The Role of Service Industry in the Economic Development

Role of banks in socio-economic development of Bangladesh Banking is a very vital part of an economy and plays very significant contribution towards socio-economic development of a country. This sector is considered to be like the life blood the economy as well. As one of the most important components of the financial system it forms the core of the money market and plays very pivotal role in embroiling resources for productive investments in a country which in turn contributes to economic development. The efficiency of the sector Is very Important or overall development of the country.

Bangladesh is the third largest Muslim populated country of the world with around 140 million of Muslim population. The hope and aspiration of the people of the country to run religiously compliant banking system came Into reality after the OIC recommendation at its Foreign Ministers meeting in 1978 at Senegal to develop Islamic banking system in all of OIC member countries. Earlier in 1974 Bangladesh signed the Charter of Islamic Development Bank (DIB) which Is the sign of its ointment towards recognizing Islamic economic and financial system.

Since after the establishment of Islamic Development Bank (DIB) Islamic banking and financial institutions grew fast throughout the world. In Bangladesh first Islamic bank was established in 1983 five years after the OIC Foreign Ministers meeting in Senegal in 1978. Financial sector of Bangladesh is dominated by banks as asset of the banking sector holds more than 60 per cent share in the Gross Domestic Product (GAP) and total deposit is currently 51 per cent of GAP of the Country. As per the last year’s (2011) financial records the total asset of 47 commercial banks of the country stood at TX. 875 billion and deposit at TX. 4510 billion. Furthermore, during the last ten years the total asset of the banking sector has grown by 325 per cent while deposit has increased by 327 per cent which is the sign of remarkable contribution of banking sector In development of the Country. In 1972, immediate after the independence of the country, population per bank branch was 57,700. Now, throughout the period, a remarkable improvement has been occurred In the sector as population per bank branch stood at around 17,600.

However, still there are ample scopes to work as many markets are sully untapped and huge population still remained unbaked. If we wish to become a middle income country, as per vision set by the government, by the year 2021 , the year in which nation will celebrate the 50 years of Independence, we have to explore all the market still untapped in the Industry and Include all unbaked people. As common good, socio-economic Justice and equitable distribution are important objectives of 1 OFF sector.

As corporate body banking sector has social programmer in numerous areas, such as awarding scholarship for poor and meritorious students, financial cooperation to educational institutions, warm clothes distribution among cold affected people, standing before the people during natural disasters, establishing hospitals and medical colleges etc. From the social responsibility point of view banking sector of Bangladesh has great contribution in the various segments of social activities. Corporate Social Responsibility (CARS) from the Western perspective evolved more than half a century ago.

Corporate Social Responsibility (CARS) are contributing their part in the social activities to eradicate poverty and for the sustainable development of the country. At present, banking Jobs are of high demand. A large number of people are currently involved in this sector and still there are rooms for creating more employment within the industry other than those self-employed people getting finance from the industry. Banking sector is thus making noticeable contribution to the economy of the country by creating employment in Bangladesh.

Last but not least, we must not Gerard the fact that the banking sector is a very vulnerable, chancy and sensitive sector. It has to be encountered and absorbed various kind of shock. Moreover, due to some internal and global phenomenon country’s banking sector faces multi dimensional challenges. All these challenges must be brought under good management. We must have to step forward with extreme pre-cautions. Any compromise in good governance and good management in banking sector may be fatal for the economy. Nevertheless, the sector must improve its performance in terms of trust, confidence of people and professionalism.