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Hasan Ul Banna
 Prospects and challenges of Blue Economy in Bangladesh
The concept of Blue Economy has opened a new horizon for economic development of the
coastal countries through utilizing sea and marine resources at national and international
level. The concept has become a buzzword for sustainable development particularly in
drafting the post-2015 development goals. Estimates suggest some 30 million Bangladeshi
directly depend on oceanic economic activities like fisheries and commercial
transportation. Coastal and Island developing countries have remained at the forefront of
this Blue Economy advocacy, recognizing that the oceans have a major role to play in
humanity's future.

Blue Economy conceptualizes oceans as 'Development Spaces' Where spatial planning

integrates conservation, sustainable use, oil and mineral wealth extraction, bio-
prospecting, sustainable energy production and marine transport.

Bangladesh's economy is sea borne to a good extent and with $130 billion GDP the
country's economy stands the 44th. Sovereign rights have been established on more than
118,000 sq km of maritime territory, 200 nautical miles (NM) of exclusive economic zone,
and 354 NM of continental shelf after positive verdicts in international courts. In the same
way , the verdict with India declared on 7 July 2014 also allowed Bangladesh's sovereign
rights on all the living and mineral resources of the Continental Shelf extending up to 354
nautical miles.

Fundamental principles of Blue Economy:

1. Optimizing the benefits received from the development of their marine environments eg
fishery agreements, bio prospecting, oil and mineral extraction.
2. Promoting national equity, including gender equality, and in particular the generation of
inclusive growth and decent jobs for all.
3. Having their concerns and interests properly reflected in the development of seas
beyond national jurisdiction, including the refinement of international governance
mechanisms and their concerns as States proximate to seabed development.
Bay of Bengal partnership:
The Bay of Bengal is the largest bay in the world that forms the north-eastern part of the
Indian Ocean. The foreign minister gave an idea of the collaboration that could take place
and said "it must be based on certain universal principles of engagement-mutual trust,
respect, mutual benefits, and equitable sharing of benefits."

The role of marine resources in :

*poverty alleviation,
* acquiring autarky in food productions,
* protecting environmental balance,
* facing adverse impacts of climate change and
* other economic possibilities are unlimited. But with the potentialities and possibilities the
challenges also accompany. The following may be the challenges:
♦ Ensuring the sovereignty over the total coastal area.
 ♦ Maintaining the security over the economic area.
♦Establishing marine friendly infrastructure for marine tourist.
♦ Protecting the area from the international smugglers and fish pirates.
♦ Maintaining investment friendly environment in the awarded area.
♦ Sustainable use of biodiversity.
♦ Maintaining marine and coastal ecosystems.
♦ Preserving mangrove and sea grass.
♦ Addressing climate change and managing carbon emission.
♦ Maintaining sea level rise and change in ecosystem and temperatures, from coral
bleaching.
♦Addressing ocean acidification and blue carbon.
♦Keeping the sea area free from pollution and marine debris. And
♦ The growing human population, intensification of agriculture.
Potentialities of Blue Economy in Bangladesh:
♥Food security:
One billion people in developing countries depend on seafood for their primary source of
protein. Bangladesh can have it now.
♥Fisheries:
Globally 350 million jobs are linked to marine fisheries, with 90 per cent of fishers living in
developing countries. The value of fish traded by developing countries is estimated at $25
billion, making it their largest single trade item.
♥Marine and coastal tourism:
Marine and coastal tourism is of key importance to many developing countries. Despite the
global economic crisis international tourism continued to grow. International tourist
arrivals increased by 4 per cent despite the global economic crisis and constituted 9 per
cent of Global GDP (direct, indirect and induced impact).
♥Harvesting power generation:
Researchers have recently completed the first ocean tests of a system that uses a so called
artificial muscle to generate power from the motion of a buoy riding up and down on the
waves.
♥Energy from waves:
A new device being developed by the UK-based Checkmate SeaEnergy could help tap an
important portion of this wave power. The device is a long, water-filled rubber tube closed
at both ends. It will be capable of generating one megawatt of power at about 12 cents
(BDT 9.30) a kilowatt-hour, which is competitive with electricity costs from other wave-
power technologies.

