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1History of BankingBangladesh inherited its banking structure from the British regime and had 49 banks and otherfinancial institutions before the Partition of India in 1947. The Dhaka Bank established in 1806was the first commercial bank in the Bangladesh region of British India. Bengal Bank, the firstBritish-Patronized modern bank established in India in 1784, had opened its two branches in 1873in Sirajganj and Chittagong of Bangladesh region. Later in 1862, the Bengal Bank Purchased theDhaka Bank and opened its first branch in Dhaka in the same year by reconstituting and mergingthe Dhaka Bank. Thereafter, another branch of Bengal Bank was opened in Chandpur in 1900. Anumber of other branches of Bengal Bank were opened in this region and some branches had beenclosed in Course of time. There were six other branches of Bengal Bank in operation in theterritory of Bangladesh until the Partition of British-India in 1947 and these branches were atChittagong (1906), Mymensing (1922), Rangpur (1923), Chandpur (1924), and Narayanganj(1926).Following the emergence of Pakistan in 1947, Stat Bank of Pakistan, the Central Bank of thecountry, came into being in July 1948. Later, the National bank of Pakistan, a strong commercialbank was set up in 1949. In all, 36 scheduled commercial banks were in operation in the wholePakistan until 1971. Pakistanis owned most of these banks and only three of them namely,National Bank of Pakistan, Habib Bank Ltd. and the Australasia Bank Ltd, had one branch of eachin East Pakistan in 1949. During 1950-58, there other Pakistani-owned banks, Premier Bank Ltd.,Bank of Bhowalpur Ltd. and Muslim Commercial Bank, had Opened their branch in East Pakistan.Four Pakistan-owned banks, the United Bank Ltd., Union Bank Ltd., Standard Bank Ltd. and thecommerce Bank Ltd. Conducted banking business in the Province during 1959-1965.But all ofthem Had their headquarters in west Pakistan. East Pakistan had only two banks Owned by localbusiness groups white headquarters in Dhaka. These were the Eastern Mercantile Bank Ltd.(Presently Pubali Bank Ltd.) and Eastern Banking Corporation Ltd. (Presently Uttara Bank Ltd.)established in 1959 and 1965 respectively.In the beginning of 1971, there were 1130 branches of 12 banks in operation in East Pakistan. Thefoundation of independent banking system in Bangladesh was laid through the establishment ofthe Bangladesh Bank in 1972 by the Presidential Order No. 127of 1972 (which took effect on 16thDecember,1971). Through the Order, the eastern branch of the former State Bank of Pakistan atDhaka was renamed as the Bangladesh Bank as a full-fledged office of the central bank ofBangladesh and the entire undertaking of the State Bank of Pakistan in, and in relation toBangladesh has been delivered to the Bank.Bangladesh Bank has been entrusted whit all of the traditional central banking functions includingthe sole responsibilities of issuing currency, Keeping the reserves, formulating and managing themonetary and credit policy, regulating the banking system, stabilizing domestic and external