E-Banking Business in Bangladesh

Executive Summary

“Electronic Banking” refers to the systems that enable bank customers’ access to accounts and general information on bank products and services through a personal computer (PC) or other intellectual devices. Internet facilities have been introduced in Bangladesh in June 1996 beginning a new era of automated banking and commerce. Nowadays e-commerce, e-business and financial services industry have increasingly become a necessary component of business strategy and a strong catalyst for economic development. As a third world developing country, Bangladesh is far behind to reach the expected level in global banking system. So it is our urgent need to upgrade its banking system. This study has been done mainly based on primary and secondary sources of data or information, which included different publications. This report is aimed at to determine the present scenario of e-banking and banking sectors in Bangladesh and at the same time it demonstrated the scope and benefits of e-banking compared with the existing system. This study addressed significant gaps in existing knowledge about the internet banking and landscape. We tried to present actual situation of e-banking in the marketing point of view in Bangladesh. The results showed that e-banking serves several advantages to Bangladeshi banking sector, however, this study also observed that the Bangladeshi customers have not enough knowledge regarding e-banking which is rendering by banking sector in Bangladesh. A discussion of the implications of these results and limitations are provided at the end. This paper represents the painstaking scenario of e-banking services, offences and how laws cop and formulate a better e-banking environment in Bangladesh and tried to simplify future problems and ultimate possibilities to drawbacks them from E-banking.

Introduction

E-banking is now a global phenomenon. It is an invaluable and powerful tool driving development, supporting growth, promoting innovation and enhancing competitiveness. Technological innovations have been identified to contribute to the distribution channels of banks and these electronic delivery channels are collectively referred to as electronic banking.

The evolution of banking technology has been driven by changes in distribution channels as evidenced by automated teller machine (ATM), Phone-banking, Tele-banking, PC-banking and most recently internet banking . The developed country as a part and parcel of their economy is now using electronic banking or online banking.

Apart from the developed countries, the developing countries are experiencing strong growth in e-banking such as India and the Republic of Korea are experiencing particularly strong growth in e-banking. In Southeast Asia, internet banking is also developing rapidly in Thailand, Malaysia, and Singapore and in Philippines. We refer also Thailand, Zimbababwe, Tunisia& Iran explored the extent of adoption and usage of internet banking. In Nepal, ATMs are the most popular electronic delivery channel for banking services but only a few customers are using internet banking facilities.

A strong banking industry is an important in every country and can have a significant affect in supporting economic development through efficient financial services. But there have been several major challenges and issues faced to the e-banking growth and the e-business in general. One major obstacle addressed most is the security concern. Another issue challenged e-business (including e-banking) is the quality of delivery service – including both delivery speed and delivery reliability.

Limited payment options available to online customers are also being complained. As an Internet based technology, e-banking is new and a quite unfamiliar for some people in Bangladesh due to the digital divide and the different level of internet experience and environment .Understanding the reasons for the lack of such  innovation in developing countries such as Bangladesh will develop a fruitful research. The aim of the paper is to look at the emergence, advantages and acceptance of e-banking in Bangladesh. This paper is aimed at to determine economical prospects of e-banking and to explain the present scenario of banking sectors in Bangladesh and at the same time it demonstrates the scope and benefits of e-banking compared with the existing system. This paper also tries to present actual situation of e-banking in the marketing point of view in Bangladesh.

Origin of the Report

Our honorable course instructor has assigned us at the beginning of the semester an assignment on ‘‘E-banking business in Bangladesh’’ which is most vital and one of the basic concepts of our course titled E-commerce and E-business. we ,the group members of group 2 have provided our best effort to conduct assessment on that topic and present our report.

Objective of the Study:

1. To shed light on the concept of e-banking.

2. To examine the present status of existing e-banking in Bangladesh.

3. To know the adoption of e-banking in Bangladesh context.

4. To know the e-banking services in Bangladesh.

5.To know the importance of e-banking in banking business.

6. To review the e-banking offences and prevention law in Bangladesh.

7.To evaluate the responses from the clients of bank(IFIC bank ltd.)

8. To make necessary recommendations to solve the e-banking related drawbacks.

Methodology

This report has been done mainly based on primary& secondary sources of data or information. The research based on secondary data attained through the websites, books, Bangladeshi different laws and correlated journals. Primary data has been collected from Dhaka based some selected banks e.g. IFIC bank ltd. Dutch Bangla Bank Ltd. in the year2011-12.

Data Processing and Analysis  

MS Word, Excel and other related computer software have been used in the processing and compilation of collected information. Necessary tables have been prepared on the basis of collected data and various statistical techniques have been applied to analyses on the basis of classified information. Detail information and analysis have also been given in the report.

Limitations of the study

The focus of the report is mainly based on Dhaka based some selected banks in Bangladesh. E-banking was the important issue in world but Bangladesh is developing country with the limited infrastructure facility and limited skill manpower. Computer literacy was found very few and information technology was in the infant position.

There were some limitations faced during the study:

1. Small span on time.

2. Shortage of book and published sources in Bangladesh.

3. The study was based on limited variable. Difficulties faced to collect the desire information. Disclosing the information was very restricted.

4. Uncooperative behavior of some officials& respondent.

5. Lack of up to date information.

6. Lack of disclosure of internal information.

E-banking Business in Bangladesh

Overview of E-banking

Electronic banking does not mean only 24-hours access to cash through an Automated Teller Machine (ATM) or Direct Deposit of pay checks into checking or savings accounts as many consumers may think. Electronic banking (e-banking) involves many different types’ transactions; it is a form of banking where funds are transferred through an exchange of electronic signals between financial institution, rather than exchange of cash, cheques or other negotiable instruments. With the expansion of global Information and Communication Technology (ICT) infrastructure and the internet, e-banking is set to play a pivotal role in the national economic development of any country. But appropriate software, technology, infrastructure, skilled manpower and cyber law are crucial for the

Implementation of e-banking in the country. This paper reviewed the issues associated with various forms of e-banking accompanied by a field survey and explored the

Challenges and prospect of e-banking in Bangladesh.  Global banking scenario has been changed; Cheques are now passing away and e-banking are widely welcomed as well as

the statutory reforms has also been implemented in this regard for check and balance in this regard. E-Banking redeemed us a new metamorphose banking system and the advent of such banking propelling the status of business in a wide range. Globalization creates an environment where Bangladesh’s banks are to stay within the competition, they will have to move forward and that’s why e-banking system adapted by most of the banks. According to oxford dictionary, e-banking a method of banking in which the customer conducts transactions electronically via the Internet. Today e-banking play a key role in the national economy. ATMs, telephone banking, PC banking to internet banking are rapidly being introduced in Bangladeshi’s bank and that why without the authorization of Bangladesh. Bank no bank can remove any business document or record from their network. E-banking reduces costs and improving competitiveness by developing alternative distribution channels. It also increased the ability to enlarge their accessible customer stand. The widespread factors related with e-banking are simplicity of use, transaction security, expediency and speed. Presently, five basic services provided by

online banking system worldwide. Users can view their account balance and transactions history, funds transfer between accounts, pay bills, request credit card advance and order cheques. Stock market transactions, submission of standardized accounting payment files for bank transfer are also provided by some banks. E-banking is now a global  phenomenon. Apart from the developed world, the developing countries like as Bangladesh are also experiencing strong growth in such transactions. To secure electronic data interchange rules has been adopted and specified data accessing through computer

Network by a digital signature for customer rights and obligations. With this context there is also punishment for violation of banking rules and regulations. Government of Bangladesh’s emphasis on building a digital country, Upcoming ICT park, developing ICT infrastructure, waving taxes on computer peripherals are allocated and automation plan of the banking sector have brightened the prospects of e-banking in Bangladesh. So as to say “nice to have” but an “impossible to survive without” such bless of business.

Basic Features of E- Banking:

E-banking changes the value of banking brand. It has some features which creates an encouraging banking environment .Through e-banking people can make a transaction easily and safely. In the other side banks feel secured about their all transactions smoothly, swiftly, timely and accurately. Some of features which execute in present time:

1. Banks provided booths for online transaction in all over the country.

2. Non-stop cash withdrawal facility from the booths.24 hours, 7 days, and 364 day’s banking.

3. without any queue quick cash withdrawal facility

4. Account checking facilities from any ATM booth in any time.

5. Account statement collection from ATM.

6. Money transfer facility from one account to another account at same bank through e-banking.

7. Present balance inquiry.

8. Check account balance through SMS service.

9. Personal Identity Number (PIN) can be change through e-banking.

10. Every transactions slips of bills.

12. Utilities bill paying facility.

13. Withdrawal money using Visa Card, MasterCard, Maestro and other banks debit card.

14. Withdrawal money from dollar account, which gives taka by converting foreign currency.

15. Remittances collection.

Different Forms of E-banking

The terms ‘PC banking’, ‘online banking’, ‘Internet banking’, ‘Telephone banking’ or ‘mobile banking’ refer to a number of ways in which customers can access their banks account without having to be physically present at the branch of a bank. E -banking may be understood as the term that covers all the ways of banking business electronically.

 PC Banking

The increasing awareness of the importance of literacy of computer has resulted in increasing use of personal computers through the entire world. Furthermore, incredible plummet of cost of microprocessor has accelerated the use of computer. The term ‘PC banking’ is used for banking business transacted from a customer’s PC. Using the PC banking or home banking now customers can use their personal computers at home or at their office to access their accounts for transactions. For subscribing to and dialing into the banks’ Intranet proprietary software system is use for password. Basically, there are two types of PC banking. The first type is online banking, in which bank transactions are conducted within closed networks. The customer needs specialized software provided by his bank. The second type is Internet banking, which German banks have been offering since the mid-nineties, although the only product they were offering at the time information. Unlike closed networks, Internet banking permits the customer to conduct transactions from any terminal with access to the Internet. Internet banking would free both bankers and customers of the need for proprietary software to carry on with their online banking transactions.

 Mobile Banking

Actually mobile banking is a variation of Internet banking. Mobile banking is a good example of how the lines between the various forms of e-banking are becoming gradually blurred. Due to the new transmission technologies such as WAP (Wireless Application Protocol), portable terminal like mobile phones, International Journal of Scientific and Research Publications, personal digital assistant (PDA) or small hand-held PCs are providing bank customers with access to the Internet and thus paving the way to Internet banking. It assures immense flexibility and makes the financial services independent of time and place. However, the use of mobile banking is still in a nascent state. The slower transmission speed of the WAP standard and the limited amount of information available are just two of the factors inhibiting the use of those terminals.