♥Shipping and port facilities:

Eighty per cent of global trade by volume, and over 70 per cent by value, is carried by sea
and handled by ports worldwide. For developing countries these percentages are typically
higher. World seaborne trade grew by 4 per cent in 2010 despite the economic recession.

♥Biotechnology:
The global market for marine biotechnology products and processes is currently estimated
at $2.8 billion by 2017.
 ♥Submarine mining & exploration of oil and gas:
The world is gearing up for the exploration and exploitation of mineral deposits on and
beneath the seafloor.The primary assessment indicates few trillion gas in a few zones
available within our premises.

♥Port tax or levy:

At present, around 600 ships arrive in Bangladesh per year and anchor in the ports of
Chittagong and Mongla. With this new opening of Blue Economy, obviously, a huge number
of ships will anchor in the ports of Bangladesh, and earning from this sector is likely to
increase tremendously.

Steps to be taken
♦The prime minister said steps have been taken to strengthen Bangladesh Navy and
Coast Guards to resist illegal use of animal and mineral resources in the exclusive economic
zone as well as to keep international sea line open and safeguard the free movement of
commercial ships.

♦Coordination agency is to be established. Bangladesh Navy must be able to coordinate

with other maritime forces, which include coast guards and other government agencies
charged with sovereignty, security, law enforcement and constabulary functions at sea.

♦Given the current global and regional security environment comprehensive maritime
security is required. It includes Bangladesh ports, shipping, fishing, off-shore oil and gas
facilities and shipping lanes in Bangladesh water.

♦ Maritime space belonging to Bangladesh has to be secured from military and non-
military threats.

♦Besides national efforts, regional or global cooperation is also necessary to ensure

maritime security, in particular against transnational non-maritime security, in particular
against transnational non-military threats.

Blue economy is a relatively new jargon in Bangladesh but very common in global economy
even in Indonesia. This is a hope and means of development in the near future. Experts
opine that Bangladesh can rise to a middle income country by using this Blue Economy
concept
 Banks to bring interest rates down to single digits
The interest on three month term deposits to be fixed at 6%

Owners of private commercial banks have decided to bring down the interest rate on
lending to 9% and that on deposits to 6% from the existing levels.

The new interest rates will come into effect from July, the first day of fiscal year 2018-19.

Currently, private banks are lending at between 14 and 15%. The average interest rate for
deposits is between 9 and 10%.

The decision was taken by the Bangladesh Association of Banks (BAB) at an emergency
meeting on Wednesday at its office in the capital, with BAB Chairman Nazrul Islam
Mazumder heading up the meeting, said a press release.

BAB took the decision under direction of Prime Minister Sheikh Hasina in order to create
an industry-friendly environment, create new entrepreneurs, generate employment, and to
accelerate trade, the release added.

Nazrul Islam Mazumder said: “Interest rate for the three-month term deposit from July 1
will be 6%, and the lending interest rate will be 9%. No bank will charge an interest higher
than this. Banks will have to accept this decision.”

The BAB leaders also had a meeting with the prime minister later in the day.

“After taking the decision, we met Prime Minister Sheikh Hasina and informed her about it.
There is no scope for apprehension about its implementation. The bank owners took this
decision for the country’s development,” Nazrul said.

Boosting investment

According to the Bangladesh Bureau of Statistics, the contribution of investment to GDP

was 30.51% in the outgoing fiscal, of which 23.10% came from private investment and
7.41% from public investment.

Finance Minister AMA Muhith told parliament during his budget speech earlier this month,
that the GDP growth target for the coming fiscal will be 7.8%, while keeping inflation below
5.6%.
The proposed budget also set the target to improve the ratio of investment to GDP to
33.54% from 31.47% (provisional) in the outgoing fiscal year. Of this, 25.15% is expected
to come from the private sector and 8.39% from the public sector.

