Currently, even a business organisation in Bangladesh like MANY OTHER COUNTRIES, without maintaining a bank account, can not operate its daily activities. Despite the massive development in the recent past in BANGLADESH OF ALTERNATIVE delivery channels such as Internet Banking, BEFTN (Bangladesh Electronic Funds Transfer Network), RTGS (Real Time Gross Settlement) and many other aspects of digital banking, people are still comfortable enough to use checks for personal and business transactions. In the case of large-scale TRANSACTIONS, the use of checks is obviously the best way in our country because of security issues.
The possibility of a check being dishonoured is significantly high due to the high number of transactions through this mode. The receiver of checks must therefore have sufficient and effective legal redress, which they can consider when faced with this situation. Recently, in a case of dishonouring the test, a well-known film actor has been accused and filing these cases is almost regular occurrences with different courts across our country. People deliberately issue checks without making funds available in their bank accounts due to a lack of integrity and ethical practice. It may only seem to be a misdemeanour, it is, in fact, a serious crime.
Cheque Dishonour or Bounce – In Laws of Bangladesh
1. The most vital LAW ENACTED TO PROVIDE LEGAL REMEDY TO SUCH A SITUATION IS THE NEGOTIABLE INSTRUMENTS ACT, 1881 (Act No. XXVI of 1881). Section 6 of this Act established what constitutes a cheque, stating that’ a bill of exchange drawn on a stated banker and not presented as payable other than on order.’ In addition, in the case of laws, a check was also known as an order on a borrower by a lender to pay the whole or part of a debt to another person.
2. If a check is not cleared because of insufficient funds or if the debtor who issued the check to the lender ordered his bank to dishonor the check or for any other reason, then the remedy will be under Section 138 of the above Act.
3. Section 138 of the Negotiable Instrument Act, 1881 makes it clear that, whenever a check is bounced, it is then accepted as correct until it is otherwise proved that an unscriptural guilt is created which involves punishment of a criminal nature which may include 01 (one) year of captivity or fine, which may extend to three times the value of the dishonoured check or both. In addition, the person who is regrettable also has a civil remedy under the same section, and in order to obtain the civil remedy, the person has to take some steps.
4. The first issue to be assessed by the court is whether the check has been presented to the bank for withdrawal within six months of the person being dismissed. If the check has been presented to the bank for withdrawal any time after it has been given to the regrettable person for six months, then the court will not allow the claim. Considering that the check has been submitted within a valid period of time and if it is dishonored, then pursuant to Section 138 of the Negotiable Instrument Act, 1881, the unfortunate person must send a written notice by registered post with acknowledgement due to the person who gave the check claiming the money back.
6. It should be remembered that the crime of dishonor of the search referred to in section 138 of the Act is considered a criminal offence. The legislation was aimed at punishing and not obtaining a due sum. Nevertheless, the section retains the possibility of restitution as the owner of the check can be paid by the court an amount of any fine recovered up to the check value. If someone wants to recover cash that has not been discovered then he or she will file a civil SUIT FOR MONEY recovery. In reality, however, it was found that filing a criminal proceeding under s.138 was the most effective way to recover money.
Hence the conditions for filing a case when Cheque Dishonours or Bounce in Bangladsh :
Step by Step Process for filing a case for Cheque Dishonour or Bounce in Bangladesh
The recipient of the check may file a case against the applicant under the following conditions:
(A) Submitting the check to the bank:
The default check must be submitted to the bank for encashment within 6 months from the date it is drawn. If the check is dishonored, due to such dishonour, the bank shall give a slip.
(B) Legal Notice:
Upon obtaining a check dishonor slip from the bank, the payment application shall be made by notifying the giver of the check within 30 days by registered post. The recipient will give the money back for 30 days.
(C) Implementing Section 138
Unless, within 30 days of receiving the notice, the giver of the check fails to make the payment of the said amount of money, the receiver of the check shall file a case under section 138 of the Negotiable Instruments Act, 1881.
The recipient of the check may file a case against the applicant under the following conditions:
When the owner presents the check for encashment to a bank, he will bring in court the claim for check dishonor that has local jurisdiction over that bank. The offense of check dishonor can be completed with the emphasis on certain specifics:
i) drawing of the check,
ii) presenting the check,
ii) returning the check unpaid by the drawee bank,
iv) giving written notice to the drawer of the check demanding payment of the check sum,
v) failure of the drawer to make payment within 30 days of receipt of the notice.s of receiving the notice, the giver of the check fails to make the payment of the said amount of money, the receiver of the check shall file a case under section 138 of the Negotiable Instruments Act, 1881.
Now, if the above five different acts were carried out in five different locations, one of the courts exercising jurisdiction in one of the five local areas could become the place of trial for the offense of cheque dishonour. The plaintiff may select any of the courts in whose jurisdiction any of the five components of the said offense have been made.
Essential documents you need if you would like to file a case against a dishonoured cheque in Bangladesh
“Tahmidur Rahman|The Legal Source is Considered as one of the leading firms in Banking Law in Bangladesh”
Telegraph Bangladesh
PENALTY FOR CHEQUE DISHONOUR or Bounce in Bangladesh:
The offender who commits the dishonor of the cheque shall be punished with imprisonment for a term of up to one year or with a fine of up to three times the value of the cheque or both.
Skyscrapers in Bangladesh
FAQ
What is a Cheque Dishonour in Bangladesh?
Dishonoured checks are ones that the bank on which they are drawn declines to honor (pay). Non-sufficient funds (NSF), which denotes that there are not enough cleared funds in the account on which the check was drawn, is the most frequent cause for a bank to refuse to honor a check. [1] A bad check, dishonored check, bounced check, cold check, rubber check, returned item, or hot check are all terms that might be used to describe an NSF check. Such checks are often returned with the endorsement "Refer to drawer," instructing the recipient to get in touch with the check's issuer for a justification of why it wasn't cashed.
What are the differences between cheque bounce and Dishonour?
The sole difference between a cheque bounce and a cheque dishonour is that a cheque dishonour happened because of a distinguishing signature, an incorrect date, etc. However, the reason the check bounced was because there weren't enough funds in the drawer's account.
Can I present the dishonoured cheque again for a second time?
Yes, even if the check was previously dishonored, you may still bring it to the bank for payment. It should go without saying that the check can only be presented in the bank once while it is still valid. The typical check's validity term is three months.
What are the reasons for refusing a cheque in Bangladesh by a Bank?
Any major bank may refuse to honor a check if there aren't enough cleared funds in the account to cover it. Additional justifications for not honoring a check include:
The account holder instructs the bank not to pay the cheque, which is known as a stopped cheque; the account holder's funds are frozen;
the account does not actually exist because a false cheque was presented; the cheque's date is outside the time frame allowed by law;
the signature on the cheque does not match the signature on file of the account holder or another authorized signatory on the account;
or the cheque is damaged.There are also further justifications for payment refusal as per Bangladeshi law.
Under Negotiable instrument is Section 138 a bailable offence?
A violation of Section 138 constitutes a non-cognizable offense. Additionally, it is an offense that is subject to bail. Section 138 violation will consist of the following elements: Drawing a check by the drawer to pay off a debt or other obligation
Is it a criminal offence when a cheque gets bounced in Bangladesh?
A violation of Section 138 constitutes a non-cognizable criminal offense. Additionally, it is an offense that is subject to bail. Section 138 violation will consist of the following elements: Drawing a check by the drawer to pay off a debt or other obligations.
Can I file cheque bounce case after 30 days under NI 138?
A complainant and/or the person holding the check in good faith are obligated under Section 138(b) of the Act to notify the accused within 30 days of receiving notification from the bank that the check or other instrument has been dishonored.