SWIFT:

SWIFT is a bank owned nonprofit co operation based in Belgium servicing the financial community worldwide. SWIFT is a highly secured messaging network enables Banks to send and receive fund transfer, L/C related and other free format message to and from any banks active in the network. Having SWIFT facility, Bank will be able to serve its customer more profitable by providing L/C, payment and other message efficiently and with utmost security. Especially it will be of great help for our clients dealing with imports, Exports and Remittances etc.

EASY PAY MACHINE:

It is a mechanical device which can accepted utilities bill like land phone bills, cell phone bills, Gas bills, WASA DESA bills etc. The day after tomorrow bank will report to the particular authority to give acknowledgement on behalf of their customer.

 INTERNET BANKING: Internet Banking lets you handle many banking transactions via your personal computer. For instance, you may use your computer to view your account balance, request transfers between accounts, and pay bills electronically.

Internet banking system and method in which a personal computer is connected by a network service provider directly to a host computer system of a bank such that customer service requests can be processed automatically without need for intervention by customer service representatives. The system is capable of distinguishing between those customer service requests which are capable of automated fulfillment and those requests which require handling by a customer service representative. The system is integrated with the host computer system of the bank so that the remote banking customer can access other automated services of the bank.

AUTOMATED TELLER MACHINES (ATM):

An automated teller machine or automatic teller machine (ATM) is an electronic computerized telecommunications device that allows a financial institution’s customers to directly use a secure method of communication to access their bank accounts, order or make cash withdrawals (or cash advances using a credit card) and check their account balances without the need for a human bank teller (or cashier in the UK). Many ATMs also allow people to deposit cash or cheques, transfer money between their bank accounts, top up their mobile phones’ pre-paid accounts or even buy postage stamps.

On most modern ATMs, the customer identifies him or herself by inserting a plastic card with a magnetic stripe or a plastic smartcard with a chip, that contains his or her account number. The customer then verifies their identity by entering a pass code, often referred to as a PIN (Personal Identification Number) of four or more digits. Upon successful entry of the PIN, the customer may perform a transaction.

If the number is entered incorrectly several times in a row (usually three attempts per card insertion), some ATMs will attempt retain the card as a security precaution to prevent an un authorized user from discovering the PIN by guesswork. Captured cards are often destroyed if the ATM owner is not the card issuing bank, as non-customer’s identities cannot be reliably confirmed.

TELE BANKING:

Undertaking a host of banking related services including financial transactions from the convenience of customers chosen place anywhere across the GLOBE and any time of date and night has now been made possible by introducing on-line Tele banking services. By dialing the given Tele banking number through a landline or a mobile from anywhere, the customer can access his account and by following the user-friendly menu, entire banking can be done through Interactive Voice Response (IVR) system. With sufficient numbers of hunting lines made available, customer call will hardly fail. The system is bi-lingual and has following facilities offered

• Automatic balance voice out for the default account.

• Balance inquiry and transaction inquiry in all

• Inquiry of all term deposit account

• Statement of account by Fax, e-mail or ordinary mail.

• Cheque book request

• Stop payment which is on-line and instantaneous

• Transfer of funds with CBS which is automatic and instantaneous

• Utility Bill Payments

• Renewal of term deposit which is automatic and instantaneous

• Voice out of last five transactions.

SMART CARD:

A smart card usually contains an embedded 8-bit microprocessor (a kind of computer chip). The microprocessor is under a contact pad on one side of the card. Think of the microprocessor as replacing the usual magnetic stripe present on a credit card or debit card. The microprocessor on the smart card is there for security. The host computer and card reader actually “talk” to the microprocessor. The microprocessor enforces access to the data on the card. The chips in these cards are capable of many kinds of transactions. For example, a person could make purchases from their credit account, debit account or from a stored account value that’s reload able. The enhanced memory and processing capacity of the smart card is many times that of traditional magnetic-stripe cards and can accommodate several different applications on a single card. It can also hold identification information, which means no more shuffling through cards in the wallet to find the right one — the Smart Card will be the only one needed.

DEBIT CARD:

Debit cards are also known as check cards. Debit cards look like credit cards or ATM (automated teller machine) cards, but operate like cash or a personal check. Debit cards are different from credit cards. While a credit card is a way to “pay later,” a debit card is a way to “pay now.” When you use a debit card, your money is quickly deducted from your checking or savings account.

Debit cards are accepted at many locations, including grocery stores, retail stores, gasoline stations, and restaurants. You can use your card anywhere merchants display your card’s brand name or logo. They offer an alternative to carrying a checkbook or cash.

E-CHEQUE:

• An e-Cheque is the electronic version or representation of paper cheque.

• The Information and Legal Framework on the E-Cheque is the same as that of the paper cheque’s. It can now be used in place of paper cheques to do any and all remote transactions.

OTHER FORMS OF ELECTRONIC BANKING

• Direct Deposit

• Electronic Bill Payment

• Electronic Check Conversion

• Cash Value Stored, Etc.

Banking &E-banking Sector in Bangladesh:

Banking sector in Bangladesh According to the Scheduled Banks Statistics; (October- December, 2006) by Bangladesh Bank, the entire banking sector comprised 48 scheduled banks(commercial banks plus specialized banks i.e.DFIs) and 4 non-scheduled banks. It had all told 6562 branches. Total credit (net assts) and the total deposits (liabilities) of the sector stood Tk.156254.52 and Tk.182925.60 crores respectively as on end December, 2006. The detailed position is given below:

Source: Bangladesh Bank statistics,2006

It appears the above figures that the banking sector is dominated by four nationalized commercial banks (NCBs) followed by the private commercial banks (PCBs). Nationalized commercial banks not only had the highest number of branches, but also

held the highest amount of credit and deposits. Out of total 6562 branches, the NCBs had 3384 branches i.e. 51.57 percent. In terms of business, next highest position is held by the private commercial banks (PCBs). There are thirty commercial banks in the private sector including Islami banks. The third position is held by five development finance institutions (DFIs). On the other hand, nine foreign commercial banks stood forth on yearend 2006.

ICT in Banking Sector

Penetration of Computer in Banks is very rapid. All banks now are computerized at least at head office level. If we go at branch level only; 19% branches of NCBs, 38% branches of PCBs and 97 % branches of FCBs are computerized. ITRC survey found that overall computer density in the banking sector is 1.64. Only 1,131 branches have at least one computer. For foreign commercial banks the computer density is 45.34, where as for NCBs the ratio is only 0.41. The specialized bank scenario is almost same as the NCBs, 0.43. On the other hand, private commercial banks have comparatively higher ratio, 4.94. As a whole 61.81 percent bank does not have any LAN. LAN penetration ratio [considering the branch level] is also very poor for overall banking sector, 0.07. The ideal ratio should be 1. Only FCBs have satisfactory picture in this regard. The PCB has an acceptable ratio, 0.22. Generally in NCBs other than the major two cities [also not each branch] banks are working in standalone environment. The problem is, NCBs is the unique market player with more than 50 percent of market share, so ICT penetration is more crucial for this category of banks. Some midrange and mainframe computer systems are available in the banking sector. Only 11% of banks have inter branch connectivity through ICT network [WAN]. 70 percent of solution provider for WAN are of local origin. At the head office level 95.45 percent banks use banking software. 24 types of banking software are available in banks. 95 percent banks have Management Information Systems. But only 38 percent MIS are integrated to the transaction processing system [TPS]. If we consider head office level in service processing the use of computer or electronic device is very encouraging: 96.5 percent of banks use computer or some sort of electronic device, the similar figures are 58.62 percent in corporate banking, 68.97 percent in foreign exchange, 41.38 percent in fund transfer, 37.93in investment banking. A broad spectrum of electronic baking services is available in Bangladesh with different degree of penetration. Credit card service is provided by 23. 1 percent banks, both PCBs and FCBs are there. The credit card service is from VISA and Master Card. Tele banking is second most penetrated e-baking service in Bangladesh. Credit card is becoming very popular service in major cities of Bangladesh. During 1999 the growth of credit card market is almost 100 percent. Majority of banks is planning to introduce ICT for integration of banking services and new ICT based banking services, which will play a vital role in penetration of e-commerce in Bangladesh. 75 percent banks have strategic plan and implement it in IT and e banking. According to the survey the electronic banking service will observe an exponential growth in the next two years.

E-Banking in Bangladesh

In recent years the banking industry has undergone massive changes in providing service to their customers by using information technology. Developments in information technology and telecommunications have set in a motion an electronic revolution in the Bangladeshi banking sector. Foreign Commercial Banks (FCBs) in Bangladesh are playing a pioneer role in introducing modern financial products and services. Private Commercial Banks (PCBs) have started to follow the same pattern. On the other hand Nationalized Commercial Banks (NCBs) and the Specialized Banks (SBs) could not yet show notable performance regarding the issues. But due to the demands of the time, they are now taking initiatives to launch modern and innovative products and services. Currently most of the banks in Bangladesh are providing electronic products and services to their Customers’ .We cannot say they are completely following electronic way. Because they offer some of the functionalities of the complete electronic banking like intra-bank transactions, Letter of Credit (LC) and foreign exchange etc. Banks products and services are categorized into two broad groups (i) Traditional Products and Services; and (ii) Modern and Innovative Products and Services which is called E-banking.

Table 2: Payment and Transaction of Products and Services offered by

Category of Banks in Bangladesh:

Source: International Journal of Scientific and Research Publications, Volume 2, Issue 7, July 2012

The existing modern and innovative banking products and services in Bangladesh are: modern and innovative products like- Debit Card and Credit Card, modern and innovative services like Automated Teller Machine (ATM), Point of Sales (POS) and eservices like On-line banking, , Society for Worldwide Interbank Financial Telecommunication (SWIFT)etc.

Table 3: Number of Banks Adopting Modern Products and Services

Source: Survey output conducted on Commercial Banks in Bangladesh. Published on : International Journal of Scientific and Research Publications, Volume 2, Issue 7, July 2012 .

Based on a recent survey on the scheduled banks in Bangladesh, it is found that during the last couple of years, the use of debit card, credit card and ATM as a smart payment rapidly increasing the transaction of products and services. ATM facility was available only in 22 banks (2 NCBs, 1 SB, 15 PCBs and 4 FCBs) at the July of 2005, but at the July of 2007, the number reached to 31 (3 NCBs, 1 SB, 20 PCBs and 7 FCBs) (Table 1). The Credit Card, Debit Card, On-line banking and SWIFT facilities also reached to 24, 25, 28, and 40 banks respectively over the period. Efforts of PCBs in offering modern and innovative products and services increased substantially during the period2005-2007.

Pioneers of E-banking in Bangladesh & popular e-banking services :

A broad spectrum of E-banking services, a subset of electronic finance, is available in Bangladesh with different degree of penetration.