In April, the government slashed the cash reserve requirement (CRR) for banks by one
percentage point to 5.5% for the benefit of private commercial banks. Finance Minister
AMA Muhith has also proposed that the tax rate for banks and financial institutions be
reduced by 2.5% in the national budget for the 2018-19 fiscal year (FY19).

Under the present corporate tax policy, publicly listed banks, insurance, and non-bank
financial institutions pay 40% corporate tax, while non-listed companies pay 42.5%.

Before this decision however, Islami Bank Bangladesh Limited (IBBL) announced on
Tuesday that it would reduce the profit rate of investment from July 1 to a single digit for
the sake of continuing the country’s development. Islami Bank has taken this initiative
following Hasina’s recent guidance to bring down the profit rate of banks to single digits,
said a press release on Tuesday.

A welcome move

“Bringing the lending rate down to a single digit is a good and timely decision for the
country’s private sector investors. This will help increase investment,” Bangladesh
Garment Manufacturers and Exporters Association (BGMEA) President, Siddiqur Rahman,
told the Dhaka Tribune.

“This will help Bangladesh gain the investment needed for the expansion of existing
businesses as well as for new enterprises. Employment generation will be boosted,” he
added.

“This is an expected step, but not the only measure to boost investment. The expected
outcome of the decision is that private sector investors will get loans at low rates and this
will increase private sector investment,” former caretaker government advisor, AB Mirza
Azizul Islam, told the Dhaka Tribune.

To attract private sector investment, the government should concentrate on other issues
such as gas and electricity connections, and improving port capacity, said the economist.

He also urged bank owners not to lower the interest rate on deposits, for the sake of
common people who keep money in banks as a means of safe income.
BAB Chairman Nazrul, also sponsor chairman of Exim Bank, told UNB that if any bank goes
against the BAB decision, the association will take punitive action.

He said, already five private banks, including IBBL, Union Bank, First Security Islami Bank,
and Al-Arafah Islami Bank have announced their decision to charge single digit interest
rates on loans starting July 1.

“These banks control about 50% of the banking business,” he said.

“If they can take such a bold decision, the others can do the same,” he said.

If necessary, BAB will extend a hand to ensure implementation of the decision, he added.

The country has 57 banks, of which six are state-owned banks, while the remaining are
private and foreign banks.

Winners and losers of single digit interest rate

BAB decided to cut the interest rate on lending to 9% and that on deposits to 6% from the
existing levels

The decision to cut down interest rates will likely discourage clients from depositing
money in the banks and intensify the liquidity crisis, experts warn.

But businessmen say the move will boost investment.

The Association of Banks (BAB) decided to bring down the interest rate on lending to 9%
and that on deposits to 6% from the existing levels. The new interest rates will go into
effect from July 1.

Currently, private banks are lending at between 14% and 15%, while the average interest
rate for deposits is between 9 and 10%.

In a statement, the BAB said it took the decision under the direction of Prime Minister
Sheikh Hasina to create an industry-friendly environment, new entrepreneurs, generate
employment, and to accelerate trade.

However, former caretaker government advisor AB Mirza Azizul Islam fears that the move
could worsen the liquidity crisis.

“It will make people reluctant to deposit money. Many may withdraw their money and
invest in other sectors such as savings certificates,” he told the Bangla Tribune.
Azizul said the interest rate could have been brought down to a single digit by reducing the
spread between the interest rates on lending and borrowing.

The banks’ deposit growth has declined to some extent, he noted, adding that slashing
interest rates could trigger more liquidity crisis, which in turn could jeopardize the plan to
reduce the lending rate.

“Only cutting down interest rates won’t do. We should also monitor whether the loan
money is being used in productive sectors,” he added.
BAB Chairman Nazrul Islam Mazumder said they had fixed 6% interest on new deposits
and noted that it would not cause any problems for the old depositors.
“We, the bank owners, are trying to bring down the interest rate to single digit. So are the
banks’ managing directors and the government,” he added.
But South Asian Network on Economic Modeling (Sanem) Executive Director Prof Selim
Raihan feared that the move could affect all clients.
“There’s no harm if the loan money plays a [positive] role in the national economy,” he said,
adding that since there was lack of good governance in the banking sector, the initiatives
being taken could deepen the sector’s crisis.
“The forceful reduction of interest on deposit to cut the interest on loans will affect the
general people,” he added.
Selim said the recent decisions on the banking sector are not enough to tackle the sector’s
crisis.