What are the process of Tax Submission in Bangladesh ( Personal Income Tax, Corporate Income Tax, Custom Duties etc.) and what are the rules and regulations that relate to specific custom duties, supplementary duties, regulatory duties and their relationships with HS code and brand valuation and how to deal effectively with the issue? This post in details will provide a complete overview of Tax Submission in Bangladesh and will hopefully answer to your quries in regards to Tax Law in Bangladesh.
Taxation in Bangladesh
In Bangladesh, the history of income tax submission dates back to 1860 when British rulers introduced it in this country under the title of the Income Tax Act, 1860. Many changes have occurred since then. Recently, taxation facilities have become one of the Bangladeshi business organization’s important and complex compliance issues. Tax levy and taxes were updated by the promulgation of the Finance Act almost every year. Tax facilities in Bangladesh are usually regulated by the 1984 Income Tax Ordinance.In Bangladesh, legal aid related to VAT, tax and customs is high in demand. Because of its complexity, particularly for businesses, new investors and entrepreneurs understanding the various formalities involving taxation is a big challenge.
With income tax in particular, different statutory requirements for e.g. income advance tax, source tax deduction, tax exemptions, tax rebate, procedures for filing annual tax returns along with their assessments, etc., and their correlation, which can be found difficult without proper knowledge. Here one by one, we will explain the procedures and regulations in regards to Tax Submission in regards to Bangladeshi Law.
Are you actually Suppose to Pay Income Taxes? Are you in the Bracket? Find out whether you are actually eligible for Tax Submission in Bangladesh First!
In accordance with the stipulation set out in the Finance Act, if any person earned more than Tk 220,000 during the 2013-14 income year, he / she must send his / her income return along with the source(s) of income. Nonetheless, the total non-taxable income limit will be Tk 275,000 for women and senior taxpayers aged 65 and above, Tk 350,000 for physically challenged mentally handicapped workers, and Tk 400,000 for war injured freedom fighters serving in the gazette.
The following person must also submit his / her income tax return, however, if he / she did not earn much more than the maximum limit, if he / she:
(i) resides in a municipal corporation or paurashava or divisional headquarters (HQ) or district headquarters and owns a motor vehicle including a jeep / microbus or is a member of a VAT registered club;
(ii) runs a business or profession licensed and operates a bank account;
(iii) has registered as a doctor, dentist, lawyer, income tax practitioner with a recognized professional body;
(v) is a candidate for an office of any paurashava, city corporation, or a Member of Parliament;
(vi) assessed to tax for any of the three years immediately preceding the income year;
(vii) participates in a tender floated by the Government, semi- Government, autonomous body or a local authority. In addition, any registered company/Non-Government Organisation (NGO) shall file a return of its income or the income of any other person for whom the company/NGO is assessable to the authority.
The tax rates during the assessment year 2014-15 for individual taxpayer other than female, taxpayers of 65 years and above, differently able person, retarded employee and gazetted war-wounded freedom fighter are as follows:
The income tax return is something that people are required to submit each year by November 30. And by that time, you will have to update your employment, property, and income tax data through a form. The main reason is that the data submitted for a fiscal year may vary from the information submitted a year earlier.
A taxpayer has to notify the state on its current status after using a TIN. Punitive measures are also in place to avoid taxes.
Every income tax payer is entitled to receive income tax return form free of charge from tax offices or NBR i.e. National Board of Revenue website. In addition, NBR has launched online tax calculator on www.nbrtaxcalculatorbd.org to promote the assessment of their taxes by assessees. Additionally, for small businessmen, doctors and lawyers, NBR offers spot assessment. Anyone who invests Tk 1000,000 as initial capital shall pay Tk 4000 and pay Tk 2000-4000 as income tax to those doctors and lawyers who have practiced their profession for 5-10 years.
For Tax Submission in Bangladesh, each assessee shall deposit the amount to the govt after assessing the amount of income tax. Exchequer by pay order, challan treasury or online via www.nbrepayment.gov.bd and submit duly signed and verified return form along with the necessary documents to the tax circle concerned.
Many individual classes enjoy tax holidays. For example, if you own savings certificates, invest in the stock market and have life insurance, a certain amount of your income tax will be waived.
For this purpose, income tax lawyers suggest savings tools as they are most risk-free and can be found at the National Savings Bureau, post offices, and banks.
Punishment for infringement of the tax rules in Bangladesh
In addition, an assessee shall be guilty of an offense punishable by imprisonment for a term that may extend to one year or a fine or both if he / she refuses to provide the return of income in due time without reasonable cause. In addition, the DC of Taxes will impose fine Tk 10 percent of the last estimated amount, but not less than Tk 1000, and will also impose fine Tk 50 late on each day.
Therefore, a person will be guilty of an offense punishable by imprisonment that may stretch to five years but may not be less than three months or fine or both if he disguises the information or intentionally gives false details of his earnings in regards to tax submission in Bangladesh .
The established income tax collection schemes are soft, complicated, time-consuming and are not yet taxpayers ‘ trouble-free. In this regard, the entire system of tax management should be effectively structured to prevent tax evasion.
Where to complain in regards to Tax Submission in Bangladesh
If you have a service allegation or other tax-related issues, you can file a written appeal to the tax commissioner detailing the problems.
The prosecutor must hold a hearing on it after receiving the petition, leading to its settlement.
If not, with his or her issues, the taxpayer should petition a jury. The person still has the option to move to the High Court as a last resort remedy in the event of a further failure to substantiate the complaint.
And last but not least, a taxpayer will know that whatever service they get is not safe. In fact, a taxpayer gets the services by paying money.
Value Added Tax (VAT) in Bangladesh | Tax Submission in Bangladesh
All goods except those listed in the VAT Act’s First Schedule and all services except those specified in the Second Schedule are taxable goods and services. Originally, a comprehensive list comprising the list of services subject to VAT was the Second Schedule of the VAT Act. The First and Second Schedules now list respectively statutory exemptions to goods and services. The third schedule lists the goods and services subject to additional duties (SD) and their relevant statutory rates.
Most of the countries that implement VAT worldwide operate a single standard VAT rate. Appendix 1 indicates certain countries ‘ VAT rates with the year in which they launched VAT. In regards to Tax Submission in Bangladesh, country’s VAT legislation provides a standard rate of 15 percent for home consumption goods and services in line with best international practice and a zero rate for exports. Under the rule, all taxable goods and services manufactured and sold for sale in the country are subject to VAT at 15%. For all goods and services to be exported and deemed to be exported from the country, a rate of 0 percent applies. In practice, however, there are some other rates that emerged from different methods
Registration of VAT in Bangladesh
All importers, zero-threshold exporters and suppliers (manufacturers, dealers, wholesalers, retailers) of all taxable goods and services with an annual turnover limit of BDT 60 millions (BDT 6 million, equivalent to US$ 80,400) and above are required to be registered under VAT. The VAT law requires a divisional VAT office to issue a certificate of registration within 2 (two) working days of receiving a request.
Businesses below the threshold can opt for voluntary registration of VAT in Bangladesh, in line with international practice. The amount of VAT collected shows that the majority of VAT registered persons are optionally or voluntarily registered.
One of the reasons is that while the threshold has undergone upward revision quite a few times over the past 20 years, those with their existing threshold within voluntary VAT registration could not escape the net once the threshold was increased due to administrative convenience as well as external pressure.
The study of different VAT regimes, particularly those of developing countries, suggests that in a simpler procedure, despite the distortionary effects of the different treatment between undertakings above and below the threshold, many countries tax undertakings differently and at a much lower rate.
This is done primarily because of the administrative and compliance costs, equity and competitive advantages and disadvantages of the economically involved parties. In Bangladesh, this is no exception. Section 8 of the Act provides that undertakings whose annual turnover is below the VAT threshold and for which VAT registration has not been made compulsory are entitled to pay turnover tax @ 3% of declared and approved annual turnover without the possibility of claiming input tax credit. Nevertheless, most of the taxable products listed and a number of items are not eligible for turnover tax as they are required to register VAT.
