The commercial banks (CBs) have been playing a vital role in the economy of Bangladesh. Amongst the financial institutions, commercial banks constitute the heart of the financial structure since they have the ability to add the money supply and thus create additional purchasing power.
The banking sector is considered to be an important source of financing for most businesses. Banks take deposits from savers, paying interest on some of these accounts. They pass these funds on to borrowers, receiving interest on the loans. Their profits are derived from the spread between the rate they pay for funds and the rate they receive from borrowers. This ability to pool deposits from many sources that can be lent to many different borrowers creates the flow of funds inherent in the banking system.
The banking sector is considered to be an important source of financing for most businesses. Banks take deposits from savers, paying interest on some of these accounts. They pass these funds on to borrowers, receiving interest on the loans. Their profits are derived from the spread between the rate they pay for funds and the rate they receive from borrowers. This ability to pool deposits from many sources that can be lent to many different borrowers creates the flow of funds inherent in the banking system.