Declining deposit
The rate of deposit in the banking sector has been declining. The central bank data show
that depositors have withdrawn nearly a thousand crore taka between December last year
and March, 2018.

The total deposit in December last year was Tk9,26,179 crore. At the end of March this
year, the amount stood at Tk9,25,279 crore.

Bank officials say the continued disbursement of loans and a decline deposit has led to
liquidity crises in the banking sector.

Bangladesh Bank data show that more than 100 million account holders deposit money in
57 banks. The bank directors are mainly conducting their business with the money of these
depositors.

According to the central bank, the bank directors had invested only Tk46,124 crore in the
sector until September last year, while they withdrew Tk1,43,707 crore as loan from the
banks during the same period.
ROAD ACCIDENT IN BANGLADESH: AN ALARMING ISSUE
There has been an alarming rise in road accidents, significantly highway accidents, in
Bangladesh over the past few years. According to a study conducted by the Accident
Research Centre (ARC) of BUET, road accidents claim on average 12,000 lives annually and
lead to about 35,000 injuries. According to World Bank statistics, annual fatality rate from
road accidents is found to be 85.6 fatalities per 10,000 vehicles. Hence, the roads in
Bangladesh have become deadly!

But these statistics, numerically shocking as they may be, fail to reflect the social tragedy
related to each life lost to road accidents. One accident that remains afresh in my memory
is the death of 44 school children a few years ago, after the truck they were travelling in
skid and fell into a pond. 44 young dreams and hopes lost due to reckless driving. Only a
month after this tragedy, Bangladesh lost two brilliant citizens, filmmaker Tareq Masud
and journalist Mishuk Munier, to yet another road accident in August. We, the people were
shocked, angered and many led protests to the streets demanding immediate action to
bring justice for those killed and to ensure road safety. A series of ongoing public protests
in Bangladesh advocating improved road safety began on 29 July 2018. They were sparked
by the deaths of two high-school students in Dhaka struck by a bus operated by an
unlicensed driver racing another to collect passengers. The incident impelled students to
demand safer roads and stricter traffic laws, and the demonstrations rapidly spread
throughout Bangladesh. But as from the lines quoted in the beginning from a daily
newspaper, one can see that the most recent fatality figures express no progress!

A high growth in urbanization and motorization can be identified as one of the factors
leading to the higher number of road accidents. Recent studies claim that the annual urban
growth rate in Bangladesh stood at 4% in 2010, whereas the present growth in motor
vehicles stands at 8%. Consequently, the road systems are experiencing greater congestion,
physical deterioration and safety problems. According to a WB report, only 40% of the
main roads (National Highways and the Zila Roads) are in good state.

The traffic police department has a crucial role to play in identifying and holding
accountable reckless driving, speeding and unstable or overloaded vehicles. The
maintenance, repair and expansion of roads coupled with setting up dividers on national
highways, cautioning signals for hazardous locations, disseminating information on driving
and road safety to masses through media and exemplary punishment for violating traffic
laws are some of the main areas that need to be worked on rigorously by the government.

As citizens, we too have a role to play in ensuring road safety. While travelling in public
transports, passengers should protest and stop speeding and reckless driving by bus and
taxi drivers. Owners of motor vehicles should ensure that employed drivers have genuine
licenses, are properly trained and drive responsibly. Road safety education to pedestrians,
especially children, within the communities by community leaders is also a good way to
promote road safety.
A proper estimation of the economic cost of lives taken by road accidents in Bangladesh
would surely reflect the considerable loss of addition to GDP. According to WHO, the
economic cost of road accidents to developing countries is 2-3% of GDP. The thought
crosses my mind, of those 44 and many other children killed in road accidents over the
years, how many doctors, engineers, scientists, inventors and other future potential has the
nation lost?