The number of businesses registered under VAT system is 480,467, which is glaringly poor as compared to the number of total businesses in the country. According to the economic census of 2001 and 2003 the total number of businesses in different sectors was 3,674, 971 of which 1,127, 613 were registered with the trade licensing authorities
Vat Filling in Bangladesh | Vat Submission in Bangladesh
Compliance with taxes is ensured by submitting periodic returns. In Bangladesh VAT, a registered person is required to submit a return in a tax period in accordance with section 35 of the VAT Act. Submitted in a prescribed form –(Mushak 19) in duplicate to the local VAT office within 15 days of the following month, VAT returns are normally submitted on a monthly basis, although there are provisions for quarterly and semi-annual returns for certain companies. Compliance with taxes is ensured by submitting periodic returns. In Bangladesh VAT, a registered person is required to submit a return in a tax period in accordance with section 35 of the VAT Act. Submitted in a prescribed form –(Mushak 19) in duplicate to the local VAT office within 15 days of the following month, VAT returns are normally submitted on a monthly basis, although there are provisions for quarterly and semi-annual returns for certain companies. The Bangladesh VAT filing scenario shows a huge difference between what’s being taught in the book and what’s being done.
Although Return should be the core of all VAT activities in an ideal VAT system, namely tax liability, input tax credit, drawback, and revenue statistics, VAT returns were not given the importance they deserve in Bangladesh. Return filing rate is very low. According to the latest statistics, out of 480,467 registered VAT-payers, the number of returning units in 2009-2010 was only 77,619, i.e. 16.15% (NBR, 2011).
One of the reasons for weak return filing is that VAT is obtained at sources in the case of firms with more than 70% (estimated) registered individuals, such as construction firm, procurement provider. The lack of a culture of voluntary tax compliance is another reason for the unsatisfactory rate of return submission. Due to the lack of successful compliance, the situation is further compounded.
Until now, there has been no significant VAT system automation in Bangladesh. Although most VAT commissioners have data processing units with the VAT Information Management System (VIMS) computer program in place, returns are not processed systematically.
“TR Barristers in Bangladesh is Considered as one of the leading firms in Tax Law in Dhaka, Bangladesh”
Bangladesh is implementing the Harmonized Commodity Coding System. Import ProceduresDocuments required for importation include a letter of credit authorization form, a lading or airway bill, commercial invoice or packing list, and origin certificate. For certain imported items or services, the relevant government agencies require additional certifications or import permits related to health, safety or other matters. For the public sector, reduced documentation requirements are applicable.
Foreign companies must obtain permission from the Chief Import and Export Controller and submit the following documents: photocopies of an import registration certificate; photocopies of invoices, lading bills and import permits duly certified by the bank; a copy of the General Index Register (GIR) certificate; a certified copy of the last tax order; name and description of each impairment.
A new customs law is likely to soon be put in parliament under which the government will have to digitalize the associated environment, said National Revenue Board (NBR) officials.
The new draft law also implements various measures in line with global trends to promote the clearance of goods planned for export and import from ports to encourage international trade, they said.
“In view of international best practices, we have drafted the new law. The latest one is more up-to-date and more pragmatic, “a senior official of the NBR said, trying to remain unnamed as he was not allowed to speak to the media.
The new law includes various measures to promote faster trade, followed by advanced economies.
One of the clauses is the Advance Cargo Declaration, which provides companies with the ability to request customs-related import documentation prior to the arrival of goods in ports.
Under a mechanism called Post Clearance Audit, the new law will also open up the scope for compliant businesses to quickly clear goods.
According to the draft, compliant and honest traders will receive a green channel for importing and exporting goods as authorized economic operators.
Want new articles before they get published?
Subscribe to our Awesome Newsletter.
Case Brief Preparation for Supreme Court Bangladesh: A Comprehensive Guide Preparing an effective Case Brief for the Supreme Court of Bangladesh is a fundamental skill for young lawyers and legal practitioners. Known locally as ব্রিফ বা কেস স্টাডি প্রস্তুতি, this…
Court Craft and Etiquette for Bangladesh Lawyers: Mastering কোর্ট ক্রাফট ও শিষ্টাচার in the Supreme Court For any legal professional aspiring to excel in the judiciary of Bangladesh, understanding Court Craft and Etiquette for Bangladesh Lawyers—or কোর্ট ক্রাফট ও…
Photocopy Permission for Affidavit in High Court Bangladesh: A Comprehensive Guide In the judicial system of Bangladesh, understanding the nuances of Photocopy Permission for Affidavit in High Court Bangladesh is essential for lawyers, litigants, and law students…
Pass Over and Not Today in Bangladesh Courts: Usage and Rules Explained In the procedural landscape of Bangladesh’s judiciary, understanding specific court terms such as Pass Over (পাস ওভার) and Not Today is essential for both young lawyers and clients navigating the…
Mentioning a Matter in High Court Division Bangladesh: Understanding Mention (মেনশন) and Its Essentials In the practice of law in Bangladesh, mentioning a matter in High Court Division Bangladesh is a fundamental procedural tool that enables advocates to bring urgent…
Maiden Appearance in Bangladesh Supreme Court: Understanding Its Significance and Procedure In the legal landscape of Bangladesh, the concept of Maiden Appearance (মেইডেন অ্যাপিয়ারেন্স) holds a pivotal place, especially within the highest echelons of the judiciary…
Understanding Review Petition Supreme Court Bangladesh: A Comprehensive Guide The review petition Supreme Court Bangladesh plays a crucial role in the legal framework, offering parties an opportunity to seek reconsideration of judgments or orders passed by the Supreme…
Understanding the Chamber Court Appellate Division Bangladesh: A Comprehensive Guide The chamber court Appellate Division Bangladesh occupies a pivotal position in the country’s judicial hierarchy, serving as a specialized forum within the Appellate Division of the…
Understanding the Role of the Chamber Judge Bangladesh Supreme Court The term chamber judge Bangladesh Supreme Court refers to a unique judicial function within the highest judiciary of Bangladesh, where designated judges hear urgent or interlocutory matters in their…
Understanding the Criminal Petition for Leave to Appeal Bangladesh The criminal petition for leave to appeal Bangladesh is a critical legal remedy available to aggrieved parties seeking to challenge decisions of lower courts in criminal matters before the higher…
Comprehensive guide to cyber law violations in Bangladesh in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to Bangladesh digital signature law in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to legal advice for tech companies Bangladesh in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to Bangladesh information technology act in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to technology dispute resolution in Bangladesh in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Below is an overview of the process of obtaining a trade license for companies operating within the zone of Dhaka City Corporation. Many local authorities have similar rules.
Step 1: Collect prescribed Application Form from the City Corporation/ Municipal Corporation/ Union Parishad’s Office. Step 2: Submit completed Application Form with supporting documents to the concerned section. Step 3: Inspection by the Licensing Supervisor. Step 4: Required fees to deposit at the concerned office. Step 5: Obtain Trade License form the City Corporation/ Municipal Corporation/ Union Parishad office.
The trade license filled-in application form must be accompanied by the required documents.
Required Documents:
Application Form
National ID Card of the Entrepreneur
Holding Tax Payment receipt
Recent Passport Size Picture of the Entrepreneur
Declaration of non –Judicial stamp to abide by the rules & regulation of City Corporation & Municipal Corporation
A certified copy of the memorandum and articles of association
STEP 1: OBTAIN THE PROPER FORM OF THE PROPER OFFICE.
Depending on the type of business, Dhaka City Corporation (DCC) has two forms for a trade license. The “K” form must be used by a commercial firm. Although the ten zonal offices use the same K form, the form must be obtained by a client from their respective zonal office. What distinguishes it from that of other zones is a seal and the officer’s initials selling the form. The form will cost Tk. 10 (Yes, it’s that low to encourage potential business ventures).