To gain more control over ones cash positions, one needs easy access to accounts and information in real time. One will need the convenience of local banking and the global solutions of an industry leader. The solution is CitiDirect® Online Banking. The motto of CitiDirect® is “Money isn’t everything but it can be everywhere”. The available facilities are:

• Online Direct Debit Transaction Process

• Information Reporting

• Real-time information reporting for more effective cash management

• Delivered with the highest level of security

• Easy-to-use application

• World Link through CitiDirect

• Comprehensive payment transaction solution

• Flexible, streamlined functionality

• Reliability, speed and information

• Payments through CitiDirect

• A comprehensive payments solution globally and locally

• Simplified, secure transaction management

• Timely, accurate information

• E-mail and Wireless Banking Alerts by CitiDirect.

Govt. owned schedule bank and various private banks are now rendering financial services through internet banking, sms banking, phone banking, automated teller machine and POS terminals. The key leading banks are the following:

• The Hongkong & Shanghai Banking Corporation Ltd (HSBC)

• Janata Bank Ltd.

• Mutual Trust Bank Ltd

• One Bank Ltd.

• Southeast Bank Ltd.

• Standard Chartered Bank

• BRAC Bank Ltd. Citibank N.A.

• Prime Bank Ltd.

• Dutc Bangla Bank Ltd

• IFIC bank ltd

Foreign banks through successful use of a global network have increased the timeliness and accuracy of information, benefiting its customers, employees and also management.

IFIC Bank Ltd.

International Finance Investment and Commerce Bank Limited (IFIC Bank) is banking company incorporated in the People’s Republic of Bangladesh with limited liability. It was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions aboard. In 1983 when the Government allowed banks in the private sector, IFIC was converted into a fully fledged commercial bank. Explore the world of convenience banking that lets you take control of your time. With IFIC Internet Banking you can conveniently and securely observe your account’s information from your home or office.

Now, you can access your IFIC Bank account 24/7 round the clock.

Features & Benefits:

• View account balances.
• View transaction details.
• Print account statement (in the form of short& for a particular period.
• Cheque book  inquiry.
• Interest rate inquiry.
• Detail product lists & product information.
• Change password.

Banking facility is free of charge for you. Banking information and be in touch any time with IFIC bank from your mobile. You can check your account balance, account information or even get your mini account statement through IFIC sms banking service. Account and card holder of IFIC bank to apply for sms banking service please fill up the application form and drop it to the nearest IFIC bank branch.

Following services are available:

• View account balance
• View transaction details
• Print account statement (in form of short& for a particular period)
• Cheque book inquiry
• Interest rate inquiry
• Detailed product list& product information
• Change password.

Dutch Bangla Bank Limited:

DBBL pioneered Mobile Banking in Bangladesh. It was the first bank to offer banking faculties through a wide range of mobile phones. SMS (Short Messaging System) is an extremely unsecure method to do mobile banking. DBBL recommends you use a HTML browser found on many phones to access internet banking facilities.

Benefits of Mobile Banking

• By providing electronic access to money, it is possible to ultimately
• Alleviate poverty, because of the following reasons.
• Real time on-line banking
• Available anytime, anywhere throughout the country
• It is convenient, affordable and secure
• It is much more effective in developing savings habits
• It will make access to banking and advanced payment
• Transactions at affordable cost.

Dutch-Bangla Bank is the first bank in Bangladesh to be fully automated and introduce Electronic Banking. The automation was completed in 2003, but further additions and features are continuously being added and upgraded. DBBL has adopted the same exact automation solution used many international banking giants. Although this was significantly more expensive than other solutions, it is a small price to pay for a client’s peace of mind.

A DBBL client now has unrivaled access to banking from any DBBL branch, ATM and POS. All of these services are free-of-charge and are surprisingly afford DBBL also has the largest ATM network in Bangladesh. This gives DBBL clients full access to ‘anytime anywhere’ banking nationwide. All international and many local banks use the DBBL ATM network for their own clients. DBBL has installed over 800 ATMs nationwide. As with most things, ATM access to all DBBL ATMs is unlimited and free for all DBBL clients able for everyone. DBBL has the largest IT budget in Bangladesh. DBBL maintains the state-of-the-art Electronic-Banking Division. The Electronic-Banking Division oversees and maintains DBBL’s investment as well as implementing upcoming projects.

BANK ASIA

Bank Asia centralized Database with online ATM, SMS and Internet query service. The significant delivery channel of Bank Asia was the shared ATM Network. Bank Asia had 21 ATMs as a member of ETN along with eleven other banks. Bank Asia was maintaining its competitiveness by leveraging on its Online Banking Software and modern IT infrastructure. It was the pioneer amongst the local banks in introducing innovative products like SMS banking, and under the

ATM Network the Stellar Online Banking software enables direct linking of a client’s account .Without the requirement for separate account.

BRAC Bank ltd.

For the first time in Bangladesh BRAC Bank limited has introduced e-commerce program for all VISA cardholders. Electronic Commerce is a convenient and affordable way to buy and sell products or services online.

E-Commerce software and service enables individuals to maintain an online business while performing transactions right from the Web. It is the fastest, convenient and cost effective way of making transaction through web site.

Cardholder’s Benefits

– Search and find what they are looking for instantly

– Choosing from a variety of options such as size and color

– Viewing any or all of product specifications and photographs

– Purchases will be delivered directly to their door

– Order products without leaving their home

– Security knowing every transaction is secure

– Checking how much they have “spent” before committing to a purchase

. BRAC bank is one step ahead because for the first time they have introduced online shopping in Bangladesh. With exclusive features and facility BRAC bank also provides general online facility like the other banks. As the world economy is growing faster and banking sector is making mark each and every day, online banking is very important and effective to be a part of it. Bangladesh just started its journey in internet banking and banks are coming forward to make it a success. Online banking is clearly a huge benefit for the customers and saves a lot of time and things get done so easily.

Eastern Bank Limited

Eastern Bank Limited Internet banking application addresses the needs of small, individual and corporate account holders of the bank. This application provides a comprehensive range of banking services that enable the customer to meet most of their banking requirements over the net. The transactions that are supported by the internet banking provided by Eastern Bank Limited are Account operations and Inquiries, Fund Transfers and Payments, Utility Bill Payments, Deposits, Loans, Session Summary etc.

HSBC

Business banking account enabled a person to receive credit of all the cash or cheque deposits along with inward remittance and made all local payments and provided access to the wide range of services for the business requirements. A person may deposit up to BDT50, 000 cash per transaction and any BDT amount in cheque 24 h a day, 7 days a week through the ATM Machines, conveniently located Sales and ServiceCenters. Easy Pay Machines were also available for deposit of BDT 50,000 cash per transaction and any BDT amount in cheque to the business banking account. With easy pay machines, both HSBC and Non-HSBC customers made deposits and pay their utility bills, credit card payments and etc.

STANDARD CHARTERED BANK

Standard Chartered offers the client a comprehensive range of Cash Management services. Electronic Banking provides various types of support through a wide range of operating systems, sweeping transaction accessories with the provision of reporting features or other special functions. Standard Chartered offers the client a comprehensive range of Cash Management services. Whether it is a financial institution, a multi-national corporation or a domestic Company, Electronic Banking application has the capability to support full range of Cash Management reporting and transaction initiation needs. It provides the secure, reliable and effective link between the client and client’s accounts anywhere across the Standard Chartered network. Electronic Banking provides various types of support through a wide range of operating systems, sweeping transaction accessories with the provision of reporting features or other special functions. There are 10 offices and 50 employees under this division, which operates in 26 countries.

Arab Bangladesh Bank Ltd

AB bank Ltd. is the first private bank of Bangladesh with a long standing experience in domestic and international banking. Its 153 branches in all the major commercial centers of the country and 152 correspondents worldwide provide proficient banking services to its customers.

National Bank

 The National Bank LTD is the first private sector Bank fully owned by Bangladeshi entrepreneurs. At present it has over 150 branches across Bangladesh that provides a wide range of commercial banking services to its clients. NBL was the first domestic bank to establish agency arrangement with the world famous Western Union in order to facilitate quick and safe remittance of the valuable foreign exchanges earned by the expatriate Bangladeshi nationals. NBL was also the first among domestic banks to introduce international Master Card in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The Bank has in its use the latest information technology services of SWIFT and REUTERS.

The Premier Bank Limited

The bank providing service for receiving cash and documents beyond transaction hours till 8 o’ clock in the evening. This service is attractive for those like shopkeepers who accumulate cash as sales proceeds in the afternoon when counters of Bank Branches usually remain closed. The service is available at selective branches of our Bank.

The service is provided that-

* View Account Summary

* View Account Details

* Print Statement

* Cheque Book Inquiry

* ViewStandingInstructionCity i-Bank user tips:

E- Banking products and services in Bangladesh

E-Banking products and services can include wholesale products for corporate customers as well as retail and fiduciary products for individual customers. Ultimately, the products and services obtained through internet banking may mirror products and services offered through other bank delivery channels. A brief description of retail and wholesale products and services is given below:

Automated Teller Machine (ATM):

An automated teller machine or automatic teller machine (ATM), also known as an automated banking machine (ABM), cash machine is a computerized telecommunications device that provides the clients of a financial institution with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller. ATMs are known by various other names including ATM machine, automated banking machine, and various regional variants derived from trademarks on ATM systems held by particular banks.

On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN).

Using an ATM, customers can access their bank accounts in order to make cash withdrawals, debit card cash advances, and check their account balances as well as purchase prepaid cell phone credit. If the currency being withdrawn from the ATM is different from that which the bank account is denominated in the money will be converted at an official wholesale exchange rate . Thus, ATMs often provide one of the best possible official exchange rates for foreign travelers, and are also widely used for this purpose

Debit Card:

A debit card is a plastic card which provides an alternative payment method to cash while making purchases. The amount of a transaction is typically displayed on a card reader, after which the customer swipes the card then enters their PIN number (an attendant must swipe gift cards at gas stations). There is usually a short delay while the EFTPOS (Electronic Funds Transfer at Point of Sale) terminal contacts with the computer network (over a phone line or mobile connection) to verify’ and authorize the transaction.

 Credit Card:

A credit card is a system of payment named after the small plastic card issued to users of the system .A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. Credit cards charge interest and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual’s credit rating. http://www.investopedia.com. A credit card is different from a debit card in that it does not remove money from the user’s account after every transaction. In the case of credit cards, the issuer lends money to the consumer (or the user). It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to ‘revolve’ their balance, at the cost of having interest charged.

Point of sale (POS):

POS is an abbreviation for point of sale (or point-of-sale, or point of service).