For a developing country like Bangladesh, allowing its citizen to perish to road accidents is
not only tragic but unacceptable!
 Agent Banking in Bangladesh
Agent Banking means providing limited scale banking and financial services to
the underserved population through engaged agents under a valid agency agreement,
rather than a teller/ cashier. It is the owner of an outlet who conducts banking transactions
on behalf of a bank. Globally these retailers are being increasingly utilized as
important distribution channels for financial inclusion. Bangladesh Bank has also decided
to promote this complimentary channel to reach to the poor segment of the society as well
as existing bank customer with a range of financial services specially to geographically
dispersed locations.
Bangladesh Bank is issuing this guidelines as per authority conferred to it by Article 7A(e)
of Bangladesh Bank Order, 1972, Section 45 of Bank Company Act, 1991 and Section 4 of
Bangladesh Payment and Settlement Systems Regulations, 2009.

4.1 The following services will be covered under Agent Banking:

I. Collection of small value cash deposits and cash withdrawals (ceiling should
be determined by BB from time to time );
II. Inward foreign remittance disbursement;
III. Facilitating small value loan disbursement and recovery of loans, installments.
IV. Facilitating utility bill payment ;
V. Cash payment under social safety net programme of the Government ;
VI. Facilitating fund transfer(ceiling should be determined by BB from time to time);
VII. Balance inquiry;
VIII. Collection and processing of forms/documents in relation to account opening, loan
application, credit and debit card application from public;,
IX. Post sanction monitoring of loans and advances and follow up of loan recovery.
X. Receiving of clearing cheque.
XI. Other functions like collection of insurance premium including micro‐ insurance etc.

Although the central bank issued an agent banking guideline in 2013, the first banks
started full-fledged agent operations in 2016. The business took off almost immediately,
with 544,536 accounts opened with deposits of Tk380.68 crore opened between October
and December that year.
By the end of March this year, the number of agent banking accounts stood at 1,468,797
with deposits of Tk1,634.36 crore, according to the latest estimate of Bangladesh Bank.
banking was Tk 309.56 crore between October and December last year.
Comparable quarterly figure for remittance sent through mobile banking was not available
but migrant workers sent home Tk 8.12 crore in December using mobile banking.
The total money transacted via agent banking stood at Tk 380.68 crore in December last
year.
It started off with 10 banks and now 16 commercial banks run agent operations - Dutch-
Bangla Bank Limited (DBBL), Bank Asia, Al-Arafah Islami Bank, Social Islami Bank Limited,
Modhumoti Bank Ltd, Mutual Trust Bank Limited, NRB Commercial Bank, Standard Bank
Ltd, Agrani Bank Ltd, Midland Bank, First Security Islami Bank, The City Bank, Islami Bank
Bangladesh Ltd, The Premier Bank Ltd, United Commercial Bank Limited, and AB Bank
Limited.
Meanwhile, Trust Bank, South Bangla Agriculture and Commerce Bank, Brac Bank Ltd, and
NRB Bank have secured licenses from the central bank to operate agent banking, but they
are yet to launch the service.

Secret behind the growth

Agent banking has been able to get such popularity mainly for its simplicity to the clients
and cost-effectiveness for the banks.
According to a research paper titled, “Alternative delivery channel: Opportunities and
challenges of the new banking environment” by Bangladesh Institute of Bank Management
(BIBM), agent banking has become popular because of its benefits for both the banks and
clients, while the country’s economy is also being benefited through financial inclusion.
The banks have been able to increase customer volume, improve financial appearance,
lower operating costs, expansion of business, increase deposit collection, improve banks’
branding and widen their spreads.
Agent banking has facilitated customers by providing full-fledged banking services at their
doorsteps in the remote area, and it has made convenient and easy for channeling
remittance.
The agent banking outlets are now not only limited to services like cash deposits, cash
withdrawal remittance payment only, the banks have started giving out small loans
through the outlets.
As of March 31, this year, six banks have disbursed Tk122.25 crore in credit through their
agent banking outlets.