STEP 2: GET CERTIFICATION OF THE LOCAL WARD COMMISSIONER.
On completion of the application, it must be sent for approval to the local ward commissioner.
STEP 3: BOOK BY TK 50, COLLECT LICENSE, AND SUBMIT APPLICATION WITH SUPPORTING DOCUMENTATION TO DCCS ZONAL OFFICE.
For the K Form, the receipt of the lease for the premises from which the company operates or, if purchased, the receipt of the municipal tax payment shall be made. Supporting documents include: 3 copies of owner’s PP size photo Rent receipt or proof of ownership of premises
Step 4: Await Licensing Supervisor (LS) inquiry.
The LS usually goes to the business entity for a visit when submitting the form to verify the information provided.
STEP 5: PAY FEE AND COLLECT TRADE LICENSE PREDETERMINED.
Another choice for commercial licensing is the signboard charge. The company’s charge is compulsory for all types of business. A trader has 30% of his license fee to pay.
TRADE LICENSE FOR A MANUFACTURING COMPANY
STEP 1:PROCURE THE PROPER FORM FROM THE OFFICE OF THE PROPER OFFICE.
From the zonal office of the DCC where the manufacturing company must submit its request.
STEP 2:GET CERTIFICATION OF THE LOCAL WARD COMMISSIONER.
Local ward commissioner must validate the completed form.
STEP 3:SUBMIT APPLICATION WITH SUPPORTING DOCUMENTATION.
Supporting documents include: 1. 3 copies of the owner’s PP size photo
2.Rent or premises ownership proof
3. No neighbourhood objection certificate
4. Written undertaking on a Tk 150 non-judicial stamped paper
5. Fire license from the local fire department.
STEP 4: Sign OF THE SUPERVISOR LICENSING (LS).
The LS usually goes to the business entity for a visit when submitting the form to verify the information provided.
STEP 5: PAY PREDETERMINED FEE AND COLLECT TRADE LICENSE.
Once the LS has completed its inspection, the company is asked to go to the DCC office to pay the predetermined fee and collect its trade license. The fee schedule depends on the class under which the application was made.
STEP 6: SIGNBOARD FEE
A signboard fee must also be paid when collecting the trade license. The signboard fees must charge 30 per cent of the license fee for all types of business.
Trade License Renewal Process in Bangladesh style=”font-size: 16px; text-align: left;”>
The renewal process for your business licenses You must collect a form. There will be options in the form from 1 to 18. From 1 to 6, you must write the name of the institution, the name of the applicant, the name of the applicant’s parents.
If there are two people to start trading, the name of two people should be included. In addition, the two applicants ‘ pictures should be included. But you have to pick one from the business while dealing with different people. Accessing this person can accomplish the application.
The address of the company should be noted in the 7 number blank box. You must write the number of national identity cards in the 8 number blank boxes. You need to write down seriously in the 10 number empty boxes. You’ve got to write your mobile number there. You have to fill in the entire form in this way until the end. You must submit this to the authority by completing the form. You will then have the approval for renewal to continue your business legally. It’s not difficult to renew trading licenses. Only, according to the procedure, you have to go. You can do all the work perfectly within one day.
You may contact us to know how to renew your business license in detail.
STEP 1: PICK-UP DEMAND BILL FROM THE LICENSE BOOK (THIS BOOK IS VALID FOR FIVE YEARS)
When the expiring trade license is checked, the LS fills the details in the demand bill and gives the business booklet. The demand bill is like a bank deposit slip, a four-page booklet. All the pages contain the same information: one page is for the bank and one page is for the business.
STEP 2: PAY RELEVANT FEE AT DESIGNATED BANK
Deposit by application bill designated bank and automatically renew the license.
“Depending on the type of business, Dhaka City Corporation (DCC) has two forms for a trade license. The “K” form must be used by a commercial firm.”
For any kind of business enterprise in Bangladesh, a trade license is compulsory. It is issued by the respective areas of the local government. Each business enterprise must acquire a Trade License from each local authority under which it operates. If a business enterprise has more than one business site, each local authority must acquire a trading license. It is released for a period of one year and has to be periodically renewed. Some government fees are attracted by the Trade License, which typically depends on the business forms.
The process of obtaining trade licenses for companies operating within the area of Dhaka City Corporation is listed below. Some municipal councils have laws that are identical. For more details, you are advised to contact the appropriate local government.
How to get a trade license as a commercial firm in Bangladesh?
STEP 1: Obtain the Correct form.
Depending on the type of company, Dhaka City Corporation (DCC) has two types of commercial license. The “K” type needs to be used by a commercial company. Although the ten zonal offices use the same K form, the form must be obtained by a company from its respective zonal office. What sets it apart from that of other zones is a seal and the initials of the officer selling the type. The form will cost Tk. 10.
STEP 2: GET THE LOCAL WARD COMMISSIONER’S CREDENTIALS.
It has to be sent for validation to the local ward commissioner after the form is completed.
STEP 3: Obtain a license book from TK. 50 and Send APPLICATION TO DCCS ZONAL OFFICE WITH SUPPORTING Documents.
For the K Form, it is appropriate to include a rent receipt for the premises on which the company is operating or if owned, a municipal tax payment receipt. Documents to support this include:
3 copies of the owner’s picture in PP format Leasing receipt or proof of possession of premises
Stage 4: Wait for the enquiry of the Licensing Supervisor (LS) .
The LS usually goes to the business organization for a visit upon submission of the form to check the details given.
Stage 5: PAY PREDETERMINED FEE AND CLOSE TRADE LICENSE. The company is requested to go to the DCC office to pay the predetermined fee and receive their trade license after inspection by the LS is concluded. The schedule of payments depends on the business category in which the request was filed.
Phase 6: FEE OF SIGNBOARDS
A signboard fee often has to be charged when collecting the trade license. For all forms of companies, 30 percent of the license fee would be paid for signboard fees.
How to get a trade license for a manufacturing firm in Bangladesh?
STEPS PROCESS:
Step 1:PROCURE THE PROPER FORM
For Tk, the “I” shape will have to be purchased. 10 from the DCC zone office where the manufacturing business has to send its order.
STEP 2:GET CERTIFICATION OF THE LOCAL WARD COMMISSIONER.
The completed form must be checked and certified by the local ward commissioner.
STEP 3:SUBMIT APPLICATION WITH DOCUMENTATION SUPPORTING.
Supporting documents shall include:
3 copies of the owner’s picture of PP scale Leasing receipt or proof of possession of premises No neighborhood certificate of objection A written undertaking for a Tk 150 non-judicial stamped paper Fire License of the local fire department Environmental Certificate of the DOE
Stage 4: AWAIT ENQUIRY ON THE LICENSING SUPERVISOR (LS). Upon submission of the form, the LS typically goes to the business entity for a visit to check the details given.
STEP 5: PAY PREDETERMINED FEE AND COLLECT TRADE LICENSE.
When collecting the trade license, a signboard fee has to be paid as well. For all types of business the signboard fees will payable 30% of the License fee.
What is drug license in Bangladesh?
You need to get a drug license if you want to deal with medicine. This drug license is issued by the Department of Medicine Administration under the Ministry of Health and Family Planning. License fee is 3000 BDT inside the municipal area and outside the municipal area is BDT 1500.
How to apply for drug licence in bangladesh?
You need the following documetns for getting a drug license in Bangladesh:
Bank statement.
Treasury Chalan of the License fee submission.
The receipt of the rent of the shop or photocopy of the rental agreement. …
An Angikarpotro by another licensed pharmacist.
How to get GMP certificate License for drug?
Good manufacturing Practice (GMP) Certificate:
An Application in Company Letter Head
Manufacturing license of medicine
Your company profile
What are the documents required for a trade license in Bangladesh?
