BB on digital drive

Atiur Rahman

Bangladesh Bank Governor Dr Atiur Rahman has said several steps have been taken to digitise the banking system, including the central bank, which would cut the cost of doing business.
"If any work that takes five days to finish can be done in five minutes, the cost of doing business will fall drastically," he says.
The central bank is at the forefront of the government's firm commitment to build a 'Digital Bangladesh'. The BB has marked a historic milestone in trade and business, delivering conventional banking services by introducing e-commerce recently -- a strong stride towards digital Bangladesh.
The banks have been allowed to transact online. People can pay utility bills through internet, transfer funds (account to account) and pay for trading goods and services. Also, the banks facilitate online credit card payments in local currency.
A national payment gateway, connecting all the banks for inter-bank transaction (e-banking), is expected to be in place soon.
The BB governor says licences have been given for e-commerce, but e-payment gateway is necessary for making it more dynamic. The work has started, the World Bank is financing the project and the work will be complete within one year, he says.
"We have awarded the work of banking solution to Tata. The Bangladesh Automated Clearing House has already gone into a trial run. Seventy-five percent cheques in Dhaka city are now being cleared automatically. The remaining 25 percent will be cleared under the system soon."
The system will support both intra-regional and inter-regional clearings based on a central processing centre in Dhaka and designated clearing regions, conforming to the international best practices and cost-effective solution for cheque processing.
The governor says the BB is going to introduce central depository system. Transaction of the secondary bills will be done under this system. And transactions of treasury function and savings instruments will be automated.
The central bank is strengthening its muscle. No contracts were awarded on political influence. "After taking the charge, I myself have given all the contracts."
The Central Bank Credit Information Bureau will start functioning online by June. All the departments of BB headquarters and its nine branch offices have already been brought under a network, connecting around 3,100 computers, the governor says.
Enterprise Data Warehouse creates an electronic data bank, which will provide all information and statistics of monetary, trade and fiscal areas of the national economy. The BB officials concerned will have access to the data warehouse to conduct any policy analysis.
The governor says mobile banking has been introduced to ensure quick delivery of remittance.
Asked whether such banking will lead to money laundering, he says the cellphone operators will act as the lone service providers. The bank concerned will control the whole banking and will be responsible for any irregularities. The mobile banking will be conducted through a bank-led model.
About interest rate, the governor says many banks keep interest rate below 10 percent in case of big loans, but for other loans the rate is high.
"We are taking steps to minimise the cost of doing business. In the next one year there will be a big change in lowering the cost of doing business."
There has been an allegation that directors are appointed on political consideration in the state-owned banks. Asked whether it would lead to an increase in default loans, the BB chief said the central bank does not differentiate between the public and private banks. "If anybody violates regulations, they will be charged."
Atiur says the central bank has prepared a detailed guideline for the bank directors. The government should monitor whether the directors are following the guidelines.