Challenges
Though substantial progress has been made in the area of agent banking in terms of the
number of agents, account-holders and deposits, there are a number of challenges
confronting the growth of this new tool of banking.
The BIBM research paper identified seven challenges for banks.
The challenges are:

 selection and monitoring of agents

 cheque book issue and clearing cheque,
 limited transaction time,
 power failure,
 cash carrying or management risk,
 physical and cyber security,
  and settlement of complaints.
Another research paper by BIBM titled “Agent Banking: Effectiveness in Financial
Inclusion,” says product lending is still absent in the agent banking outlets.
Central bank data says agent banking is concentrated in two banks, with DBBL and Bank
Asia covering more than 86% of agent banking accounts.
By the end of March 2018, a total of 884,680 accounts were opened through DBBL and
380,936 accounts through Bank Asia.

Use of Technology in Banking Sector of Bangladesh

Today, information and communication technology has become the heart of banking sector
and banking industry is at the heart of every robust economy. Electronic banking system
has become the main technology driven revolution in conducting financial transactions.

Technology has already enabled most of the banks in Bangladesh to introduce innovative
products to their customers in the form of ATM/POST facility, Mobile/Tele banking, Web
banking, ‘Anytime’ and ‘Anywhere’ banking, etc. Customers of banks have felt the positive
impact of technological solutions implemented by banks. Banks play a vital role in
developing the economic and social conditions of a country.

The major share of the profit of banks generally comes from spread. But the profitability of
banks is under tremendous pressure because of continuous shrinking of spread. It becomes
important for banks to reduce the cost per transaction for increasing spread that in turns
will increase the profitability of banks. Use of technology in banks reduces the cost. Banks
have realized that cost of transaction drastically reduces from brick and mortar structure
of the branch to online delivery channels like ATM, POS Terminal, Mobile Phone, Internet,
etc. Each of these channels has its own specific advantages in terms of improved customer
service and reduced transaction cost.

The basic difference between online banking and traditional banking is that, in traditional
banking the customer has to visit the branch for the basic banking needs viz. withdrawal or
deposit of cash, transfer of funds, statement of accounts etc. Online-business saves
customers’ time. Bank also enjoys lower overheads, establishment, premises and
maintenance costs, which results in reduction of transaction cost. Low transaction cost is
one of the main reasons why online business is getting popularity. Worldwide transaction
cost of ADCs are decreasing as number of online (branch less) transactions are increasing
very rapidly.

ICT Infrastructure of Banks

According to the Bangladesh Bank (BB) guideline, commercial banks are categorized as
Category-1 and Category-2. Category-1 means Centralized ICT Operation for managing core
business application solution through Data Center (DC) with backup assets for
continuation of critical services including Disaster Recovery Site (DRS)/Secondary Data
Center to which all other offices, branches and booths are connected through WAN with
24/7 attended operation. Category-2 means Decentralized ICT operation for managing
distributed business application solution hosted at DC or operational offices/branches with
backup assets for continuation of critical services connected through WAN or having
standalone operations.

Branch Automation
Despite the fact that the SOCBs are large in terms of shares in assets and number of
branches, they could cover only around 72.3 per cent of their branches under
computerization while the PCBs and FCBs brought 99.5 and 100 per cent of their branches,
respectively, under computerization.

IT Investment and Sector-wise IT Budget

In tune with the global trends, Bangladeshi banks have been investing heavily in
technology infrastructure, solutions and manpower. Possibly, the key purpose of such high
investments in IT is to achieve increased productivity, efficiency, profitability and
competitive advantage through improved internal and external transaction flow, better
access to clients and markets and enhanced reach and quality of products and services.
Total investment for IT operations in the banking sector up to 2015 was estimated at Tk.
25,007 crore since 1968 (considering the installation of computer at Agrani Bank in 1968
which was the first installation of computer in the banking sector of Bangladesh).