An applicant needs the following documents:
Copy of National ID card (NID) of the entrepreneur
Three (3) Passport size Photograph
Copy of Passport (in case of Foreigner)
Necessary Information to fill up the Form
Holding Tax payment receipt
Recent receipt (papers) or ownership proof
3 copies Passport size photos of the business holder (attested)
A non-judicial stamp of Tk. 150/- for abiding rules of city Corporation
Agreement of partnership (If he / she has a partner)
TIN Certificate of Individual and entity
Certificate of Incorporation (For Limited Company)
Statement of Bank Solvency (Full Clearance)
Work Permit from Bangladesh Investment Development Authority (BIDA)
License from Fire service & Civil Defence (Applicable for Industry)
[Note: Each and every copy should be attested by first class gazette officer/ Word Councilor]
How to renew a trade license in Bangladesh?
The renewal process is comparatively routine and no inspection is required. When the trade license comes up for renewal the business has to go the LS.
PROCESS STEPS:
STEP 1: PICK-UP DEMAND BILL FROM THE LICENSE BOOK (THIS BOOK IS VALID FOR FIVE YEARS)
The LS fills in the details in a demand bill upon reviewing the expiring trade license and gives the company the booklet. A four page booklet similar to a bank deposit slip is the demand bill. All the pages are filled with the same information: one page is for the bank and one is for the company.
STEP 2: PAY RELEVANT FEE AT DESIGNATED BANK
Deposit designated bank through demand bill and it will automatically renew the license.
What is the 2023 trade license fee list in bangladesh?
Business Type
Sub Type
Trade License Fees in Taka
City Corporation
Bank, Insurance & Fincial Insttution
Scheduled Bank
10000
Dhaka South City Corporation
Bank, Insurance & Fincial Insttution
Scheduled Bank
10000
Dhaka South City Corporation
Bank, Insurance & Fincial Insttution
Insurance(Branch Office)
5000
Comilla City Corporation
Bank, Insurance & Fincial Insttution
Insurance(Branch Office)
5000
Comilla City Corporation
Bank, Insurance & Fincial Insttution
Lending Institution(Branch Office)
5000
Dhaka South City Corporation
Bank, Insurance & Fincial Insttution
Lending Institution(Branch Office)
5000
Comilla City Corporation
Bank, Insurance & Fincial Insttution
Currency Excenge
5000
Dhaka South City Corporation
Bank, Insurance & Fincial Insttution
Currency Excenge
5000
Comilla City Corporation
Bank, Insurance & Fincial Insttution
Stock Buy-Sale Organization(Branch Office)
3000
Dhaka South City Corporation
Bank, Insurance & Fincial Insttution
Stock Buy-Sale Organization(Branch Office)
3000
Comilla City Corporation
Bank, Insurance & Fincial Insttution
N.G.O(Branch Office)
5000
Dhaka South City Corporation
Bank, Insurance & Fincial Insttution
N.G.O(Branch Office)
5000
Dhaka South City Corporation
Business Nature
Capital From Taka
Capital To Taka
trade License Fees
Sub-Category
Limited Company
0
100000
1500
Dhaka South City Corporation
Limited Company
0
100000
1500
Comilla City Corporation
Limited Company
100001
500000
2000
Comilla City Corporation
Limited Company
100001
500000
2000
Dhaka South City Corporation
Limited Company
500001
1000000
3500
Comilla City Corporation
Limited Company
500001
1000000
3500
Dhaka South City Corporation
Limited Company
1000001
2500000
4500
Comilla City Corporation
Limited Company
1000001
2500000
4500
Dhaka South City Corporation
Limited Company
2500001
5000000
5500
Dhaka South City Corporation
Limited Company
2500001
5000000
5500
Comilla City Corporation
Limited Company
5000001
10000000
7500
Dhaka South City Corporation
Limited Company
5000001
10000000
7500
Comilla City Corporation
Limited Company
10000001
50000000
10000
Comilla City Corporation
Limited Company
10000001
50000000
10000
Dhaka South City Corporation
Limited Company
50000001
999999999999
12000
Dhaka South City Corporation
Limited Company
50000001
999999999999
12000
Comilla City Corporation
How to register a partnership business in Bangladesh?
The registration process for the partnership consists of two steps: a) reservation of the name; and b) entity registration. A partnership registration may be done within one or two days under normal circumstances.
Step 1- Selecting the name of the Relationship The partners are free to choose any term, subject to the following rules, as they want for their partnership firm:
To contribute to misunderstanding, the names must not be too identical or close to the name of another existing company doing similar business. The explanation for this rule is that a company’s image or goodwill can be injured if an allied brand can be adopted by a new company. The name does not include any terms expressing or suggesting the government’s sanction, approval or sponsorship. You can apply for name clearance using the RJSC website once you have selected a name.
STEP 2 – PREPARE A PARTNERSHIP DEED You should prepare a partnership deed. Usually, a partnership deed contains the following clauses: Name and Address of the firm as well as all the partners; Nature of business to be carried on; Date of Commencement of business; Duration of Partnership (whether for a fixed period/indefinite time); Capital contribution by each partner; Profit sharing ratio among the partners; Rules to be followed in case of retirement, death and admission of a partner; and The above are the minimum essentials which are required in all partnership deeds. The partners may also mention any additional clauses. The Partnership Deed should be on a stamp paper in accordance with the Stamp Act and should be signed by all partners. Then it should be notarized. STEP 3- REGISTER PARTNERSHIP DEED WITH RJSC The partnership deed and filled up Form I should be filed with RJSC. These documents will be reviewed by the officials of the RJSC. When the officials are satisfied with the points stated in the partnership deed, he shall record an entry of the statement in a register called the Register of Firms and issue a Certificate of Registration. PRIMARY SIDEBAR CATEGORIES Categories Select Category Trademark registration in Bangladesh Copyright registration in Bangladesh Patent in Bangladesh .bd domain registration Work permit in Bangladesh BEPZA work permit How to open a Buying House in Bangladesh Transfer of property in Bangladesh How to check the ownership of a property in Bangladesh
How to get a factory registration certificate in Bangladesh?
The Factory Authority shall apply to the District Offices of the Factories and Establishments Inspection Department for its building, establishment or extension, licensing or renewal.
Documents Required
Orginial copy of license fee or renewal fee or Treasury Challan
Reciept of Licence and Renewal Fee payment according to the number of workers.
Case Brief Preparation for Supreme Court Bangladesh: A Comprehensive Guide Preparing an effective Case Brief for the Supreme Court of Bangladesh is a fundamental skill for young lawyers and legal practitioners. Known locally as ব্রিফ বা কেস স্টাডি প্রস্তুতি, this…
Court Craft and Etiquette for Bangladesh Lawyers: Mastering কোর্ট ক্রাফট ও শিষ্টাচার in the Supreme Court For any legal professional aspiring to excel in the judiciary of Bangladesh, understanding Court Craft and Etiquette for Bangladesh Lawyers—or কোর্ট ক্রাফট ও…
Photocopy Permission for Affidavit in High Court Bangladesh: A Comprehensive Guide In the judicial system of Bangladesh, understanding the nuances of Photocopy Permission for Affidavit in High Court Bangladesh is essential for lawyers, litigants, and law students…
Pass Over and Not Today in Bangladesh Courts: Usage and Rules Explained In the procedural landscape of Bangladesh’s judiciary, understanding specific court terms such as Pass Over (পাস ওভার) and Not Today is essential for both young lawyers and clients navigating the…
Mentioning a Matter in High Court Division Bangladesh: Understanding Mention (মেনশন) and Its Essentials In the practice of law in Bangladesh, mentioning a matter in High Court Division Bangladesh is a fundamental procedural tool that enables advocates to bring urgent…
Maiden Appearance in Bangladesh Supreme Court: Understanding Its Significance and Procedure In the legal landscape of Bangladesh, the concept of Maiden Appearance (মেইডেন অ্যাপিয়ারেন্স) holds a pivotal place, especially within the highest echelons of the judiciary…
Understanding Review Petition Supreme Court Bangladesh: A Comprehensive Guide The review petition Supreme Court Bangladesh plays a crucial role in the legal framework, offering parties an opportunity to seek reconsideration of judgments or orders passed by the Supreme…
Understanding the Chamber Court Appellate Division Bangladesh: A Comprehensive Guide The chamber court Appellate Division Bangladesh occupies a pivotal position in the country’s judicial hierarchy, serving as a specialized forum within the Appellate Division of the…
Understanding the Role of the Chamber Judge Bangladesh Supreme Court The term chamber judge Bangladesh Supreme Court refers to a unique judicial function within the highest judiciary of Bangladesh, where designated judges hear urgent or interlocutory matters in their…
Understanding the Criminal Petition for Leave to Appeal Bangladesh The criminal petition for leave to appeal Bangladesh is a critical legal remedy available to aggrieved parties seeking to challenge decisions of lower courts in criminal matters before the higher…
Comprehensive guide to cyber law violations in Bangladesh in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to Bangladesh digital signature law in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to legal advice for tech companies Bangladesh in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to Bangladesh information technology act in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to technology dispute resolution in Bangladesh in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
This post in will explain in details the Land LAW IN BANGLADESH – Rules & Regulations, Everything about property law that you need to know and be aware of.
