Top Law Firm in Bangladesh

Top Law Firm in Bangladesh

Leading Law Firm in Bangladesh

Leading Law Firm in Dhaka

Ease of Doing Business in Bangladesh

FM Associates | A Full Service Law Firm | Offices in Bangladesh, India, UAE & UK


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doing business in Bangladesh | FM Consulting International

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How to Setup Banking and Finance Business in Bangladesh

The banking & financial sector in Bangladesh plays a vital role in economic urbanization of Bangladesh. 

The banking & financial sector is regulated by the country’s central bank known as the Bangladesh Bank. The Bangladesh Bank under the financial system includes scheduled banks, non-banking financial institutions (NBFI), micro finance institutions (MFI), insurance companies, co-operative banks, credit rating agencies and stock exchange. 

The banks have been obtained license to operate in Bangladesh as per the Bank Companies Act 1991 and on the other hand, NBFI’s operational licenses are granted under Financial Institutions Act 1993, though both are supervised and guided by the Bangladesh Bank.The central bank is responsible for the management of the financing functions and activities of banks and NBFIs in Bangladesh. Microcredit Regulatory Authority (MRA) and Insurance Development and Regulatory Authority (IDRA) are the regulatory authorities for microfinance operations and insurance segments and Securities and Exchange Commission (SEC) of Bangladesh is the regulatory body for stock exchange market operations or any other securities market.
How to Setup Banking and Finance Business in Bangladesh

Registration and Licensing Procedure Financial institutions in Bangladesh

Entering the banking industry can be quite a challenge bearing in mind the complexities of the registration procedure as well as obtaining the license from the Bangladesh. Bank Company Act, 1991, empowers Bangladesh Bank to issue licenses to carry out banking business in Bangladesh. Pursuant to section 31 of the Act, before granting a license, Bangladesh Bank needs to be satisfied that: “ the company is or will be in a position to meet its obligations to depositors in full as their claims accrue; the affairs of the company are not being or are not likely to be conducted in a manner detrimental to the interest of its present and future depositors.”

As iterated above, financial institutions include banks and all other financial institutions in its ambit. However, the procedure of setting up a bank and other financial institutions are somewhat different from each other. 


According to Section 31 of the Banking Companies Act, 1991, no company shall carry out banking business in Bangladesh without obtaining a license from Bangladesh Bank.

i) The New Commercial Bank must be a public limited company incorporated in Bangladesh. The paid-up capital of the new commercial bank shall not be less than TK. 400 Crore as per the regulation of the Banking Company Act 1991 and the paid-up capital must be held in unencumbered form. 

ii) Shareholders/Directors and the CEO must provide their personal details, which must include, among others, the following: a) Full Name b) Date Of Birth c) Place of Birth d) Citizenship details, including Passport number and place of issue e) Full Address, including permanent and present with telephone number f) Marital Status, g) Education, h) Present Occupation and i) Tax Identification Number.

iii) Formation of the Memorandum and Articles of Association and shall apply for approval from the Bangladesh Bank

iv) Submission of Joint Venture Agreement if foreign shareholders are involved.

v) Apply for Registration of the the proposed company at the Registrar of Joint Stock Companies (RJSC) under the Companies Act, 1994, as a Public Limited Company by submitting all the relevant documents and the government fees and obtain a Certificate of Incorporation from RJSC 

vi) Obtain license from Bangladesh Bank 

vii) Obtain VAT, TIN certificate from National Board of Revenue and Trade License from the City Corporation.

viii) After obtaining the license from Bangladesh Bank, the company shall apply to Bangladesh Bank for its scheduling under Article 37 of the Bangladesh Bank Order, 1972


The Financial Institution Act 1993 and the Financial Institution Regulations 1994 deal with the requirement and procedure of setting up a financial institution.