And in 2015, approximately Tk. 1138 crore was invested on IT processes in the banking
segment, excluding central bank In 2015, it is seen that a major portion of the IT budget
was used to procure hardware and it was 41.9% of total budget. Second highest budget
went to software sector. However, budget for security, training and audit was very poor in
last five years. The rest of the budget went to power management, vehicles purchase,
stationary procurement and decoration purpose.
Penetration of Computer (PC) and E-mail ID
Number of computers and official E-mail account per hundred employees are two
important parameters to understand the automation status of a bank. At the end of 2015, it
is seen that about 86% of the bank employees have working terminal (PCs) whereas
approximately 77% of the employees (perhaps most of the non-officers have no e-mail id
which is not unusual) have official e-mail addresses. Currently we have about 1.73 lac
employees in the banking sector and total number of 1,46,253 PCs and 6700 Servers are
being used in this sector.
Corporate Intranet System and Internal Communication
Some of the banks have their in-house developed system having a revolutionary impact in
implementing the paper-free communication inside the bank. An internal web portal that
holds features like circulars, messaging, news, instant notices, employee profiles, on-line
leave processing, on-line requisition, on-line cheque requisition, MIS reports from CBS data
and many more.
Human Resource in IT Department
Today ‘IT Department’ is the most important department in any bank which was hardly
found a decade ago. This departments works like a power-hose of a bank. Most of the IT
departments are headed by DMD equivalent executives. Approximately, 3500 IT
professionals has been working in those departments.
Core Banking Software (CBS)
Using the CBS Systems, banks are providing real-time online banking services to its
customers. It has also the capability to provide centralized MIS and ad hoc reports.
Moreover, it is also helping to ensure seamless flow of information in a secured manner at
all levels of the management. In today’s highly volatile and competitive business
environment, a centralized robust CBS that can accommodate all the electronic delivery
channels is a must for survival in the race of competition.
Data Communication Infrastructure
Reliability of data communication link is a matter of the utmost importance for smooth
operation of online banking. Optical fiber transmission system is more reliable compared
to other transmission links. A decade ago it was a dream to get an optical fiber connectivity
in Bangladesh. But, recent development of the optical-fiber network of the country have
brought huge opportunities for banks to run online banking activities easily. Following
table shows that banks are now trying to give more priority to use optical fiber link
compared to other links to ensure stable online data services. Moreover, around 94%
banks use dual links for online branch, ATMs or ADCs.
Internet Banking
Bangladeshi customers are now able to do banking from any place of the globe at any time
by using Internet technology.
ATM Banking
Point of Sale Terminal (POST)
Besides expanding the ATM networks, the banks are also giving emphasis on increasing
their POST network covering the major outlets for ease of purchase for the customers.
Many banks have installed POS terminals in major shops, hotels, sale centre, etc., all over
the country. POST allows all types of debit card and credit cards for making transactions.
Mobile Financial Services (Mobile Banking)
Mobile banking is a term used for performing banking activities via a mobile device such as
a mobile phone. The developments in mobile phone density in Bangladesh, with 132
million subscribers, present a unique opportunity to leverage the mobile platform to meet
the objectives and challenges of financial inclusion.
Banks are already carrying out activities such as disbursement of inward remittances,
financial transactions through agent/ bank branch/ ATM/ mobile operator outlet,
payments of business organizations (such as utility bills) by individuals, payment of
individuals by business organization (such as salary distribution) payment of individuals
by Government (such as old-age allowance, freedom fighter allowance, etc.), payments of
Government by individuals (such as tax payments), individual to individual transactions
(from one registered mobile account to another registered mobile account) and other
transactions such as microfinance, overdraft facilities, insurance premiums, etc.
Agent Banking
Bangladesh Automated Clearing House (BACH)
The Bangladesh Automated Clearing House (BACH) started automated cheque clearing
from 07 October 2010 by replacing the ancient manual clearing system with automation,
which allows inter-bank cheques and similar type instruments to be settled instantly.
Bangladesh Electronic Funds Transfer Network (BEFTN)