Types of Land in Bangladesh
At first let’s summarise the main forms of land properties or title to lands in Bangladesh. It is important to understand that the types of land classified below may co-exist so that there are several layers of tenure in relation to one parcel of land. For example, a person who has common law freehold may enter into a 3-year lease with a tenant, who may in turn lease a room to a sub- tenant.
The right to use a government land plot for a term of 99-years at no expense varying from one to three acres. The Ministry of Lands grants landless persons (i.e. persons without freehold of common law) rights to use khas. Often this type of tenure is called a’ permanent lease.’
C. Leasehold
The right to use land or housing owned by another, also referred to as a money lease, for a fixed period in exchange for payment of rent. It is important to sign leases of more than one year. There is no need to provide one year or fewer leases in writing.
D. Sharecropping Agreement
Each shareholder and landowner receives one-third of the crop, and the remaining third is allocated on the basis of their contribution to crop costs. Sharecropper contracts must be legacy for at least five years.
E. Customary Ownership
Official government bodies and normal institutions share jurisdiction over property law in the Chittagong Hill Tracts. Nevertheless, customary law is applied in practice and institutions of government seldom interfere.
F. Co-operative Ownership
Cooperative ownership is a condominium-like ownership of an apartment. The purchaser holds stock shares in the building company and a rent or transfer of the apartment being sold by the seller’s contract in a collective ownership.
G. Tied Tenancy
Where a person occupies residential accommodation as an employee of a government agency or private organization, or as an agricultural land labourer.
H. Informal Tenure
There are many forms of unofficial tenure, which means tenure that does not meet the requirements for registration. It includes the following details. • Leasing without a registered lease— a person who has a verbal AGREEMENT to occupy land or housing for a rent payment of more than one year or from year to year. • Unregistered land ownership— a person owns land under circumstances but the land is not properly registered. For example, the land transfer was not registered to the current owner, or the current owner owns part of a subdivided block and the subdivision was not registered.
What are the main government and non-government bodies (eg, representative bodies) which administer the land law of Bangladesh rules and regulations or deal with housing, land and property?
The Lands Ministry, which has the following divisions, is the largest government agency responsible for land management, which governs the Land LAW IN BANGLADESH – Rules & Regulations, and Everything regarding property law.
• The Land Record & Survey Directorate is responsible for conducting land surveys and creating individual land registration certificates (khatian) and maps (mouza) for each parcel of land.
• The Land Reform Board is responsible for administering government land (i.e. khas), establishing and collecting land development tax, ENFORCING LAND REFORM LAWS and preparing modified property registration certificates.
• The Land Appeal Board is responsible for the determination of appeals against decisions of government officials on land issues, namely land taxes and land ownership and boundaries as reported in land registration certificates (khatians) and maps (mouza).10 In addition to the above, the Land Registration Department is responsible for the registration of land ownership changes arising from land recording. The LAND REGISTRATION OFFICE IS HOUSED WITHIN THE LAW, Justice and Parliamentary Affairs Ministry. This operates at district level by District Registrars and by Sub Registrars at Upazilla, i.e in Sub-District Level.
“TR Barristers in Bangladesh is Considered as one of the leading firms in Property Law in Dhaka, Bangladesh”
According to Bangladeshi law, the following forms of TRANSACTIONS are required to be registered: leases for more than one year or from year to year; freehold transactions relating to common law, such as transfers or subdivisions; and the granting of 99-year government land leases (khas).
In fact, informal conveyancing is extremely common as there are major issues with the system of land REGISTRATION IN BANGLADESH.We use the word ‘ informal conveyancing’ to refer to transactions that do not comply with the criteria for registration. The World Bank ranks Bangladesh 186th out of 190 countries for the speed, reliability and performance of its land registration processes.17 The shortcomings in the land registration PROCESS IN BANGLADESH are as follows:
For example, registering a transfer of freehold land in Dhaka will take about 245 days, require a payment of 10 percent of the purchase price and involve eight different procedures.These procedures are generally too difficult for lay people to follow without legal assistance, and too expensive for urban poor people. The cost of land registration is exacerbated by required speed moneys in government offices.
Inaccuracy in certificates:
The reliability of land registration certificates (khatian) and maps (mouza) is undermined by the fact that there are several government agencies involved in the process of land registration and poor coordination between them. At three different offices, ownership rights are registered:
o The Directorate of Land Record & Survey (DLRS) is responsible for conducting surveys of land, including preparing individual land record certificates (khatian) and maps (mouza); o The Department of Land Registration (DLR) is responsible for registering land transfers and reporting these to the Land Reform Board; and o The Land Reform Board (LRB) is responsible for manually preparing updated land record certificates.
How ‘TR Barristers in Bangladesh Associates’ helps the purchaser of any land in Bangladesh:
In Bangladesh, the transfer of property is GOVERNED by the Transfer of Property Act 1882, which essentially shapes the Land Law in Bangladesh & Rules and regulatations. In this act, “transfer of property” means an act by which a living person transmits property to one or more other living persons, or to himself, or to himself, or to one or more other living persons, in the present or future; and “transfer of property” means such an act. “Living PERSON” INCLUDES AN INDIVIDUAL CORPORATION or association or body.
There are four modes of property transfer given below: sale; lease; exchange; and inheritance and mortgage transfer of gift property.
SALE:
Sale is an ownership transfer in exchange for a price paid or promised or part paid or promised. Unless the price is determined, a sale is not complete.
Contract for Sale: If the seller and buyer agree to sell or buy the property at a later stage, the seller and buyer must enter into a contract for sale. A agreement establishes a contractual responsibility between the buyer and the seller, and a contract for sale does not change ownership of the property. A sales contract in the sub-registry should be registered.
LEASE:
The lease of immovable property is a transfer of the right to enjoy such property, made expressly or implied or in perpetuity for a certain period of time, in consideration of a price paid or promised, or in consideration of money, a share of crops, services or any other value.
EXCHANGE:
The trade is called an exchange if two people swap each other’s ownership of one item for the possession of another, one thing or both things being cash only.
“The lease of immovable property is a transfer of the right to enjoy such property, made expressly or implied or in perpetuity for a certain period of time, in consideration of a price paid or promised, or in consideration of money, a share of crops, services or any other value.”
Under the present LAWS OF BANGLADESH, the deed by which the property will be transferred is required to be registered with the relevant Sub Registry Office. Non registered document has no legal value and the any party will not be able to enforce his/her right if the deed is not registered.
