What is Specialized Bank? Functions and Examples

Specialized banks are established for the development of a particular aspect of the economy. Let’s know what specialized bank is and it’s functions.

Specialized banks are established by the government of a country for a specific purpose. For example, Krishi Bank was established for agricultural or industrial development.


Specialized bank definition

What is a specialized bank? A bank that conducts banking activities for the development and expansion of a particular aspect of the economy is called a Specialized Bank.

Specialized banks in Bangladesh

There are 3 Specialized banks now operating in Bangladesh which are:

  1. Bangladesh Development Bank
  2. Krishi Bank
  3. Pravasi Kalyan Bank

Functions of a specialized bank

A specialized bank performs the following functions.

  • A specialized bank adopts a fixed plan for its operations, sets standards and formulates financial policies.
  • Paying loans to its client business organizations, building capital, formulating liquidity policies, and setting future goals.
  • Being equally responsible in financial management
  • Conduct cash control activities on account holder business organizations
  • Supervise and control salaries and wages of account holder organizations as per regulations.

Types of specialized banks

There can be different types of specialized banks. The types of specialized banks currently seen in different countries are explained below according to type.

1. Agricultural Bank

Banks established for the financing of farmers for the development of the country’s agricultural sector are a type of specialized bank. These banks can be called agricultural banks.

These banks mainly provide loan assistance to the farmers for the capital required for purchase of agricultural machinery, fertilizers, seeds etc. Bangladesh Agricultural Bank and Rajshahi Agricultural Development Bank can be examples of such banks.


2. Industrial Bank

Industrial banks are also a type of specialized bank. A bank established to develop the industrial sector of a country is called an industrial bank.

Industrial banks provide short-term and long-term loans to industrial entrepreneurs. Bangladesh Development Bank Limited is an example of such a bank in Bangladesh.

3. Pravasi Kalyan Bank

This bank was originally established to provide loans to workers who go abroad for employment.


The Government of Bangladesh established Pravasi Kalyan Bank in 2010 to provide loan assistance to migrants.

4. Employment Bank

Employment Bank is the special bank that is established to help the unemployed youth of the country with loans for various initiatives.

The main objective of these banks is to provide loans on easy terms to the unemployed and self-employed entrepreneurs with the aim of eliminating unemployment and poverty in the country. Employment Bank’ is one such specialized bank in Bangladesh.

5. Savings or Deposit bank

A bank that works with the objective of building capital by collecting the savings lying with the people as deposits is called savings or deposit bank.

The main task of this bank is to build capital by encouraging people to save. Bangladesh Postal Savings Bank is a bank formed for this purpose.

6. Investment bank

A specialized bank established to provide long-term capital for the expansion of trade in the country’s business is called an investment bank. Apart from providing loans, the bank plays the role of observer and borrower for the purpose of cooperation in the establishment of new companies or industries.

For this, in addition to taking responsibility for selling shares, it can also purchase a lot of shares itself if necessary. Investment Corporation of Bangladesh (ICB) is an investment bank.

7. Exchange bank

Exchange Banks are established to finance foreign trade and facilitate foreign currency exchange and transactions. These banks mainly provide loans to companies engaged in import-export business, issue certificates, settle foreign debt.

8. Co-operative Bank

A bank formed and managed under the Co-operative Act for the economic welfare of the members of the association accepts savings from the members, forms capital and lends to them at low interest.

The main objective of cooperative banks is financial welfare and development of members. Bangladesh Cooperative Bank Ltd. can be an example of this type of bank.

9. Merchant bank

Banks established for exchange banking and investment banking activities are merchant banks. Such banks carry out the activities of exchange banks and investment banks as described above.

10. Import-export bank

Import-Export Bank is a specialized bank established for the purpose of financing and supporting foreign trade. This bank provides loans to import and export enterprises, issue of foreign trade certificates, recognition of foreign exchange bills and settlement of transactions. There are practically no such banks in our country, but commercial banks fulfill this duty to a large extent.

11. Small and cottage industries bank

Banks formed to provide loans, and advice to small-scale industries of a country are called small and cottage industry banks. These banks assess, profile, and provide loans and advice to small-scale industries.

An example of such a bank would be Bangladesh Small and Cottage Industries Bank (BASIC).

12. Housing Bank

We see that housing problems are more pronounced in urban areas. The Housing Bank is formed for the special purpose of alleviating the public housing problem of the country.

Such banks provide long-term loans for house construction, renovation, flat purchase etc. and collect the amount in monthly installments. Bangladesh House Building Finance Corporation (HBFC) is one such institution.

13. Consumer Bank

Specialized banking institutions formed to help common consumers in purchasing essential goods are called consumer banks. Such banks issue credit cards to facilitate consumer purchases.

In addition, such banks are various consumer goods; Eg – Fridge, TV, Car etc. supplies on an installment basis.

14. Transportation Bank

Transportation Bank is established to provide loans to various business organizations for the expansion of the country’s transport sector.

This bank mainly provides loans for vehicle construction, import, purchase, repair, and purchase of retail equipment. There is no such specialized bank in Bangladesh till now.

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