This can mean a retail shop, a checkout counter in a shop, or a variable location where a transaction occurs in this type of environment. Additionally, point of sale sometimes refers to the electronic cash register system being used in an establishment. Point of sale systems are used in restaurants, hotels, stadiums, casinos, as well as retail environments in short, if something can be sold, it can be sold where a point of sale system is in use.

Check Truncation:

Check truncation is such a service in which a financial institution does not return the rejected checks with the monthly statement to their customers, rather they provide statement of rejected checks with the monthly statement. The banks store the rejected checks for a certain period (usually 90 days). During this time period, a customer can adjust/rectify his account if any imbalance is found between his own records and the bank statement provided by bank. After the expiration of this stipulated period, the rejected checks are spoiled and the bank maintains a micro film copy for a period.

Home Banking:

At first, banks introduced Telephone Bill Payment (TBP) system so that customers could be able to do their banking activities from their home. The next version of home banking was Video Home Banking (VHB). The internet is expected to be a major factor in home banking.

Retail Automated Clearing House Service:

The Automated Clearing House (ACH) is an electronic network for financial transactions. ACH processes large volumes of both credit and debit transactions which are originated in batches. ACH credit transfers include direct-deposit payroll payments and payments to contractors and vendors. ACH debit transfers include consumer payments on insurance premiums, mortgage loans, and other kinds of bills. Businesses are also increasingly using ACH to collect from customers’ online, rather than accepting credit or debit cards.

Wire Transfer:

Wire transfer is a process which ensures fast and appropriate timing of fund transfer from the sender to the recipient. This kind of transfer of money could be either within the country or abroad. Funds are transferred under the following network:

i. Fed wire (The Federal Reserve Communication System)

ii. Bank wire

iii. CHIPS (The Clearing House Inter-bank Payment Service)

iv. SWIFT (The Society for World Wide Inter-bank Financial Telecommunication)

Corporate Automated Clearing House:

The Automated Clearing House (ACH) is an electronic network for financial transactions. ACH processes large volumes of both credit and debit transactions which are originated in batches. Other retail and fiduciary products and services may include Balance inquiry, Funds transfer, Downloading transaction information, Bill presentment and payment, Loan application, Investment activity and other value-added services.

Prospects of e-banking in Bangladesh:

Recently, the government’s emphasis on building a digital Bangladesh, setting up ICT park, raising allocation for developing ICT infrastructure, waiving taxes on computer peripherals and other measures including the automation program of banking sector led by the Bangladesh Bank and competition among the scheduled banks in improving customer services accelerated the prospects of e-banking in Bangladesh.

• The Bangladesh railway owned a high-speed optical fiber network (1,800 km) parallel to the railway path that covered most of the important parts of Bangladesh. This optical fiber network can be used as the backbone network of e-banking in Bangladesh. For example, mobile phone operators such as GP and Ranks ITT of Bangladesh used this optical fiber network through which they reached even in rural areas with their services. It is encouraging that some of the FCBs and PCBs are already used this optical fiber network for conducting online transactions, ATM and POS services.
• In addition, Bangladesh Bank was implementing the different projects for modernizing national payment and settlement system started from 2009 followed by the development of inter-bank online network. It made mandatory for all head offices of the scheduled banks to be connected with Bangladesh Bank. These efforts would allow the scheduled banks to be connected to each other for conducting inter-bank online transactions in near future and this would smooth the introduction of e banking in Bangladesh.
• Internet services came to Bangladesh with connectivity in 1996. Digital telephone exchanges established in 389 upazilas and 17 growth centers. Work was underway to cover the rest of the upazilas under digital exchange system. Meanwhile, Bangladesh joined the information super-highway by connecting itself with international submarine cable system in 2006. A total of 159 Internet Service Providers (ISPs) now connected with this system of which 64 are actively providing services. Internet connection was slow with bandwidth range 32 – 56 kbps for dial up and 64 – 8 mbps for broadband.
• Under this scenario, as a part of government decision of building digital Bangladesh, the existing capabilities of ICT sector was likely to increase rapidly in bringing all upazilas under internet services and this will contribute in widening the scope of e-banking throughout the country. The overall computer density in the banking sector was 1.64. For foreign commercial banks (FCBs) the computer density was 45.34, where as for NCBs the ratio was only 0.41. The specialized bank scenario was almost same as the NCBs, 0.43. On the other hand, private commercial banks had comparatively higher ratio, 4.94. As a whole 81.81 percent bank did not have any local area network (LAN), 30 percent had WAN (Wide Area Network) but for some banks many branches were outside of WAN connectivity.
• At present, all foreign banks of our country were using online banking system; they were invested a lot for their automation banking services. For this reason, they were increasing market share every year. They were the pioneer of implementing electronic banking systems in Bangladesh, but now most of the private banks of our country used electronic banking systems. In our country different banks were offering electronic banking services in different ways, some were offering ATM (Automatic Teller Machine) services, some were tele-banking and some were electronic fund transfer, debit card, credit card etc.

Security measures of E-banking:

The Security of a system is the extent of protection against some unwanted occurrence such as the invasion of privacy, theft and the corruption of information or physical damage. As this system is developed through the Internet there is a big chance for hacking through our system. Current browsers counter security threats with a network communication protocol called Secure Sockets Layer (SSL). SSL is a set of rules that tells computers the steps to take to improve the security level of communications. These rules are designed for the following:

Encryption:

Guards against eavesdropping. Encryption is the scrambling of information for transmission back and forth between two points. When we send out a letter to our friend, we communicate in a language that both of us understand. Since, our language is understood by thousands of other people also, if someone else gets hold of our letter, he will not have any problem in understanding its contents

Decryption:

Encryption refers to the encoding of information that a user sends over the Internet. If an unauthorized party tries to read that, it would be impossible for them to read it. Decryption is reverse technique of Encryption. After receiving encrypted data it is converted to original data.

Secure Socket Layer:

Secure Socket Layer (SSL) provides sound privacy protection by encrypting the channel of communication between server and the customer. Using a mathematical formula, SSL puts the information into a complex code. Even if information is intercepted, that would be extremely difficult to read. So SSL’s only role is to encrypt or decrypt message. This protocol fully encrypts all the information in both the HTTP request and HTTP response, including the URL the client is requesting any submitted from contents (e.g. credit card number, debit card number), any HTTP access authorization information (user names, password) and all the data returned from the server to the customer.

Authentication:

Guards against impersonation. However, these effects protect our data only during transmission, That is, network security protocols do not protect our data before we send it. Just as we trust merchants not to share our credit card information, we must trust the recipients of our on-line data not to mishandle it.

CHALLENGESOF THE “E-BANKING REVOLUTION”

 Electronic Banking provides enormous benefits consumers in terms of the ease and cost of transactions. But it also poses new challenges for country authorities in regulating and supervising the financial system and in designing and implementing macroeconomic policy..

NEW CHALLENGES FOR REGULATORS

This changing financial landscape brings with it new challenges for bank management and regulatory and supervisory authorities. The major ones stem from increased cross-border transactions resulting from drastically lower transaction costs and the greater ease of banking activities, and from the reliance on technology to provide banking services with the necessary security.

Regulatory Risk: Because the Internet allows services to be provided from anywhere in the world, there is a danger that banks will try to avoid regulation and supervision. What can regulators do? They can require even banks that provide their services from a remote location through the Internet to be licensed. Licensing would be particularly appropriate where supervision is weak and cooperation between a virtual bank and the home supervisor is not adequate. Licensing is the norm, for example, in the United States and most of the countries of the European Union. A virtual bank licensed outside these jurisdictions that wishes to offer electronic banking services and take deposits in these countries must first establish a licensed branch.

Legal Risk: Electronic banking carries heightened legal risks for banks. Banks can potentially expand the geographical scope of their services faster through electronic banking than through traditional banks. In some cases, however, they might not be fully versed in a jurisdiction’s local laws and regulations before they begin to offer services there, either with a license or without a license if one is not required. When a license is not required, a virtual bank—lacking contact with its host country supervisor—may find it even more difficult to stay abreast of regulatory changes. As a consequence, virtual banks could unknowingly violate customer protection laws, including on data collection and privacy, and regulations on soliciting. In doing so, they expose themselves to losses through lawsuits or crimes that are not prosecuted because of jurisdictional disputes.

Money laundering is an age-old criminal activity that has been greatly facilitated by electronic banking because of the anonymity it affords. Once a customer opens an account, it is impossible for banks to identify whether the nominal account holder is conducting a transaction or even where the transaction is taking place. To combat money laundering, many countries have issued specific guidelines on identifying customers. They typically comprise recommendations for verifying an individual’s identity and address before a customer account is opened and for monitoring online transactions, which requires great vigilance.

Operational Risk: The reliance on new technology to provide services makes security and system availability the central operational risk of electronic banking. Security threats can come from inside or outside the system, so banking regulators and supervisors must ensure that banks have appropriate practices in place to guarantee the confidentiality of data, as well as the integrity of the system and the data. Banks’ security practices should be regularly tested and reviewed by outside experts to analyze network vulnerabilities and recovery preparedness. Capacity planning to address increasing transaction volumes and new technological developments should take account of the budgetary impact of new investments, the ability to attract staff with the necessary expertise, and potential dependence on external service providers. Managing heightened operational risks needs to become an integral part of banks’ overall management of risk, and supervisors need to include operational risks in their safety and soundness evaluations.

Reputational Risk: Breaches of security and disruptions to the system’s availability can damage a bank’s reputation. The more a bank relies on electronic delivery channels, the greater the potential for reputational risks. If one electronic bank encounters problems that cause customers to lose confidence in electronic delivery channels as a whole or to view bank failures as system wide supervisory deficiencies, these problems can potentially affect other providers of electronic banking services. In many countries where electronic banking is becoming the trend, bank supervisors have put in place internal guidance notes for examiners, and many have released risk-management guidelines for banks.

THE MACROECONOMIC CHALLENGES

But the challenges are not limited to regulators. As the advent of E-banking quickly changes the financial landscape and increases the potential for quick cross-border capital movements, macroeconomic policymakers face several difficult questions.

• If electronic banking does make national boundaries irrelevant by facilitating capital movements, what does this imply for macroeconomic management?

• How is monetary policy affected when, for example, the use of electronic means makes it easier for banks to avoid reserve requirements, or when business can be conducted in foreign currencies as easily as in domestic currency?

• When offshore banking and capital flight are potentially only a few mouse clicks away, does a government have any leeway for independent monetary or fiscal policy?

• How will the choice of the exchange rate regime be affected, and how will E-banking influence the targeted level of international reserves of a central bank?

• Can a government afford to make any mistakes? Will the spread of electronic banking impose harsh market discipline on governments as well as on businesses?