RECORD OF RIGHTS
If the name of the transferor is not found in the latest Khatian or his/her name is not mutated, the Sub Registrar will refuse to register the transfer deed. Therefore it is mandatory to mutate the name of the transferor in the latest Khatian.
If you wish to know about the rquired steps to go through before buying any property in Bangladesh, go through the Article Below. This post deals with the questions like Why it’s important to verify the ownership of any property in Bangladesh? How to find the Ownership of a Land?
How to find the Ownership of a Land | Check the Legitimacy of Property you buy in BD
Here we have described in details (nine steps), the procedure of verifying the property of any ownership of any properties in Bangladesh.
By choosing TRW Law Firm, clients can be confident that their land documents are in capable hands, backed by legal professionals who are dedicated to achieving the best possible outcomes.
GLOBAL OFFICES: DHAKA: House 410, ROAD 29, Mohakhali DOHS DUBAI: Rolex Building, L-12 Sheikh Zayed Road LONDON: 1156, St Giles Avenue, 330 High Holborn, London, WC1V 7QH
Regulations of Microcredit & Financial Institutions in Bangladesh
Tahmidur Rahman, Senior Associate
5 Aug 2019
What are the rules and Regulations of Microcredit & Financial Institutions in Bangladesh regarding incorporating and then managing a microcredit and microfinance institutions in Bangladesh? What are the regulatory compliances to maintain for an already established one? We explain everything in details in this post.
The concept of Microcredit and Microfinance
Before diving on to the rules and Regulations of Microcredit & Financial Institutions in Bangladesh, let’s recap the concept of microcredit and microfinance. Although the practice of lending small amounts of money for investment and consumption purposes has been popular in Bangladesh, modern structured, systemic, group-based and institutionalized micro-credit operations are Bangladeshi developments, pioneered by the Grameen Bank and replicated around the world with local modifications and adaptations. The system has experienced explosive growth here and elsewhere, and has given hope to millions of poor and lower middle class men & women and to generate income to get out of poverty. The Microfinance Management System has overcome the structural problems of targeting and providing financial services to millions of poor people.
The Societies Registration Act 1860, Companies Act 1994, Cooperative Societies Act 1984, Charitable and Religious Trust Act 1920 and Trust Act 1882 are the acts under which NGOs operating under microcredit programs may be registered. NGOs eligible to receive donations from different foreign sources must be registered with the NGO Office of International Contributions (Voluntary Activities) Regulation Ordinance 1978.
The MFIs was found to have transaction costs. Identifying and choosing target lenders and maintaining a high level of loan recovery are also expensive.
Before we deep dive into the details of Microcredit institutions in Bangladesh, if would like to know the rules for registration of a company in Bangladesh, visit the blog post below.
If you want to know how to open a company in Bangladesh or about company formation click here!
The continued “double-dip” slowdown in the investment markets is impacting Bangladesh’s economies. In addition, recent over-indebtedness problems in several countries have shown that there is over-supply of micro-credit. In this context, Bangladesh’s microfinance sector has shown great resilience and continues to contribute to the improvement of macroeconomic development. Bangladesh has achieved a remarkable achievement in financial inclusion in Asia. Approximately 81% of its adult population, including both the formal and microfinance markets, has been put under financial inclusion under the guidance of Micro regulation authorities, i.e MRA and Bangladesh Bank.
Regulations of Microcredit & Financial Institutions in Bangladesh
The Microcredit Regulatory Authority (MRA) was founded by the Government of the People’s Republic of Bangladesh under the Microcredit Regulatory Authority Act 2006 to promote and promote sustainable development of the microfinance sector by establishing an enabling environment for NGO-MFIs in Bangladesh. As the regulatory organ, MRA determines the rules and regulations of Microcredit & Financial Institutions in Bangladesh, i.e the NGO-MFIs. The Authority’s license is required to carry out microfinance operations in Bangladesh. MRA provides statistical information on the microfinance market on a regular basis. The NGO-MFIs provide operating data on the specified format twice a year and financial information on a yearly basis. The Government passed the Microcredit Regulatory Authority Act 2006 in July 2006 on the basis of suggestions made by the Committee. Under this Act, the Government established a separate Microcredit Regulatory Authority (MRA) and appointed its Board of Directors, chaired by the Governor of the Bank of Bangladesh. Under this new law, all operating MFIs will have to apply for a license from the Authority. No MFIs will be allowed to operate within the country without a license from the Authority. According to the legislation, all organizations that have a microcredit operation must separate their financial operations from other development works and keep their accounts separate.
The top three MFIs contribute 54% of the total outstanding loans as well as deposits of the microfinance sector in Bangladesh. Two of the largest MFIs, BRAC & ASA, each represent more than five million lenders. There are a few more of them evolving quickly. On the other hand, the smallest 428 NGO-MFIs contributed just 4 per cent of the total outstanding loan and 5 per cent of the total savings. The corporate dominance ratio is highly skewed in favor of large MFIs: only 22 companies hold 76% of the market share, while the three largest entities manage more than 50% of both the clients and the total financial portfolios.
On the other hand, Grameen Bank offers credit without collateral for a wide range of revenue generation and asset building activities. It also provides its members with housing loans. During the 2009-10 fiscal year, its cumulative microcredit disbursement amounted to Tk 91.9 billion, which was more than 28 per cent of the previous year. The number of its borrower members rose to 90,000, and 95% of them were women. It operates in over 45.000 villages. Several major micro-credit initiatives in Bangladesh that implement Grameen’s group-based approach include Brac, an NGO with more than 1 million members, and the Bangladesh Rural Development Board (BRDB), a government agency offering micro-credit to some 500,000 members.
Legal Requirements to be an NGO-MFI in Dhaka, Bangladesh
(1) In order to obtain a license, a person shall apply to the Authority in the prescribed form set out in the given form by MRA. (2) Upon receipt of the request in the following form, the Authority shall evaluate the information provided with the request and, upon satisfaction, request the payment of the required license fee. (Follow the figure below).
(3) The Authority shall issue the license in the form set out in Annex B within 10 (ten) days of receipt by the applicant of the license fee referred to in sub-clause (2). (4) If the application is denied, the Authority shall inform the applicant in writing within 30 (thirty) days of the rejection.
License Issuing Procedure of MFI-NGO’s in Bangladesh
(a) The licensed entity shall abide by the law and all provisions of this Microcredit Authority Provisions 2010;
(b) the licensed organization shall not be able to operate its Microcredit Activities outside the area of operation approved by the Registration Authority;
(c) the full address of the Head Office and the Branch Offices of the company shall be notified to the Authority;
(d) any alteration in the area of operation permitted by the Registration Authority;
(e) any change of address of the Head Office shall be notified to the Authority in advance;
(f) changes to the address of the Head Office or Branch Office shall be notified to the Customers and to all other relevant parties;
(g) the licensed organization shall pay the annual fees mentioned in the table beforehand;
(h)The licensed organization must provide all information as required by the Authority and extend all co-operation in carrying out any inspection and investigation by the Authority.
“TRW is Considered as one of the leading firms in Investment Law in Dhaka, Bangladesh”
For all practical purposes, existing regulations of Microcredit & Financial Institutions in Bangladeshis is regulated by working out the presented by the Grameen Bank’s simple group-based approach. The basic structure is as follows: poor women and men are grouped into classes or groups that meet once a week to deposit a small amount of savings to build up their own resources. The Bank or MFIs lends a one-year loan (some MFIs repay loans within 43-46 weeks) which the lender repays in equal weekly instalments along with interest. Once the lender repays one loan, it is entitled to obtain another loan normally of a higher amount within the total loan limit, which, of course, is adjusted upwards over time.
