BB click-starts online banking
Tuesday, 3 November 2009
Mehdi Musharraf Bhuiyan
Bangladesh made a giant stride towards introduction of e-commerce Monday after the central bank allowed online money transaction, payment of utility bills through Internet and transfer of funds from one bank to another.
Bangladesh Bank gave the groundbreaking directives to commercial banks through a circular, saying from now on their clients can pay power, water, gas and phone bills from bank accounts and transfer funds within a bank or to other banks.
The banks have been asked to accept any payment that their clients make for purchase or sale of goods or services using e-commerce platform and facilitate online credit card payments in local currency.
The central bank said such "online payments will be treated like any other cash transaction" although it reminded the banks that these money transfers would be regulated by the country's strict Anti-Money Laundering Act.
The BB ordered the banks to file reports on such payments to its Financial Intelligence Unit in an effort to combat money laundering. "All banks have been advised to keep a careful watch on misuse of online transaction," the order said.
The move comes after BB has successfully tested the online payment system in several commercial banks. BB officials said any qualms about the new payment system have been removed after the test.
Commercial banks and IT firms have hailed the BB move as a "giant leap forward" for the country's banking and software industries, adding that it would boost revenue and
ensure real time financial services for the first time.
"It's a major and laudable decision by the Bangladesh Bank. It's big departure by BB from conventional banking," Ehsanul Haque, chief executive officer of Prime Bank Limited said.
"We are now in an age when we can't do without online banking. It's need of the hour. The BB directives have created the platform for e-commerce in the country, which will be a big boost to the banking industry."
He said the move towards online banking would greatly lessen customers' hassles and banks' cost of operation. "It will also allow the bank to expand their card services and real-time banking to any part of the country."
The country had only about 400,000 credit card holders at the end of June last year, according to BB. Payments and transactions by credit cards were nearly Tk11 billion in June 2008 --- one of the lowest in the world.
"But that figures will now change thanks to the BB directives. A client can now transact fund through a click on his computer. He does not even need to come to the bank, spending hours in traffic jams and standing in the queue in front of the teller," he said.
Ahmedul Islam, chief operating officer of Bangladesh Japan Information Technology (BJIT), a leading software firm of the country, welcomed the BB's directive as the "best news for the IT industry in many years."
"It's a giant leap forward for the country's IT firms, IT-enabled services and software firms. They can now sell services online by using e-payment system," Islam said.
"In the past, many firms had to conduct online payment secretly, away from the prying eyes of Bangladesh Bank's anti money laundering officials. But the new BB directive will legalise all kinds of online payments within the country," he said.
Bangladesh last year exported software worth US$32 million and sold Tk5.00 billion worth of similar services to local industry. But much of the transaction was done secretly due to lack of BB regulations on e-commerce.
Islam said the BB e-commerce moves would act as a big catalyst for IT growth in Bangladesh. "Our neighbours India has done it much earlier and they have created hundreds of thousands of jobs and become a global IT giant," he said.
Some including software specialists have, however, urged cautions, saying the banks still need massive IT backbone to ensure that online transaction is not misused.
"No doubt it's a big step forward. But security of transactions will be an issue, as the online transaction will require the prospective buyers to submit their certain bank account information online", said a private bank IT chief.
"A lot of technical issues would be brought up with the introduction of these measures and there are questions whether the present regulation and IT infrastructure are enough to address them", he added.
Bangladesh made a giant stride towards introduction of e-commerce Monday after the central bank allowed online money transaction, payment of utility bills through Internet and transfer of funds from one bank to another.
Bangladesh Bank gave the groundbreaking directives to commercial banks through a circular, saying from now on their clients can pay power, water, gas and phone bills from bank accounts and transfer funds within a bank or to other banks.
The banks have been asked to accept any payment that their clients make for purchase or sale of goods or services using e-commerce platform and facilitate online credit card payments in local currency.
The central bank said such "online payments will be treated like any other cash transaction" although it reminded the banks that these money transfers would be regulated by the country's strict Anti-Money Laundering Act.
The BB ordered the banks to file reports on such payments to its Financial Intelligence Unit in an effort to combat money laundering. "All banks have been advised to keep a careful watch on misuse of online transaction," the order said.
The move comes after BB has successfully tested the online payment system in several commercial banks. BB officials said any qualms about the new payment system have been removed after the test.
Commercial banks and IT firms have hailed the BB move as a "giant leap forward" for the country's banking and software industries, adding that it would boost revenue and
ensure real time financial services for the first time.
"It's a major and laudable decision by the Bangladesh Bank. It's big departure by BB from conventional banking," Ehsanul Haque, chief executive officer of Prime Bank Limited said.
"We are now in an age when we can't do without online banking. It's need of the hour. The BB directives have created the platform for e-commerce in the country, which will be a big boost to the banking industry."
He said the move towards online banking would greatly lessen customers' hassles and banks' cost of operation. "It will also allow the bank to expand their card services and real-time banking to any part of the country."
The country had only about 400,000 credit card holders at the end of June last year, according to BB. Payments and transactions by credit cards were nearly Tk11 billion in June 2008 --- one of the lowest in the world.
"But that figures will now change thanks to the BB directives. A client can now transact fund through a click on his computer. He does not even need to come to the bank, spending hours in traffic jams and standing in the queue in front of the teller," he said.
Ahmedul Islam, chief operating officer of Bangladesh Japan Information Technology (BJIT), a leading software firm of the country, welcomed the BB's directive as the "best news for the IT industry in many years."
"It's a giant leap forward for the country's IT firms, IT-enabled services and software firms. They can now sell services online by using e-payment system," Islam said.
"In the past, many firms had to conduct online payment secretly, away from the prying eyes of Bangladesh Bank's anti money laundering officials. But the new BB directive will legalise all kinds of online payments within the country," he said.
Bangladesh last year exported software worth US$32 million and sold Tk5.00 billion worth of similar services to local industry. But much of the transaction was done secretly due to lack of BB regulations on e-commerce.
Islam said the BB e-commerce moves would act as a big catalyst for IT growth in Bangladesh. "Our neighbours India has done it much earlier and they have created hundreds of thousands of jobs and become a global IT giant," he said.
Some including software specialists have, however, urged cautions, saying the banks still need massive IT backbone to ensure that online transaction is not misused.
"No doubt it's a big step forward. But security of transactions will be an issue, as the online transaction will require the prospective buyers to submit their certain bank account information online", said a private bank IT chief.
"A lot of technical issues would be brought up with the introduction of these measures and there are questions whether the present regulation and IT infrastructure are enough to address them", he added.