The following steps must be satisfied before opening a financial institution in Bangladesh
i) Obtain name clearance from Bangladesh Bank
ii) Share Holder or Directors personal Details
iii) Formation of a Memorandum and take approval from Bangladesh Bank.
iv) Apply for Registration of the proposed company at the Registrar of Joint Stock Companies (RJSC) under the Companies Act, 1994, as a Public Limited Company by submitting all the relevant documents and the government fees and obtain a Certificate of Incorporation from RJSC
v) Obtaining license from Bangladesh Bank
vi) Obtain VAT, TIN certificate from National Board of Revenue and Trade License from the City Corporation.
Bangladesh Bank has unfettered discretion in deciding whether to grant any license or not. Before issuing any license, Bangladesh Bank may consider factors like financial condition of the applicant, management characteristics, capital and future earnings prospects, objectives specified in the memorandum of association, whether the setting up of the financial institution has any public interest at large. Besides, Bangladesh Bank will also determine a minimum paid-up capital for locally incorporated financial institutions depending on various factors. The paid-up capital required for incorporation of NBFI would be BDT 1 Billion.

Also, separate legal compliances are mandatory for the establishment of Non-governmental organization/NGO. NGO which deals with microcredit activities are considered as Micro Finance Institution NGSOs (MFI-NGO) and in order to operate such program, a license needs to be obtained from the Micro Credit Regulatory Authority (MRA) under the MRA Act 2006 The purpose of such organization is to alleviate poverty, generate employment opportunities and assist small entrepreneurs to commence business. 

Legal issues 
As mentioned above the challenges of a banking industry is not restrained to only the incorporation procedure. The challenges extend to the operational function as well. In order to successfully survive in this industry without facing any legal implications, one needs to be aware of the legal matters of this sector. The banking laws and the laws applicable to a financial institution must be complied with by the financial institution owners in order to avert any penalties. 
Even though banks and non-banking financial institution all fall under the ambit of financial institutions but their procedure of incorporation, operation, regulation and process are distinct from each other. This suggests that all banks are financial institution but all financial institution are not banks As such, the moment an individual decides on this formation of his institution, he must adhere to the Bank Companies Act 1991 and the Guidelines to establish a banking company in Bangladesh in case of a formation of a bank and alternatively Financial Institution Act 1993 and Financial Institution Regulation 1994, in case of non-banking financial institutions.  

Dishonour of cheque is a very common issue in the banking sector in Bangladesh. In order to escape the harsh penalties, an individual/company must always ensure that it is not paying another individual via a bank cheque any amount which is in excess of the balance remaining in his bank account or there was already insufficient funds in his account to honour the cheque, since this would bring him under the purview of legal implications of imprisonment or fine which may extend to triple the amount of cheque or both, as per the Negotiable Instrument Act 1881.  

The Bangladesh bank plays a vital role to eliminate and prevent money laundering offences by taking necessary actions in regards to any illegal and suspicious unauthorized money transactions under Money Laundering Prevention Act 2012. Bangladesh bank has the authority to suspend or freeze transactions of any account, to issue necessary directions from time to time to the reporting organizations for the prevention of money laundering; monitor whether directions imposed on the reporting organizations have duly complied and where required, conduct on-site inspections to determine the same; impose fines/suspend license of the reporting agency for failing to provide information duly, etc.
Bangladesh Financial Intelligence Unit which acts responsible for eradicating and curbing money laundering and terrorist financing activities in Bangladesh by assisting other law enforcement agencies, financial intelligence unit of other countries with the exchange of information related to such acts under Money Laundering Prevention Act 2012. 
Banking laws need to be adhered to whenever there is any foreign transaction between parties involved. As per the Foreign Exchange Regulation Act, 1947, it is unlawful for any person other than an authorized dealer, a bank which is duly permitted by the Bangladesh Bank to deal with foreign exchange, to buy or borrow from, or sell or lend to, or exchange with, any person not being an authorized dealer, any foreign exchange. Thereby it is important that the entities with foreign investors shall need to ensure that the initial investment are made via proper banking channel, i.e.  at the time of company incorporation or buying shares of an existing company, the foreign investors should be remitting the share capital amount from their foreign bank account to Company’s bank account in Bangladesh, a with a note ‘investment in the share capital of the (Name of the Company)”. This will show that the investment has been made via proper channel and while remitting the profit such initial investment documents/information shall allow a smooth transection as per Bangladesh Bank guidelines.