RISK MANAGEMENT PRINCIPLES FOR ELECTRONIC BANKING

BASEL COMMITTEE RECOMMENDATIONS

The Basel Committee on Banking Supervision expects such risks to be recognized, addressed and managed by banking institutions in a prudent manner according to the fundamental characteristics and challenges of E-banking services. These characteristics include the unprecedented speed of change related to technological and customer service innovation, the ubiquitous and global nature of open electronic networks, the integration of E-banking applications with legacy computer systems and the increasing dependence of banks on third parties that provide the necessary information technology. While not creating inherently new risks, the Committee noted that these characteristics increased and modified some of the traditional risks associated with banking activities, in particular strategic, operational, legal and reputational risks, thereby influencing the overall risk profile of banking.

Based on these conclusions, the Committee considers that while existing risk management principles remain applicable to E-banking activities, such principles must be tailored, adapted and, in some cases, expanded to address the specific risk management challenges created by the characteristics of E-banking activities. To this end, the Committee believes that it is incumbent upon the Boards of Directors and banks’ senior management to take steps to ensure that their institutions have reviewed and modified where necessary their existing risk management policies and processes to cover their current or planned E-banking activities. The Committee also believes that the integration of E-banking applications with legacy systems implies an integrated risk management approach for all banking activities of a banking institution.

To facilitate these developments, the Committee has identified fourteen Risk Management Principles for Electronic Banking to help banking institutions expand their existing risk oversight policies and processes to cover their E-banking activities.

For a similar reason, the Risk Management Principles issued by the Committee do not attempt to set specific technical solutions or standards relating to E-banking. Technical solutions are to be addressed by institutions and standard setting bodies as technology evolves. However, this Report contains appendices that list some examples current and widespread risk mitigation practices in the E-banking area that are supportive of the Risk Management Principles.

The Risk Management Principles fall into three broad, and often overlapping, categories of issues that are grouped to provide clarity

1. Board and Management Oversight;

2. Security Controls; and

3. Legal and Reputational Risk Management.

REGULATORY TOOLTO OVERCOME CHALLENGES

There are four key tools that regulators need to focus on to address the new challenges posed by the arrival of E-banking.

Adaptation: In light of how rapidly technology is changing and what the changes mean for banking activities, keeping regulations up to date has been, and continues to be, a far-reaching, time-consuming, and complex task. In May 2001, the Bank for International Settlements issued its “Risk Management Principles for Electronic Banking,” which discusses how to extend, adapt, and tailor the existing risk-management framework to the electronic banking setting. For example, it recommends that a bank’s board of directors and senior management review and approve the key aspects of the security control process, which should include measures to authenticate the identity and authorization of customers, promote non repudiation of transactions, protect data integrity, and ensure segregation of duties within E-banking systems, databases, and applications. Regulators and supervisors must also ensure that their staffs have the relevant technological expertise to assess potential changes in risks, which may require significant investment in training and in hardware and software.

Legalization: New methods for conducting transactions, new instruments, and new service providers will require legal definition, recognition, and permission. For example, it will be essential to define an electronic signature and give it the same legal status as the handwritten signature. Existing legal definitions and permissions—such as the legal definition of a bank and the concept of a national border—will also need to be rethought.

Harmonization: International harmonization of electronic banking regulation must be a top priority. This means intensifying cross-border cooperation between supervisors and coordinating laws and regulatory practices internationally and domestically across different regulatory agencies. The problem of jurisdiction that arises from “borderless” transactions is, as of this writing, in limbo. For now, each country must decide who has jurisdiction over electronic banking involving its citizens. The task of international harmonization and cooperation can be viewed as the most daunting in addressing the challenges of electronic banking.

Integration: This is the process of including information technology issues and their accompanying operational risks in bank supervisors’ safety and soundness evaluations. In addition to the issues of privacy and security, for example, bank examiners will want to know how well the bank’s management has elaborated its business plan for electronic banking. A special challenge for regulators will be supervising the functions that are outsourced to third-party vendors.

E-BANKING STRATEGIES:

No single E-banking strategy is right for every banking company. But whether they adopt an offensive or a defensive posture, they must constantly re-evaluate their strategy. In the fast-paced e-economy, banks have to keep up with the constantly evolving business models and technology innovations of the Internet space.

• In Bangladesh most of the business organizations are running centralized manner. As such visions, missions, goals of the top management of various organizations are very important. Top management should change their mindset and like Bangladesh Bank, they should encourage e-business process. Top management views are reflected to the mid level management and lower level management. Unfortunately most e-business efforts fail for non-performing visions, missions, goals and tactics at the business processes of the organization.

• Customers have some rational reasons for staying offline. Some of these reasons include usability features of the site, concerns about security and frequent complaints that signing up is complicated and time-consuming. Banks can solve these problems by refocusing investment on improving the site’s basic functionality and user-friendliness, and avoiding advanced features that most customers neither understand nor value
• An actively used online channel should also serve as a medium to sell banking services for the branch staff, the call center, and the relationship manager. Integrated channels working together are far more effective than a group of customer.
• Banks must make efforts to increase their site usage by customers and effectively co-ordinate the online channel with branches and call centers. Then only they will be able to derive maximum value that includes cost reduction, cross-selling opportunities, and higher customer retention.

• To facilitate this integration, banks must formulate paths that people in various customer segments are likely to take among the channels. The interactions in each channel can then be worked around these paths. For example, a call center representative must work out which channel(s) the customer used before coming to her, and which channel(s) the customer is likely to visit next. Each channel must have entry and exit points that must welcome customers and then send to other channels. Hence, the overall goal of banks is to create a seamless multichannel experience.
• On the other hand, those banks that are planning to build their online businesses will have to understand several strategic issues like do they have the right business model for E-banking? How should they price their E-banking products and services? Bankers planning to move into E-banking have to explore different options, make investments and have to develop a variety of partnerships. They have to put their time and efforts to identify the best opportunities. In the case of traditional banks, if they are too aggressive in using price incentives to build their e-business, they risk the profitability of their traditional business. However, if they do not offer sufficient price incentives for customers to bank online, their efforts to build a sound e- banking business may not fructify.

E-banking offenses

Electronic banking introduces faster, safe transitions system. But in some cases we can see that some of people take several offences. These offences can destroy bank’s client’s confident, information confidentiality. Password fraud is one of the worst offences in the field of e-banking sector. Here are listed some of offences occurring in several times.

1. Password fraud.

2. Risk of debit or credit card counterfeit.

3. Hacking problem

4. Unlawful access into network system.

5. The use of the laying devices

6. The enactment of computer viruses and other ways of disruption.

7. Deactivate protected equipment

8. Forming, transferring, accepting, transforming, displaying and keeping some information

9. Access in the restricted automated systems.

10. Registration (logging) with reference to the forbidden resources

11. Cryptographic methods (Hiding information of computer system.)

12. The implementation of computer viruses and other ways of disturbance.

(http://onlinebdinfo.blogspot.com)

 Provisions regarding E-Banking offense in Bangladesh

In all over the world uncertainty, risk exists in everywhere. Some of people are dishonest. They create some of problem in ubiquitously. And that’s why in Bangladesh government think that there are some chances of occurring e-banking offences in the new arena of technological development. Information Communication Technology Act 2006 is one of the great initiatives to protect offences of electronic business as well as e-banking sector.

According to ICT act 2006

Sec 56 Hacking or access without authorization

If any person:

A) Does any kind of offence knowing, it will hamper the resource, erase or change any computer system which will loss public assets.

B) Access into any computer, server, and network system without authorization. It should treat as hacking crime/offence.

Penalty: Maximum 10 year, one crore taka or both of this penalty

Sec 61 penalty of accessing in restricted system

Unauthorized access into any computer system knowing that it is restricted by controller of government should be treated as unauthorized access.

Penalty: Maximum 10 year, 1,00,000 taka or both of this.

Sec 54 penalty of destruction into computer, computer system, etc:

Damage any file, resource, document, data, program, network system should be treated as a crime.

Penalty: Maximum 10 year, 1, 00,000 taka or both of this.

Sec 55 penalty of cracking: If anybody does any hamper to any source code, hide code and desolate of any computer, computer program, computer system and computer network or does by another body will be treated as cracking offence/crime.

Penalty: Maximum 3 year, 3, 00,000 taka or both of this.

According to penal code of Bangladesh :Sec 03: Punishment of offences committed beyond, but which by law may be treated within, Bangladesh. Bangladesh has been introduced with electronic banking system with a few times before. In this regard law has been also enacted in a limited arena. Law change with the time and necessity of the people, although in the field law is new but demand of regulation are changing diplomatically, whereas the law has simplified e-banking system but also given relief for violation of such laws. There are various kinds of offense which are committing in everyday banking system. Unauthorized access into computer network or system with a guilty mind for making hamper of the owner is punishableoffence and may also punished with Maximum 10 year, 1, 00,000 taka or both of this. In this regard High Court Division, Bangladesh said that, access any network, computer system and whoever with bad intention whether it cause any hamper to owner without authorization or not shall be treated as crime. Where any person destruct any document for having any profit for himself or to make barrier to produce as evidence shall be punished imprisonment of either description for a term which may extend to two year, or fine or with both. In this context Bangladesh Bank has power to give proper management of any bank company generally. No bank exist in Bangladesh may deny the rules and regulation made by Bangladesh Bank and also has discretion to modify its own order or circular on a representation made to it. Hacking is a common word in internet related matters and that’s why it’s also relevant to e-banking. If any person does any kind of offence knowing it will hamper the resource, erase or change any computer system which will loss public assets will be punished for maximum ten year, one lac taka or both penalty. If any person enters into or upon property in the possession of another with intention to commit an offence is said to commit criminal trespass and shall be punished for a term which may extend to three months or with fine which may extend to five hundred taka or with both. High Court Division says changing source code will also be treated as offence in this regard.

All banks in Bangladesh are regulated by Bank Companies Act 1991and bound to co-operate with the rules and regulation of Bangladesh Bank which are not inconsistent with the law. Where a bank claims interest in express of what is permitted by direction of Bangladesh Bank, the court can always give relief to the aggrieved party. Also direct that the Bank Companies Act clearly invest Bangladesh Bank with a strong regulatory power over the functioning and business of banking companies. Where any activities and function are occurred by any directorial body or by any person of a bank against public interest, Bangladesh Bank have proper jurisdiction to remove chairman, director or chief executive and may make order to stop such activities.

