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Presentation TropicFunctional Differences Between A Bank And Non-Bank Financial Institution

IntroductionThe financial system facilitates transfer of funds, through financial institutions, financial markets, financial instruments and services.Financial institutions are divided into the banking and non-banking ones.Financial facilities are provided by Bank and non-bank financial institutions. But in our presentation we will try to show the functional differences between them.

Objectives of the studyBroad ObjectiveBroad objectives of the study is to make it clear what is the functional difference between a bank and a non-bank financial institution. Specific objectiveSpecific objective of the study is to know about the functional activities of a bank and non-bank financial institution.

About Banking sector Bangladesh is a third world country with an under developed banking system, particularly in terms of the services and customer care provided by the government run banks. Recently the private banks are trying to imitate the banking structure of the more developed countries. Government policies are executed by the central bank of Bangladesh, Bangladesh Bank.

Some leading Banks In Bangladesh

Bangladesh BankIslamic BankDutch Bangla BankStandard Chartered BankSonali Bank

About Non-Banking SectorNon-bank financial institutions represent one of the most important parts of a financial system. In Bangladesh, NBFIs are new in the financial system as compared to banking financial institutions (BFIs). A total of 25 NBFIs are now working in the country. The NBFIs sector in Bangladesh consisting primarily of the development financial institutions, leasing enterprises, investment companies, merchant bankers etc.

Some leading Non-Bank Financial Institution In Bangladesh

IDLC Finance LimitedReliance FinanceUttora FinanceLanka-Bangla FinanceIslamic Finance and Investment Limited

Dutch Bangla Bank Limited Dutch-Bangla bank limited is a Bangladesh-European joint venture commercial bank incorporated in 1995. With the permission of Bangladesh Bank Limited, commenced formal commercial banking operation from the 3rd June 1996.The Netherlands Development Finance Company (FMO) of the Netherlands is the international sponsors of the bank. Dutch –Bangla bank limited have 146 branches around the country.DBBL owns and operates the largest ATM network of the Country comprising of 2705 ATMs as of August 2015.

Function Of DBBLThe Bank is the leader in POS terminal and internet banking services. As a technology driven Bank, DBBL has implemented world reputed online banking software at all its branches and SME centers. DBBL also provides the following ancillary services: Any Branch banking; Online ATM/POS service; Internet banking service; and SMS and Alert banking service.*point-of-sale terminal (POS terminal)

DBBL is offering Products and Services in three main forms

Deposit Term Deposit LOAN AND ADVANCE Under Deposit the following products are available:Savings Deposit AccountCurrent Deposit AccountShort Term Deposit AccountResident Foreign Currency DepositConvertible Taka AccountNon-Convertible Taka AccountExporter's FC Deposit (FBPAR)Current Deposit Account-BankShort Term Deposit Account-Bank

Under Term Deposit the following products are offered:Monthly Term DepositTerm Deposit 3/6/12/24/36 MonthsTerm Deposit above 36 MonthsTerm Deposit 36 Months 6 Months to 1 year PayoutMonthly Term Deposit BanksTerm Deposit 3/6/12 Months Banks

The followings are known as Loan and Advances products:Loan against Trust ReceiptTransport LoanConsumer Credit SchemeReal Estate Loan (Res. & Comm.)Loan against Accepted BillIndustrial Term LoanAgricultural Term LoanLease FinanceOther Term LoanFMO Local Currency Loan for SMEFMO Foreign Currency LoanCash Credit (Hypothecation)Small Shop Financing SchemeOverdraft

Reliance FinanceReliance Finance Limited (REFL), began its journey in March 1996 as a Public Limited Company under license from Bangladesh Bank to provide innovative financial services. Since inception, REFL Company has been rendering prompt and cost effective financial services with distinctive customer service. Reliance Finance have 5 branches

Function of Reliance FinanceLEASE FINANCE TERM LOAN SME LOAN CORPORATE

FINANCESTRUCTURED AND SYNDICATION FINANCE

Deposit Schemes

Asset Backed Lease FinancingAsset backed financing Sale & Lease BackFinancing

against industrial machineries, commercial equipments, etc.

The term loan facility will support the long-term growth of businesses.

3-5 years for term finance1-2 years for Short Term Finance

Small Business is a loan facility designed to finance small scale trading, manufacturing and service ventures, especially to help small and medium entrepreneurs to meet their short-term cash flow.

Lease FinancingSale & Lease BackTerm LoanProject financingPreferred Equity InvestmentsBridge FinancingRefinancing of existing liabilitiesSpecialized product: arrange special funds

A syndicated facility is a lending facility, defined by a single loan arrangement, in which several or many banks and institutional investors participate to diversify the total risk of financing large scale projects.

Short Term Deposit Semi Annual & Annual Term Deposit Double Money Deposit Monthly Benefit SchemeQuarterly Benefit Scheme

The functional differences of Bank and Non-bank finance organization based on Dutch Bangla Bank Limited and Reliance Finance Limited:1. DBBL issue Debit and credit card but REFL can not do so.2. DBBL can issue current account but REFL can not do so.3. DBBL provides internet banking service but REFL can not do so.4. REFL provides more interest than DBBL on Deposit.5. DBBL provides mobile banking but REFL can not do so.6. According to Bangladesh Bank’s new law REFL cannot provide any kind of deposit less than 3 months, but there is no such rule for DBBL.7. DBBL can invest in call money market but REFL don’t have such permission.8. REFL can lend money to business within shortest possible time but DBBL can not do so.

The functional differences of Bank and Non-bank finance organization based on Dutch Bangla Bank Limited and Reliance Finance Limited:9. For loan purpose from DBBL the lender must have a bank account but there is no such obligation from REFL10. DBBL loan procedures are more complicated than REFL11. DBBL have student policies but REFL don’t have so.12. DBBL have children policies but REFL don’t have so.13. DBBL is interested with general people more where REFL prefer business institution.14. In financial sector DBBL have lot of experience than REFL15. REFL personals are more efficient than DBBL.

Functional Differences

Recommendation for DBBL: The bank should higher export who can understand the future

economic situation and can take initiative based on the forecast. Again the bank can achieve success from the economy if they can handle the situation efficiently.

Bangladesh is a developing country. Many people of our country live in many countries. So, it is important to maintain foreign exchange department in every branches.

Recommendation for REFL:

Operating expense has significant effect on net profit. So the company should look to minimize operating expense as much as possible.

REFL should try to expand their financial services widely, as well as number of branches

Conclusion: Both Bank and Non-bank financial institution are important part of our financial environment. In Bangladesh now different commercial banks and the non-banking financial organizations are operating there business. And every organization now involved attracting the retail customers that means the middle income group people of the country. Actually Dutch Bangla Bank and Reliance Finance Have great contribution in our economy.