Introduction of FMA and its services 
FM Associates is recognized as the best law firm in Bangladesh and this well-deserved title has been achieved by FM’s team of lawyers and barristers through their constant effort and dedication towards their client’s need. A client never leaves with an empty hand upon seeking legal assistance at FMA. 

FMA can also provide assistance in the entire procedure of the incorporation of a public limited company for the establishment of a bank or a non-banking financial institution starting from the drafting of the AOA and MOA, obtaining name clearance and submission of all the documents to RJSC. FMA supports companies in obtaining Tin Certificate and Vat certificate from the NBR and also assists in the renewal procedure of the Trade Licenses and as well as the Name Clearance, if required. FMA also assists in the entire establishment procedure of NGO in Bangladesh. 
FMA’s standard for providing quality services is impeccable. The team is specialized to deal with each sector of the industry including company, commercial, employment, patent and trademark as well as litigation. FMA ‘s services extend to the provision of legal assistance including providing legal opinion in relation to fraudulent activities, money laundering, anti-terrorism, anti-corruption and anti-bribery and law of Bangladesh.

FMA also assist its clients in litigation commencing from drafting and replying to legal notices, drafting petition, defence and filing the documents in court as well as representing clients in the courts of Bangladesh in relation to cheque dishonor suits, fraud cases, loan recovery suits etc.
FMA, experienced team of lawyers and barristers assist Bank and other financial institutions as per their requirement by reviewing and drafting of security documentation, for example, mortgage, hypothecation, etc. and also assists in the registration procedure. 


With the advent of the Covid 19 pandemic financial sectors all around the world have been hit hard and Bangladesh is no exception. With the entire country in lockdown economic activity has halted and as a result demand for financial services has drastically gone down. Bangladesh albeit small, is an active player in this global economic crisis. Infection and death are not the only fear anymore for the people of Bangladesh; in fact, the extensively stimulating economic downtime that is brewing under the umbrella of the Corona virus might leave an irreparable mark on the entire economy if it is not dealt with extreme sensitivity. The banking sector being the backbone of any economy has to be the first to deal with this abrupt calamity. Bangladesh Bank as the regulatory authority of all banks in Bangladesh will play a vital role.

The Bangladesh Bank, with a vision to mitigate the economic vulnerability has launched certain circulars for compliance for every scheduled banks of our country. In order to facilitate trade and business activities during the Corona Virus outbreak, one of the most dominant circular that has been launched, suspends adverse classification of loans from 1st January 2020 till 30th June 2020 for both the financial and non-financial institution via circular dated 19th March 2020 and 24th March 2020. By another circle dated 19th March 2020,  the Bangladesh Bank granted exporters to extend the tenure of realisation of export proceeds up to 60 days, as additional time from specified period of 4 months from the date of shipment and at the same time allowed importers to extend the tenure of submission of bill of entry up to 60 days as additional period from the date of payment on top of the present 4 months . As a generous step, Bangladesh Bank has also opted to sanction advance payment without repayment guarantee up to an amount of USD 500,000 or equivalent to other foreign currencies for import of corona virus related medical materials including lifesaving drug, medical kits and equipment . There are also other several immediate measures that are being taken by the Bangladesh bank, only, in order to combat the economy crisis that Bangladesh is currently struggling with. 