The methodology was found to be so reliable and efficient that almost the entire industry adopted this method with minor adjustments to savings / credit policies such as savings and loan interest, savings withdrawal rules, etc. Today, almost 33 million women and men are working on this basic system every week. With time, however, both the Bank and other MFIs have modified their processes to deliver more than one form of savings and credit products, as the complexity of demand has changed and MFIs have also learned to deal with more complex situations.
A handful of non-governmental organizations have attempted and are still pursuing the so-called self-help group approach to creating a financial service delivery system. In this case, the organizer or NGO organizes self-help groups with the goal of promoting the mobilization of savings among disadvantaged women and men. If the participating members need a loan, they can borrow from their samity, i.e. their own savings funds. If the funds are not sufficient, the self-help Samities may seek to borrow additional capital from banks or the NGO. The second option was tried in Bangladesh, but the first alternative was not possible.
3: Individual Lending System
As the Regulations of Microcredit & Financial Institutions in Bangladesh are maintained by both the MRA and the Bangladsh Bank, the central issue in designing an individual system as opposed to a group-based system is to deliver flexible and demand-driven services to each client / borrower. The group-based system is seen as a’ one-size fits all’ system. The individual loan strategy, i.e. providing savings and credit services to each customer on the basis of the particular client’s request. Flexibility may occur in the form of the amount and frequency of the deposit of savings, the amount of the loan and the length of the loan, the repayment of the amount of the loan and the frequency of installments (no fixed schedule is considered flexible) etc.
Nevertheless, lending to individuals does not necessarily make it entirely’ flexible.’ For example, ASA and BRAC disburse loans to individual clients under their respective microenterprise loan programs but offer a fixed one-year loan and a fixed monthly repayment plan.
Although currently there’s no money lending MFI which is solely operating on FinTech-enabled payment processing and modelled their micro finance institutions according to that modern app based payment skeleton structure presented in other countries all around Asia, like Moneytap or koinworks. Implementing a credit based money lending through apps in bangladesh will play a huge role in modern era of lending credits. This will also reduce the amount of cash needed for printing and distributing currency notes. In addition, it will help mitigate the risks of counterfeit currencies circulating in the country. Reduced cash requirements would help the central bank reduce costs and manage risks.
Currently in Bangladesh, specialized financial institutions for processing transactions are generally referred to as payment banks. Payments banks are especially useful for people who do not have a bank account but engage in payment activities. FinTech allows these banks to keep their operating costs to a minimum. Payments banks are exploiting mobile telecommunications infrastructure and their large subscriber base to remove the barriers to entry. They compete with cash transactions to provide their customers with a simpler, faster and cheaper alternative. FinTech will help to achieve all of this for payment banks. With the right kind of guidance from regulators, the payment sector in Bangladesh could grow rapidly.
5.Informal money lenders
Informal money lenders are another typical source of micro-loans that follows’ individual loans.’ No up-to-date information and research on their activities is available. Nevertheless, it is assumed, on the basis of anecdotal evidence and small studies, that rural poor are no longer dependent on money lenders for small loans due to the proliferation of MFIs. We have the potential to borrow from one or more MFIs for investment or, in some cases, for consumption purposes. Nevertheless, due to the lack of a large-scale agricultural loan from MFIs, money lenders can still be found borrowing for emergency loans to the poor and also for agricultural loans.
“Implementing a credit based money lending through apps in bangladesh will play a huge role in modern era of lending credits.”
The four key elements of the Digital Bangladesh Vision Government are the creation of human resources, the participation of women, civil services and, finally, the use of technology in businesses. Since the use of technology in industry is one of the key elements of “Virtual Bangladesh Vision,” MFS has made the most significant improvement over the years. However, only 47% of the population is still financed. Meaning that only 47% of the population has access to useful and affordable financial products and services that meet their needs–transactions, payments, savings, credit and insurance–delivered in a responsible and sustainable manner.
MFS still in its infancy has many downsides, for example: interoperability, limited service and withdrawal restriction among others. On the other hand, MFIs are currently facing competition from the finance and agent banking sectors. MFIs lack a comprehensive IT infrastructure that limits their ability to provide a variety of products and services to the financially excluded remote parts market. On the other hand, if we take a look at agent banking, we’ll see how both the collection of deposits and the disbursement of loans have grown. As of September 2018, the loan disbursement through the agent banking network amounted to BDT 150 crore, up 9.8% from a quarter earlier that year.
Given all the benefits, the complete digitization of the microfinance sector will be strenuous as a number of challenges emerge.
First of all, the costs of developing virtual field applications are very high for MFIs. In a report published by UNCDF, one of the senior managers of a large MFI developed in Bangladesh suggested that hardware costs, for example: smartphone, tablets, would be too high for them.
One of the most difficult challenges for MFIs is to win customer trust. As most MFI clients are peasants, they lack financial and technical literacy. In fact, the TMSS Senior Manager stated that, if they ask their customers to apply for a loan.
Want new articles before they get published?
Subscribe to our Awesome Newsletter.
Case Brief Preparation for Supreme Court Bangladesh: A Comprehensive Guide Preparing an effective Case Brief for the Supreme Court of Bangladesh is a fundamental skill for young lawyers and legal practitioners. Known locally as ব্রিফ বা কেস স্টাডি প্রস্তুতি, this…
Court Craft and Etiquette for Bangladesh Lawyers: Mastering কোর্ট ক্রাফট ও শিষ্টাচার in the Supreme Court For any legal professional aspiring to excel in the judiciary of Bangladesh, understanding Court Craft and Etiquette for Bangladesh Lawyers—or কোর্ট ক্রাফট ও…
Photocopy Permission for Affidavit in High Court Bangladesh: A Comprehensive Guide In the judicial system of Bangladesh, understanding the nuances of Photocopy Permission for Affidavit in High Court Bangladesh is essential for lawyers, litigants, and law students…
Pass Over and Not Today in Bangladesh Courts: Usage and Rules Explained In the procedural landscape of Bangladesh’s judiciary, understanding specific court terms such as Pass Over (পাস ওভার) and Not Today is essential for both young lawyers and clients navigating the…
Mentioning a Matter in High Court Division Bangladesh: Understanding Mention (মেনশন) and Its Essentials In the practice of law in Bangladesh, mentioning a matter in High Court Division Bangladesh is a fundamental procedural tool that enables advocates to bring urgent…
Maiden Appearance in Bangladesh Supreme Court: Understanding Its Significance and Procedure In the legal landscape of Bangladesh, the concept of Maiden Appearance (মেইডেন অ্যাপিয়ারেন্স) holds a pivotal place, especially within the highest echelons of the judiciary…
Understanding Review Petition Supreme Court Bangladesh: A Comprehensive Guide The review petition Supreme Court Bangladesh plays a crucial role in the legal framework, offering parties an opportunity to seek reconsideration of judgments or orders passed by the Supreme…
Understanding the Chamber Court Appellate Division Bangladesh: A Comprehensive Guide The chamber court Appellate Division Bangladesh occupies a pivotal position in the country’s judicial hierarchy, serving as a specialized forum within the Appellate Division of the…
Understanding the Role of the Chamber Judge Bangladesh Supreme Court The term chamber judge Bangladesh Supreme Court refers to a unique judicial function within the highest judiciary of Bangladesh, where designated judges hear urgent or interlocutory matters in their…
Understanding the Criminal Petition for Leave to Appeal Bangladesh The criminal petition for leave to appeal Bangladesh is a critical legal remedy available to aggrieved parties seeking to challenge decisions of lower courts in criminal matters before the higher…
Comprehensive guide to cyber law violations in Bangladesh in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to Bangladesh digital signature law in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to legal advice for tech companies Bangladesh in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to Bangladesh information technology act in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
Comprehensive guide to technology dispute resolution in Bangladesh in Bangladesh. Expert legal analysis by Tahmidur Rahman Remura Wahid (TRW) Law Firm covering legal framework, procedures, and practical advice.