Legislations:

• The Banking Companies Act, 1991. Sec 12
• The Information & Communication Technology Act, 2006. Sec 1 (4)
• The Information & Communication Technology Act, 2006. Sec 1 (14)
• The Information & Communication Technology Act, 2006. Sec 1 (1)
• The Banking Companies Act, 1991. Sec 57
• Information and Communication Technology Act, 2006, Sec 54
• The Penal Code, 1860, Section 204
• The Penal Code 1860, Section 441
• Information and Communication Technology Act, 2006, Sec 56
• Ibid, Section 447

Benefits of e-banking in Bangladesh:

E-business can add value through knowledge management as it helps to attain new services to the customers. Successful e-business depends on sharing of strategic knowledge for which dissemination of the information and free flow of knowledge around the globe is required. On line banking can provide twenty four hours banking facilities. Through electronic data interchange customers are able to draw money from one branch to another. Letter of credits can be sent through SWIFT or electronic fund transfer from one country to another can be feasible. Actually on line banking provides faster, reliable services. Encryption and decryption can be used to send money from one place to another. As such on line bank management handles customers in a far better way.

Benefits of nation:

Increased productivity:

 rapid mobilization of funds through e- banking can ensure increased productivity of economy and proper use of the resources

Contribution to GDP

Banks with a national economy, work towards building national capital, increasing national savings and mobilizing investments in trade and industry.

Infrastructure Development: Bank providing e-baking services are developing themselves in infrastructure thus government face comparatively less burden for infrastructure development.

Facilitating international trade: banks providing immense banking facility for  international trading specially in readymade garments sector, frozen shrimp, jute pharmaceuticals sector.

Job creation: unemployment is a great threat to  development ,IT development in banking creating new types of job like system analyst, data control manager etc.

Industrial Development: due to rapid mobilization of savings and facilitating export and import e-banking is contributing to the faster contribution to Bangladesh.

Benefits of Bank’s

Profit Maximization: E- banking leads to lower cost for the banks also ensures better profit from innovative products in this section thus helps banks to maximize the profit of the owners.

Expand beyond geographic reach: e –baking enabling the banks to expand their services beyond the geographic reach thus becoming internationally competitive.

Rapid growth: banks providing innovative and fast e- banking service will experience rapid growth in this industry, will increase its customer base and become a brand name in banking industry.

Cut down cost: E- banking services causes low cost of providing services than manual. It also reduces maintenance cost to bankers

Benefits of customer’s.

 Time savings:The main benefit from the bank customers’ point of view was significant saving of time by the automation of banking services processing and introduction of an easy maintenance tools for managing customer’s money. The main benefits of e-banking were as follows:

Continuous access to account information: customers can access to their account information any time 24 hours a day, 7 days in a week.

Don’t require physical interaction: in case of transaction customers don’t require to present physically thus fell convenient to transact .

Better cash management:  much better cash management can insure through e- banking ass cash can be easily available.

.Reduced costs: This was in terms of the cost of availing and using the various banking products and services.

Convenience: All the banking transactions performed from the comfort of the home or office or from the place a customer wants to.

Speed: The response of the medium was very fast; therefore customers actually waited till the last minute before concluding a fund transfer.

Reduced risk: as cash can be transect without physical appearance can move with the help of credit card, smart card it is less risky.

In Bangladesh most of the business organizations are running centralized manner. As such visions, missions, goals of the top management of various organizations are very important. Top management should change their mindset and like Bangladesh Bank, they should encourage e-business process. Top management views are reflected to the mid level management and lower level management. Unfortunately most e-business efforts fail for non-performing visions, missions, goals and tactics at the business processes of the organization.

Constraints to E-Banking in Bangladesh

There are some major constraints to e-banking in Bangladesh which are given below. Foreign and private banks offered a broad range of services over the internet. But Public sector banks lag behind in offering wider range of internet banking services and products.

•  At present, there is no proper infrastructure for performing Electronic banking activities   in Bangladesh.
•  Slow uptake of internet access and PCs.
•  Poor telecommunication network policies and slow paced regulatory initiatives.
•  Very minimum number of users of internet.
•  The banking infrastructure in terms of electronic payments and inter-bank
•    connectivity is poor.
•  Limitations of supportive legal system.
•  Lack of skilled IT workforce.
•  Absence of cyber law.
•  Absence of EFT (Electronic Fund Transfer) legislation.
•  Absence of need based business plan for online banking
•  ATMs may have network problems, unavailability and shortage of money.
•  High price of computer, compute hardware and banking software.
•  Lack of awareness at government level of e banking issue.
•  Lack of awareness at customer level of e banking issue.
•  Weather has a direct effect towards e-banking.
•  Government should compel the banking sectors to automate their operation and going   online by a specific period.
•  Provide adequate training and technological support to develop the manpower.
•  Appropriate legal framework.
•  Proper infrastructure development.
•  Government should implement the cyber laws to ensure proper security about customers information (i.e. Credit card number)
•  Government should establish proper educational institution to create efficient IT professionals to support e-banking in Bangladesh.
•  Developing of integrated e-banking software.
•  Government, in collaboration with the banks, should educate and inform its citizens and customers on the workability and effectiveness of E-banking. This will increase the confidence level of customers.
•  The clearing house operation in Bangladesh should be fully automated system.
•  Banks should have adequate research and technological background in this regard.
•  Bank can charge normal profit to enlarge the market size on the electronic banking products.
•  Political commitment to improve governance and institutional strength is essential for successful application of e-banking.
•  As e-bank users mostly use ATMs and POS in most cases, the banks should emphasize on providing uninterruptible service

E-banking in IFIC             Bank ltd.

IFIC Bank Ltd.

International Finance Investment and Commerce Bank Limited (IFIC Bank) is banking company incorporated in the People’s Republic of Bangladesh with limited liability. It was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions aboard. In 1983 when the Government allowed banks in the private sector, IFIC was converted into a fully fledged commercial bank. The Government of the People’s Republic of Bangladesh now holds 32.75% of the share capital of the Bank. Directors and Sponsors having vast experience in the field of trade and commerce own 11.42% of the share capital and the rest is held by the general public. This bank is one of the pioneers of e-banking in Bangladesh. It’s modern innovative model program is sms banking .

IFIC Internet Banking

Explore the world of convenience banking that lets you take control of your time. With IFIC Internet Banking you can conveniently and securely observe your account’s information from your home or office.

Now, you can access your IFIC Bank account 24/7 round the clock.

Features & Benefits:

• View account balances.
• View transaction details.
• Print account statement (in the form of short& for a particular period.
• Cheque book  inquiry.
• Interest rate inquiry.
• Detail product lists & product information.
• Change password.

IFIC Internet Banking User Tips:

• To get IFIC Internet Banking service, customers have to fill out Internet Banking Form and submit it to the nearest branch.

• After submitting application form, bank will inform User ID & Password
• After getting User ID & Password, users have to go to the website http://www.ificbank.com.bd to log in to Internet Banking service.
• After first log in, user must change password for security purpose.

• Users can use IFIC Internet Banking service anytime & anywhere of the world.

IFIC Bank’s Sms  Banking:

Banking facility is free of charge for you. Banking information and be in touch any time with IFIC bank from your mobile. You can check your account balance, account information or even get your mini account statement through IFIC sms banking service. Account and card holder of IFIC bank to apply for sms banking service please fill up the application form and drop it to the nearest IFIC bank branch. For information through sms

1 .  Go to message option of your cell phone.

1. Type the designated hot key or pin number .
2. And send sms to 6969.

Following services are available:

• View account balance
• View transaction details
• Print account statement (in form of short& for a particular period)
• Cheque book inquiry
• Interest rate inquiry
• Detailed product list& product information
• Change password.

Specialized Areas & Major Highlights of the IFIC Bank:

VISA Card

IFIC Bank VISA Credit has been launched in June 2007.  The bank successfully launched VISA Card-Credit Card which created a new dimension in its customer service and consumer financing. It can be used for withdrawal of cash from ATM or purchase of goods and services from any point of sales (POS) displaying VISA Logo. Recently the bank launched VISA Debit Card and Prepaid Card. The Debit Cards are issued to the customers who have been maintaining Savings/Current account with our online branches. Prepaid cards are issued by the branches instantly. For Prepaid cards, it is not necessary to maintain any account with the bank. Bank POS has been installed at all the branches which will facilitate the card holders for withdrawal of cash from any branch of IFIC Bank.

“Your Satisfaction is First” Slogan

Like any other country of the world, the people living in the urban areas of our country lead a very busy life. Time is very valuable to them. Despite this, they are to waste their valuable time at the counter of different Banks and other Institutions for payment of their monthly bills of different utility services like Electricity, Telephone, Water, Gas etc. They, as such, face enormous difficulties for payment of their monthly bills in time. Such inconveniences of the urban people can be removed by making an arrangement to collect all the bills of various utility services at One Point.With this end in view, IFIC Bank Limited has introduced a slogan entitled “YOUR SATISFACTION IS FIRST”. The slogan is designed to provide all the required services to the customer in making payment of their various bills on their behalf from the counter of the Bank irrespective of location.

IFIC Line- (Any Branch Banking)

Online Branch Banking The Bank has set up a Wide Area Network (WAN) across the country to provide online branch banking facility to its valued clients. Under the Scheme, clients of any branch shall be able to do banking transaction at other branches of the bank. Any amount can be deposited or transferred under IFIC Line. In the system, however, at present there is a limit for cash withdrawal through bearer or by account holder himself.

Information and Communication Technology

Banks are constantly upgrading their technological platform to enhance customer value management capability for profit maximization. Accordingly, Real Time Online Banking, ATM, Credit Card, Debit Card / Prepaid Card, POS, SMS Banking; KIOSK etc. have been introduced in the domestic Banking Arena.

IFIC Bank has introduced the following updated technology for the valued clients:

• Introduction of Real Time Online Banking System.
• Establishment of ATM interface with core Banking solution.
• Credit Card, Debit card / Prepaid Card and POS.

Customer care

IFIC bank’s firm commitment to excellent customer service delivery has resulted to remarkable progress in all areas of operation during 2006. With the liberalization of banking and financial industry and increasing customer knowledge and sophistication, competitive pricing of products is no longer sufficient in capturing large market share. The continuous improvement in delivery of products and services, reduction of turn around time for loan processing, on-line deposits and remittance payments payment has the key differentiation for winning the customer satisfaction…  Advertisement has been given in TV channels for developing awareness of the anti money laundering initiatives of the Bank

 Corporate Social Responsibility (CSR)

Globally, the notion of Corporate Social Responsibility (CSR) is fast gaining acceptance. IFIC Bank manages its business in a responsible way and contributes to the society and environment in which it operates.

• Vocational training program for migrant workers

• Education for life program
• IFIC school/orphanage
• Education program for tokai/street children
• Medical training for midwives
• IFIC health care centre
• Eye camp
• And other related programs. .

 Credit Rating on IFIC Bank Ltd.

Credit Rating Agency of Bangladesh Limited (CRAB) has upgraded the long term rating of IFIC Bank Limited to “AA3” (pronounced double A three) and retained the short term rating at “ST-2”. CRAB performed the rating based on audited financial statements up to 31st December 2011 and other relevant information as well as some operational updates of 2012.