Currently, nominal tax rates for operating a banking institution is 37.5% for publically traded ones and 40% for the ones which are not traded publically. Nominal requirements for a limited company formed locally includes a number of reporting to be done to NBR, such as: Opening a TIN, Monthly Tax deduction statement, Half Yearly Withholding Tax statement, Yearly statement related to tax return submission of its employees, Yearly statement related to salary disbursed from company to its employees, Quarterly Advance tax deposition, Yearly Tax return submission, attending appeal/hearing session as required on behalf of the company, Monthly VAT return etc. FMA can advise and assist to satisfy all regulatory compliances to enable the company to run smooth and hassle free.  There are a number of separate legal requirements that has to be filed in conjunction with the other govt. organizations (such as BIDA, Bangladesh Bank etc.)


The banking & financial sector in Bangladesh is continuously developing towards a more efficient system of banking & finance which is supportive of greater investment and inclusive economic growth. The banking & financial system includes Bangladesh Bank, scheduled banks, non-banking financial institutions, micro finance institutions, insurance companies, co-operative banks etc.  Over the last two decades Bangladesh has seen spectacular expansion of the banking and finance industry. The banking & finance industry has forwarded a step further by facilitating financial inclusion of the poor people in rural areas of which microfinance is the policy tool to achieve that objective. This has played an important role to introduce and expand the monetisation of the rural economy.


The Banking and the Financial Institutions both play a positive role in the development of the economic structure of Bangladesh. A financial system is a system that creates a secure passage for lenders to borrow money, allows liquidity inflow in the economy, provides a scheme for making payment and provides many other financial services such as insurance and pensions. The financial sector is inclusive of the banking institution as well as the non-banking financial institution (NBFI), micro finance institutions (MFI), insurance companies, co-operative banks, credit rating agencies and stock exchange. The central Bank of Bangladesh, the Bangladesh Bank is the regulatory and supervisory authority of the financial institutions in Bangladesh. The banking system and the non-banking financial institution, all fall under the heading of financial institutions but the main distinction between the two is that all banks are financial institution but all financial institutions are not banks. 

The banks of Bangladesh in order to successfully run its business, must obtain its operating license from Bangladesh Bank after registering itself as a public limited company under the Bank Companies Act 1991 and separately, the NBFI’s operational licenses are obtained from the Bangladesh Bank after registering itself as a public limited company as per the Financial Institutions Act 1993 and Financial Institution Regulations 1994, though both are under strict regulation of the Bangladesh bank.

The incorporation procedure of a bank and a financial institution are somewhat dissimilar from each other. The paid up capital of the new commercial bank shall not be less than TK. 400 Crore as per the regulation of the Banking Company Act 1991 and it must be held in unencumbered form whereas in case of financial institution, the paid-up capital or the paid up capital along with reserved fund amalgamated together must be 1 Billion as per the financial institution Regulation 1994. The requirement of the paid-up capital must be complied by the applicants in order to establish a financial institution in Bangladesh. 

This industry like any other industry shall encounter legal challenges which they are can easily overcome with the assistance of the leading law firm in Bangladesh known as the FM Associates. FMA is equipped to handle matters in relation to the incorporation procedure of a bank, a non-banking financial institution or a Non-governmental organization (NGO) in compliance with the Banking Company Act 1991, Financial institution Regulation 1993, Financial institution Regulation 1994 and Micro Credit Regulatory Authority (MRA) Act 2006. They also assist their clients with legal services relating to reviewing and drafting of security documentation, for example, mortgage, hypothecation, drafting and replying to legal notices and drafting petitions and defences in regards to negotiable instrument cases, fraud cases, recovery of money suit, money laundering cases, anti-corruption and anti-bribery cases etc They also have enormous experience and skills in drafting legal opinion on matter relating to equity investment, Islamic finance, foreign exchange regulations, offshore banking etc.
The coronona virus- Covid 19 pandemic poses an unprecedented economic crisis all over the world. Unfortunately, this has even led the financial sector of Bangladesh to step into economic downfall. Initiatives have been taken by the Bangladesh Bank in order to control the current economic situation and avoid any financial catastrophe that Bangladesh might be facing in the future.