Biz Letters
Emphasis on mobile banking
Thanks to Star Business and Mr. Sajjadur Rahman for a detailed report on mobile banking titled "Mobile banking rattles banks". Since this writer has been working on mobile banking and other related banking products to integrate Bangladesh market and monetary practices with the rest of the world, thought it to be imperative to put in humble explanations to the concerns raised by other banking service entities and colleagues. Concern against anything new being launched is a phenomenon that is quite natural as human beings. However, having the benefit of being able to refer to the rich history of economic development, we have learnt - `change is the only constant thing in this world'. We did try to obstruct nation's subscription to submarine cable network with the plea that it will cause a leakage of national secrecy and readers are possibly aware, how we had to repair the dent of being indifferent to accepting changes for better communication to get into the information super way. However, to the best of my knowledge most of the concerns mentioned in the article raised by some banks have already been addressed by the initial proposal submitted by the mobile operators.
"The transactions must be done through the banks, and mobile phones should be used as a mere banking tool, a mobile phone outlet cannot be used as a bank branch."
The proposed remittance / money transfer model of the mobile operator is not meant to replace bank branches with mobile phone outlets. Rather so far I know, branches will support the mobile phone outlets with "cash in / cash out" as most mobile phone outlets do not have substantial cash in their dispensation and require overnight vaulting of cash. Here branches will support the mobile phone outlets either by providing cash or by taking deposits of excess cash. This may actually generate additional income for the branches as they can charge fees/commission for providing such services to mobile phone outlets. These funds are currently not getting routed through banks in any way; the entire mobile banking strategy is based on the essence of bringing the unbanked / informal funds flow into the formal sector and make it countable within our GDP. This can easily be achieved by capping the amount or number of transactions that can be carried out using mobile phone by SIM / subscriber. This will be a tremendous boost for the economy as well as the banking sector.
"Banks fear the phone companies will take away a large swathe of their business because of thousands of outlets across the country."
Presently, there are around 4,500 bank branches in the country, which is not sufficient to cover a country of 150 million. That's why, we have seen recently many banks signing up with the Bangladesh Post Office, who has over 10,000 branches to reach out to the millions of people who do not have access to bank branches, where private banks find no incentive to open branches and specially the rural population which remains unbanked and underserved and some times not served at all by the formal banking sector. That's why, the fear that mobile phone companies will take away the bank's business by outnumbering through their thousands of outlets is totally unfounded.
We have seen banks using NGO networks for remittance distribution, central bank had progressively allowed that. If an NGO outlet can be used to disburse remittances and that is not a threat for the banking sector, how can a mobile phone outlet disbursing remittances be a threat to the banking sector? Do NGOs have better AML or transaction monitoring mechanism? If NGOs can be opened up to provide network services to all banks, mobile phone outlets may also be allowed to be used as a network provider for the banks which will increase coverage rather than restricting it and brining people to fast-track money transfer and taking remittances out of the hands of courier / transport companies and hundi.
"There might be huge scope for abuse of the facility without a proper law."
Whoever is the operator or facilitating bank must comply with local regulations. We welcome mobile banking regulations that will prevent money laundering as well as any illegal use of this system. I am sure the facilitator will have to arrange training and awareness sessions for the key staffs of the operators on AML issues from time to time based on the need. The facilitator can also offer assistance to the operator in developing the training module and to address the AML issues in the various processes / documentations related to this project. It can also play an advisory role to the operator in setting up the mechanism and audit procedure for preventing possible fraud / AML.
"Local bankers claimed that mobile phone banking exists only in the Philippines, South Africa and Kenya."
This is not correct. I know of a large bank that has partnered with Obopay in the US and Digi in Malaysia to facilitate person to person (p2p) payments through mobile phones.
To conclude, I strongly support introduction of mobile payments and mobile banking in Bangladesh while regulating that through current as well as new laws that will prevent any misuse of the system as well as technology, which is non-negotiable. I have heard many times, Professor Jamilur Reza Chowdhury from Brac University, Professor Kaikobad from Buet and Professor Jafar Iqbal from SUST and even our Nobel laureate Professor Yunus focusing on further usage of technology to reach services to the `bottom of the pyramid'. As a developing nation, it is a clear directive for us to move forward and help the nation advance to the next growth trajectory. The philosophy of remaining away from computers to save the electronic typewriter didn't work in the past and will surely not work in future too.
Mamun Rashid, Dhaka
Microcredit policy exploits macro interests
Non Government Organisations in Bangladesh boasts of their micro credit policies to elevate poverty from our country. It is mentionable that micro policy-holders under the poverty line have created opportunity for themselves by using their idle time. Many are found looking after domestic animals, pulling rikshaws, plantation nurseries and other self created employment acts.
On the other hand, NGOs drag out nearly 30 percent to 40 percent interest rate, including service charges against the sanctioned loans. Coupled with the strict and tight installment payment times, it creates a suicidal situation for many.
The interest rates and service charges should be made reasonable. Although Grameen Bank Founder Dr Yunus was awarded with a Novel prize for the micro credit policy and has gained world wide reputation, the real story is different.
Loan seekers are exploited and are left with no savings after paying for food and lodging. They have no scope to enjoy health care facilities either.
Following in their footsteps, thousands of NGOs and Multipurpose Organisations have started the micro credit policy in every prose and corner of our country.
Notwithstanding, the rate of interest of private banks and scheduled banks (except Bangladesh Krishi Bank) are still very high. Imposing high interest rates creates a negative impact and shows no sign of exultancy among the common people of our country.
ATN Bangla Chairman Mahafuzur Rahman also pointed the facts through his electronics media channel on August 22, 2008.
Recently, Bangladesh Bank Governor Saleheuddin Ahmed stressed the need to reduce the rate of interest but no concrete initiatives have been taken. The present care taker government should take prompt decisions to fix up the situation in every financial sector and that must lead to an ease of the price hike of commodities.
MZ Haider, Narsingdi
Focusing business under one body
Business in Bangladesh is booming. The country has bright prospects when it comes to setting up business firms. Whether it is a service-oriented business, a manufacturing based business or even a trading oriented business, Bangladesh is the perfect place to invest in.
A lot of foreign direct investors are now focusing on Bangladesh. Several factors play roles here. Labour is cheap and the working environment has recently improved due to less political tensions.
But I must say that in order to bring the entire business community under one umbrella, we must have a single monitoring body. I really do not know why we have so many bodies and what really are their functions?
We have the Dhaka Chamber of Commerce and Industry (DCCI), Metropolitan Chamber of Commerce and Industry (MCCI) and Federation of Bangladesh Chambers of Commerce and Industry (FBCCI). Can we have one body where all business communities will be under? In most cases, none of these bodies are that effective in playing significant roles in any business firms. For example, if anyone faces specific problems, then where should businesses go, DCCI, MCCI or FBCCI?
Our people set up businesses putting their own efforts rather than getting support from these bodies. In order to make the business environment friendlier, we should have a single business body that will have monitoring rights and legal powers over all business organisations.
I would suggest formations of a Bangladesh Chamber of Commerce and Industry (BCCI), where all the business communities will be under one roof.
Minhaj Ahmed, Dhaka
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