Commercial Banks rated “AA3” have very strong capacity to meet their financial commitments. They differ from the highest-rated Commercial Banks only to a small degree. “AA3” is judged to be of very high quality and is subject to very low credit risk. Commercial Banks rated ST-2 are considered to have strong capacity for timely repayment. Commercial Banks rated ST-2 are characterized with commendable position in terms of liquidity, internal fund generation, and access to alternative sources of funds.

Customer satisfaction survey

I have conducted a customer satisfaction survey on 100 customers based on different scheme facilities, service section and other ancillaries provided by IFIC bank to identify customers view regarding this bank. The survey results are given below:

 Survey Questionnaire (scheme facilities of IFIC Bank)

• Interest rate on fixed deposit and other savings scheme are pleasing enough.
• Lending procedure is convenient and simple.
• Lending rate is reasonable and scope of lending can fulfill the customer demand.
• Bank charges for pay order, account   transaction, foreign exchange transaction, debit& credit card with other banking transaction is reasonable.
• Types of deposits and other savings schemes of IFIC can meet up the savings demand of different people having different income.
• IFIC Bank needs more innovative savings scheme and elaborate loan area with lucrative characteristics to attract the target customer.

Survey Result (scheme facilities of IFIC Bank)

Most of the client of IFIC Bank think that its given interest rate on deposit is satisfactory and charges it demand is reasonable but they do believe that IFIC Bank should introduce more innovative products and elaborate loan area with easier and convenient lending procedure.

 Survey Questionnaire (service section of IFIC Bank)                           

• Customers are always well treated by the employees as per their slogan “your satisfaction first”
• Time required for check clearing, foreign exchange transaction and other transaction is satisfactory.
• E- Banking and SMS banking reducing the time required for banking transaction and very much convenient to customers

Survey Result (Service Section of IFIC Bank)

 According to customers, they are well treated by the employees of IFIC Bank as per their slogan “your satisfaction first”. But due to heavy work load and some lack of equipment some time more time is required for transactions which sometimes bother them.

 Survey Questionnaire (Ancillaries of IFIC Bank)

• Numbers of employees are adequate to serve the vast customers.
• Number of branches around the country is enough for smooth transactions and customer service.
• Number of ATM booth is satisfactory.

Survey result (Ancillaries of IFIC Bank)

Most of the customers are belief that though the number of branches are moderate but the number of ATM booth insufficient. And number of employ should increase to provide better service to them.

Ratio Analysis

Ratio analysis is a widely used financial tool for drawing effective decisions from historical financial data. Financial ratios do vary a lot in terms of their nature, criteria, purpose and uses. It is the trend analysis and industry comparisons that make financial ratios a potent tool for the analyst as far as decision making is concerned. I have the option of calculating a lot of financial ratios from a wide ranging perspective. But, I think it is worthwhile to concentrate on those ratios that have a bearing on the subject matter of the report.

 Current ratio

Current ratio is used for measuring the internal liquidity of the firm. Maintaining an optimum current ratio is critical for most firms but more so for a bank and other depository organizations. Liquidity shortage can shore up the cost of funds whereas excess liquidity puts a squeeze on the profitability. Current ratio for current year is 1.57. Here is a look at the current ratio of IFIC Bank over last five years.

From the above graph we can observe that the current ratio of the Bank by and large decreased over the course of last five years.

Comparison of current ratio with the peer group shows IFIC Bank has higher current ratio than all other banks in the group.

Capital Adequacy Ratio (CAR)

Capital Adequacy ratio measures the solvency and financial strength of a firm. A bank with higher capital adequacy ratio is more likely to withstand a financial crisis. On the other hand, a bank with low capital adequacy ratio is vulnerable in the face of external shock and internal poor performance. Here is a look at CAR of IFIC Bank over last five years.

CAR has improved over last five years for IFIC which is a good sign for the financial Strength of the firm. In 2007 it was 9.80% and within four year it goes to 10.40%. Comparison of CAR with peer shows that IFIC Bank has the lowest ranking in this regard. The management should explore the reasons and take steps accordingly.

 Loan Deposit Ratio

            Loan deposit ratio is an important ratio for a bank. Bank tries to maximize their loans given the amount of deposits. But, too high loan deposit ratio can be risky at the same time. Here is a look at loan deposit ratio of IFIC bank over last five years, where the current year ratio is 8.5%.

Loan deposit ratio has increased for IFIC over last five years. But, it should be looked into risk associated with it is properly taken care of.

 Return on Asset (ROA)ROA is a basic measure of profitability of a firm. It is especially helpful in comparing firms in the same industry. ROA expresses net profit after tax as a percentage of total assets. ROA for IFIC Bank over the last five years are shown in the following graph.

ROA of IFIC Bank which is 1.39% in 2011, showing a decreasing trend in recent years which needs to look into by the management to spell out corrective measures.

Comparison with peer group reconfirms my suggestion to do some scrutiny on the declining and low ROA of IFIC.

 Return on equity

ROE is perhaps the most widely used measure of profitability. ROE expresses the net profit after tax as a percentage of total equity of common shareholders. Here is a look at ROE of IFIC Bank over the last five years with current year ratio up to June which is 20.89%.

Like ROA, this measure of profitability has also shown a considerable decline in recent years which is a real cause for concern for the Bank.

Comparison of ROE with peer group shows that ROE of IFIC has left a lot to be desired. The reasons for low ROE needs to be found out.

SWOT Analysis

SWOT Analysis of E –Banking business in Bangladesh:

Strength:

E –banking business need some fundamentals to grow. Although there are several weaknesses of e-banking in Bangladesh, the present ongoing trend is showing a bright future for e-banking.

 Optical fiber connectivity: For e-banking high tech connectivity is an important factor. Bangladesh has optical fiber connectivity besides satellite connectivity. It has connected with SEA ME WE 4 optical fiber consortium, the largest optical fiber highway for high speed data transmission.

Availability of ICT experts: For e-commerce ICT learned skill person is crucial factor. Bangladesh is making a huge investment in improving the ICT skilled personnel. The ICT education has been incorporated in National Education Policy 2009 as a compulsory subject from secondary level. The schools and colleges are providing with computers and necessary ICT support. The Public and Private universities are offering graduate courses on ICT. Each year a huge graduate obtain ICT graduation from these institutions. Besides numerous public and private training institutions are also giving training on ICT. Bangladesh Govt. has given a special priority to train its officers and staffs with ICT education.

 Rapid growth in telecommunication industry: Availability of telecommunication facility is the predominate factor for e-banking. There is a rising trend in telecommunication sector in Bangladesh. Besides govt. fixed phone service, a numerous private companies are serving the fixed phone services. 5 renowned multinational companies are providing cellular phone services. According to the census report of BBS, total no of mobile phone subscribers reach to 76.43 million in June, 2011 which is 53.71% of total population. The current growth rate is 6 million in past 6 months. If this is continued, the number could reach 82.5 million (57.70%) by the end of this year. The total subscribers of mobile phone users has been reached to 78.075 million in the last survey.

 software development and web: A huge number of software development companies have been launched in our country. They are building customized software and websites of international standard with a token of creativity.

ISP service provider: For e-banking availability of ISP service provider is necessary. Government owned Bangladesh Telephone & Telegraph Board (BTTB) has set up digital telephone ISP in each district town of the country. The private mobile phone companies are also providing internet services through EDGE and GSM technology. WIFI and WIMAX technology of internet accessibility is also available now in Bangladesh.

 Govt. strategic planning: For strengthening e-commerce e-readiness is the most crucial factor. E-readiness includes having supporting legal and administrative support, human capital, and infrastructure and so on. The most strengthening fact in respect of e-commerce in Bangladesh is that Bangladesh Govt. has taken a strategic vision named “Digital Bangladesh” to capture all the amenities of information technology within 2011. To implement this vision Bangladesh govt. is adopting programmes and project which will ultimately lead to the boosting up of e-commerce in Bangladesh.

 Infrastructure planning for e-commerce: For e-commerce there should be available infrastructure with high speed internet and trained ICT personnel. Bangladesh Govt. has adopted an ICT policy to provide all supporting framework related to e-commerce. The policy was first introduced at 2008 and finally approved in the parliament in 2009 which is known as “National ICT Policy 2009.” The policy has 10 specific objectives among them 3 are directly related with development of supportive framework of e-commerce. The 3 specific objectives are shown in the following table:

01 .Support to ICT |Ensure reliable and cost effective power

• Create supportive legal framework for IPR protection, online documents sharing transactions and payments.
• Establish a Govt. interoperability framework to be addresses by all govt. ICT projects.
• Promote the use of cost effective, open source and open architecture solutions.
• Build ICT infrastructure facilities in educational institution.
• Decentralize ICT growth outside the capital.

02. Education and training Access skills of ICT professionals and meet gaps with targeted trainings.

• Encourage closer collaboration between academia and industry.
• Extend the reach of ICT literacy throughout the country by incorporating ICT Course in Secondary education and Technical and Vocational education.
• Enhance the quality and reach of education at all levels with a special focus on mathematics, science and English.
• Ensure ICT literacy for all in public service.
• Boost use of ICT tools in all levels of education.
• Ensure that all universities provide global standard ICT education.

03.Universal access Extend universal connectivity to all citizens as a public service obligation within 5 years.

• Extend internet backbone infrastructure to all district headquarters immediately.
• Extend internet and IP telephony services to all parts of the country within 5 years.
• Build ICT infrastructure facilities in educational institutions.
• Decentralize ICT growth outside the capital.
• Improve internet availability and reliability.

 Institutional framework for implementing e-commerce & banking : Ministry of Commerce, Ministry of Information and Communication and Planning Commission are now jointly implementing the e-commerce in Bangladesh. There is already an e-Commerce committee headed by commerce secretary. Ministry of Information and Communication is working for enacting a law regarding “Electronic Transaction act.”

Weakness:

E-banking is now showing a rising trend in our country due to extensive support from Bangladesh Govt. and to cope with the necessity of globalization exporters are also going toward to do more e-commerce. But there are several weaknesses still prevailing in our country that need an immediate remedy.

Shortage of capital: A huge amount of capital is necessary to build up the supporting infrastructure in the elementary stage of doing business. As a developing country like other sectors, the entrepreneurs are facing to have adequate capital usually venture capital.

 Ineffectiveness of some law : There are some laws that are ineffective for conducting e-banking. The new Intellectual Property Rights (IPR) bill of Bangladesh concentrates mainly on software copyright protection. However, the e-banking related copyright protection is not covered in the new IPR. According to the Evidence Act (The Negotiable Instrument Act, 1881; Revised up to 1999), a physical signature is necessary to make any contract valid in the eyes of the law. This makes electronic contract void.

