that Credit Control is a function performed by the Central Bank (Reserve Bank
of India), to control the credit, i.e. demand and supply of money or say liquidity in the economy.
With this function, Central bank regulates the credit granted by the commercial banks to its
customers.
Purpose of credit control:
Credit control is needed to keep the country's economy afloat and achieve its goals. One of the
responsibilities of the central bank is to keep the lending activities of commercial banks within a
certain range. The following purposes are generally controlled;
Bringing stability to the exchange rate
To keep the stability of commodity prices in favor of the common man