What is Corporate Finance?
Corporate finance refers to the financial activities related to managing a company’s capital structure, investment decisions, and financial planning. The ultimate goal is to maximize shareholder value through efficient financial strategies.
Key Components of Corporate Finance
- Capital Budgeting: Evaluating and selecting profitable investment projects.
- Capital Structure: Determining the optimal mix of debt and equity financing.
- Working Capital Management: Managing daily liquidity, short-term assets, and liabilities.
Bangladesh Bank Guidelines on Corporate Finance
Bangladesh Bank has issued clear regulatory frameworks to ensure responsible and risk-mitigated corporate financial practices. Key directives include:
- Single Borrower Exposure Limit: A cap on the total exposure to a single client or group.
- Credit Risk Grading (CRG): Risk assessment mechanism for corporate borrowers.
- Large Loan Policy: Requires audited financials, regular monitoring, and BB reporting.
- Green Financing Guidelines: Promotes financing of environmentally sustainable projects.
Role of Banks in Corporate Finance
- Providing loans and structured finance to corporates
- Acting as financial advisors in mergers, acquisitions, and capital raising
- Managing treasury operations and market risk
- Issuing and underwriting corporate bonds
Career Scope in Corporate Finance
In Bangladesh, demand is rising for skilled professionals in corporate finance across banks, NBFIs, and corporate firms. Expertise in BB compliance and credit risk analysis is highly valued.
Conclusion
Corporate finance plays a vital role in shaping not just businesses, but the broader financial system of Bangladesh. Understanding its mechanisms, especially under BB regulations, is essential for finance professionals and banking exam aspirants.
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