Cost of service: Though different bank  has taken many e banking facility but cost of providing the service is high like use of ATM to withdraw money, having transaction information through sms.

Low demand for E- banking: people live below the poverty line, they have no IT knowledge and IT affordability. As a result, there is a little demand about it among the mass people. Only literate people have demand for it.

 High cost of Internet access: There are high cost of broadband internet access prevails in our country. For broadband internet connections a fixed amount is necessary initially and monthly subscription fee is also high which restricts users having banking facilities available in net.

Lack of consumer protection and privacy: In e-banking the entire business process are conducted excluding any physical evidence of goods and services. In our country there are very few laws that can protect consumer’s protection in the traditional businesses. So the ensuring the protection of consumers in respect of e- is a challenge which to be meet.

Lack of suitable cyber law: E-banking can face a lot of crimes related hacking of business sites., stealing personal information, using unauthorized use of international payment cards etc. But there is no appropriate law to prevent various cyber crimes.

Poor inter bank connectivity: The banking infrastructure in terms of electronic payments and inter-bank connectivity is poor. Interbank transaction is more cumbersome as the clearing-house of the central bank is not online. An inter-bank transaction may take even 2 weeks if the branches are different cities.

IT skills shortage: For e-commerce & banking a trained human resource on IT Knowledge is necessary. In our country where literacy rate is so small, the number of technically know how IT personnel is still very low.

 Lack of availability of International Credit Cards: A very small number of multinational banks provide their clients with internationally accepted credit cards, but the process followed by the banks is prohibitive and does not facilitate trade. According to regulations, after the bank screens a prospective client, the client has to deposit the equivalent amount of the travel quota allowed to someone travelling abroad. Subsequently the bank issues a credit card; however, the card is limited to the amount deposited at the bank. Since this is the same amount that the traveler is allowed anyway, this diminishes the attractiveness of the credit card.

Opportunities

Awareness of people: Non-branch banking is becoming popular in our country. Many banks are now offering non-branch banking facilities. A person can withdraw or deposit money in any branch of the bank he has account with. So moving to internet banking will allow the banks to offer non-branch banking facilities.

Increased international trade:  rapid growth in international trade in Bangladesh specially in Garments sector has paving the way for rapid & innovative e-banking service development.

Infrastructure development &govt. policy: govt. has taken different steps, policies to enhance the capacity for doing e –commerce and banking. Infrastructure development is on going ,e-banking software are becoming available now, new laws are adopting to protect the consumers and prevent cyber crime.

Threats:

Lack of e-banking knowledge: people specially in rural areas are not interested in e- banking because of their adequate knowledge regarding it so a large portion of our population lagging behind. The movement towards online banking might marginalized the customers who do not have internet access or who are not technologically sound.

Concept of virtual banking :The concept of virtual banking is yet not supported by country people. People have concern about security and privacy. They like to feel their money with their hand. They actually don’t believe in virtual money transfer.

Rapid obsolesce: In the field of IT new technology is coming every day. The one which is very popular today might get obsolete tomorrow. So to have a competitive edge over the competitors the banks must always update their services.

High maintenance cost: delivering e-banking service require high infrastructure, high initial & maintenance cost which are really costly for commercial banks providing service.

Findings:

 E-banking is in its nascent state in Bangladesh. At present, Information Technology (IT) is a subject of widespread interest in Bangladesh. The government has declared IT as a thrust sector and set up a vision of Digital Bangladesh in 2021.But Bangladesh has a long way to go in a very short time to enjoy the fruits of information age. It will be only possible when there will be political commitment with better IT infrastructure, internal network, country domain and above all a high speed fiber optic link to the information superhighway.

Though lack of adequate govt. support, adequate knowledge and technical skill, high cost causing Bangladesh to lagging behind in e-banking business . A broad spectrum of electronic banking services, a subset of e-finance, is available in Bangladesh with various degree of penetration. Credit card and POS services are provided by 23 percent of banks [PCBs and FCBs]. Several thousands of POS terminals have been set in major cities of the country. Tele-banking is second most penetrated e-baking service in Bangladesh. ATM is expanding rapidly in major cities.

The software support for internet banking, i.e. FLEXCUBE is available in Bangladesh. Again Bangladesh Government is working on the copyright law and the preservation of intellectual property act.

Among the banks operating75 percent of banks have strategic plan to implement ICT and internet banking. , which will play a vital role in bringing efficiency in the financial sector.

Bangladesh Bank is planning to have Automated Clearing House (ACH) which will automate the processing of checks by MICR coding. This shows the intention of Bangladesh Bank to the betterment of the services

 Though there are 62 banks in Bangladesh(state owned commercial bank 4, private commercial banks 31, 10 Foreign Commercial Banks, specialized banks 11,new approved bank 6 and central bank 1)source Wikipedia., mostly head quartered in Dhaka. but specially private commercial banks is expanding their branches throughout the country which is  a green signal for overall economic development.

The Government spending in ICT is going to increase by at least 2% of ADP in coming years. The new budget provision encouraged the investment in the application of ICT in trade and finance. The ICT companies will get preferential terms which will be able to meet up 20% of its revenue expenditure. BCC has created a centralized fund for R&D which would encourage contributing 1% of all profits from ICT-enabled services to the HRD fund. This will greatly help the development if ICT in Bangladesh.

The Ministry of Science, Information and Communication Technology has given out the policy for the development in the IT sector. The ministry has concentrated on the following sections:

• Human Resources Development through Education and Training

• ICT Infrastructure development

• Research and Development in ICT

• Development of ICT Industry

• Development of E-Commerce

• E-Government / E-Governance establishment

• Establishment of Legal Issues

 The Government of Bangladesh has taken some important initiatives to develop our IT sector. Still we are waiting to see a fruitful change in our Information Technology. However, some remarkable steps of government are highlighted for information.

• IT has been declared as a thrust sector
• Waiving all taxes and duties from import of computer hardware and software.
• Hundred percent remittances of profit and capital gains for foreign investors without any approval.
• An independent regulatory body, Bangladesh Telecommunication Regulatory Commission (BTRC) has been established, functioning since 2002.
• Recently started the establishment of ICTPark to boost up the country’s ICT activities.
• The govt. is liberalizing telecom sector in phases, with increased participation of private sector.
• Copyright Act 2000 named Intellectual Property Rights (IPR) Law related to ICT is in the process of finalization and is in the process of enactment by the Parliament.
• Decision to link Bangladesh to global highway through submarine cable link by next two years.
• National Information and Communication Technology (ICT) Policy has been approved in 2002.

Recommendations:

Internet technology has brought a revolution in our conventional banking system.  But electronic banking system in Bangladesh is yet in the preliminary stage. The experts, however, provide the e-banking the greatest importance for the economic development of the country and for the better performance of the banks. The government also acknowledges the importance of e-banking system. We can suggest the following sequence of recommendations for quick introduction of e-banking in Bangladesh.

• e-banking service must be made cheap.
• e-banking system should be more flexible.
• Unemployment is also very much detrimental to e-banking. Naturally, enhancing literacy rate would create more enabling environment for e-banking.
• Poverty and illiteracy seem to play no detrimental role for e-banking. It hints that technology accepts no limitation. It may be so that just modern technology is essential to overcome the poverty and illiteracy.
• Piracy and fraudulent are no threat for e-banking. Government and banks must take effective preemptive measures against piracy and fraudulent.
• No rhetoric but effective, sincere and practical efforts from the side of the government are expected for successful and timely introduction of e-banking.
• Government should create a congenial environment for this sector, and provide adequate training and technological support to develop the manpower.
• Banks should have their own Strategic plans for e-banking.
• There should be career design for the experts in this sector.
• Banks should have adequate research and technological background in this regard.
• Banks should try to promote awareness of the clients about the e-banking.
• Bank should charge normal profit to enlarge the market size of the electronic banking products.
• e-banking technology is mature, dependable, available and viable, so arrangement must be made for the introduction of the latest ICT technology.
• The distribution channels of e-banking must be sufficient, technologically sound and up- to-date.
• e-banking service must be convenient, uncomplicated, quick, easy available and user friendly.
• e-banking experts are available, however with the growing needs more experts must be there . So, respective education and training institutes must be established following the growing needs of the market.
• Clients are aware of e-banking services; they do not resist the introduction of e-banking. However, it would not harm if campaign is set to popularize the e-banking.

Conclusion:

Economy of Bangladesh is still underdeveloped and one of  the main reason of this is banking sector is not properly developed.

This study on electronic banking in Bangladesh shows that, though Bangladesh is a developing country having wide spread poverty and illiteracy, according to the view of the bank officials as in the most developed countries of the world e-banking is equally important and relevant for Bangladesh. Instead of the fact that ICT is one the fastest growing and developing sectors, the banks in Bangladesh provide big weight to the prospect of the e-banking. The technology of e-banking is developing in its mature form. It is available and transferable in the banking sector of the country. Though experts are not very much easy to get and costly, the banks are convinced that it will not be a major hindrance for the expansion of the e-banking in size and depth. Successful introduction of the e-banking will expedite the economic and social progress of the country. Government should, therefore, establish or facilitate the establishment of the required educational institution and favorable legal and environmental framework for the e-banking.  technology transfer, the world could not be divided according to the development status of developed and developing countries. Just on the contrary, modernization of the economy through transfer and adaptation even of the most developed technology help ultimately expediting the economic progress and removing the development gap between developed and under developed countries.

 Bangladesh law ministry should take an initiative to modify certain laws according to internationally recognized e-banking laws. There need to follow the rules and regulation enacted by the parliament and run the banking business under proper and pure supervision of Bangladesh Bank which may tends toward the actual public interest of this country. In such disputed matter judicial decisions are also playing an important/vital role to get a relief and to ensure the legal interest of the mass people.

 Successful implementation of all govt. policies and internal ICT  policies of Banks can ensure sound e- banking business in Bangladesh.

Bibliography

Internet journals

• Prospectus of IFIC Bank Ltd (2011&2012)
• International journal for scientific research publication.
• Journal for research publication, Bangladesh.

• Basel Committee On Banking Supervision, Risk Management Principles for Electronic Banking,
• International Journal of bank marketing, Vol. 17, No. 2.
• Deutsche Bank Research, E-banking snapshot, in Digital Economy.

• BRAC University Journal, Vol. II, No. 2. Huda,Shakil,Momen,Mohammad Abdul,Ahmed,Mushtaque(2004):”On Line Banking System”,

Websites

• www.dbresearch.com

• www.ificbank.bd.com
• www.yahoo.com
• www.google.com
• www.wikipedia.com