The commencement of the Bangladesh Electronic Funds Transfer Network (BEFTN) added
a new milestone in the country’s payment and settlement system. BEFTN is the paperless
electronic exchange that ensures transfer of funds from one account to another, either
within a single institution or across multiple institutions through computer-based systems.
RTGS
Bangladesh Bank is committed to provide a safe, efficient, inclusive and authorized
payment and settlement system for the country. The introduction of the Real Time Gross
Settlement (RTGS) system is another milestone of the country’s financial sector
development. RTGS is a central processing and settlement facility system which was
launched on 29th October 2015.
Online MIS in Banks
A separate MIS department can ensure precise, timely and accurate generation of MIS
report. Generation of MIS report from various departments and sending it to the
management at right time is a challenging job. For this reason, a separate MIS department
gives benefit to an organization especially if the organization is very large.
Call Center
Giving importance to customer satisfaction and easy access to banking services, 48% banks
have established its high tech contact Centre. IVR, integrated with CBS and Card system
that enables customers to do banking by any phone system as well as consultation with Call
Centre agents (Phone banker)
 Good Governance In Banking Sector A Must
Businessmen, economists and policymakers are worried about corruption and
irregularities in the banking sector, which are creating obstacles to the country’s march
towards becoming a more prosperous nation.
Bangladesh has achieved the eligibility for escaping the LDC status but the development
thrust is being marred by widespread corruption in the banking sector.
Analysts think that the banks are losing their capacity to extend credit support to the
entrepreneurs in the given circumstances keeping pace with the country’s development
thrust.
Experts underscored the need for ensuring good governance in the banking sector to
overcome this drawback. The bank authorities should be strict in scrutinising applications
for loans, assessing qualifications of the applicants before approving any loan.
The corrupt bank directors and officials should be brought to justice for approving
clandestine loans and misappropriating funds. The loan defaulters should be punished as
well.
The Artha Rin Adalat Ain (Money Loan Court Act) needs to be amended to empower the
banks to sell the mortgaged property of the defaulter clients to realise the loan.
Besides, steps should be taken to expedite the disposal of the cases filed over loan
defaulting. At the same time, the entrepreneurs and companies that pay back the loans
properly should get more loans at lower interests
The 7th Five Year Plan that was introduced in 2015 also emphasised attracting private
investment. The plan targets to attract Tk 31.90 lakh crore investments by 2020. Of them,
77.3 percent investment is expected to come from private sector and 22.7 percent from the
public sector.
The government has planned to distribute LNG gas for the industrial purpose at the end of
this year. The government is also establishing 100 economic zones and those are ushering
in hopes of attracting large-scale investment both from private and foreign investors.
Owing to the fact, experts opined to build a robust banking system by preventing
mismanagement and corruption.
Finance Ministry officials said the prevailing mismanagement and corruption in banks is
also worrying the government high-ups. Even the finance minister has sought suggestions
from the World Bank and International Monetary Fund (IMF) in this regard. The
government proposed the two global lenders to conduct an assessment of the country’s
financial sector. World Bank Country Director Qimiao Fan also assured the finance ministry
of their support.
Banking sector insiders said the World Bank in 1998 made three recommendations to help
prevent mismanagement and corruption in Bangladesh’s banking sector. However, the
government could not implement any of these recommendations yet.
The World Bank and IMF conducted a financial sector assessment in 2003. The
organization made a set of suggestions for a sustainable banking system, but the
suggestions are yet to be implemented.
The findings of the assessment indicated that the authorities were able to identify almost
all the mismanagement in the banking sector but could not take any action due to political
affiliations of the persons involved in irregularities.
The global lenders also suggested handing over Basic Bank to the private sector and amend
the Money Loan Court Act (Artho Rin Adalat) to empower the bank to realise default loans
more effectively.
In the meantime, legal actions have to be taken against those who already have become
loan defaulters. Around 2 lakh cases are still pending with the Money Loan Court.

Causes, Impact And Solution

Of
Traffic Jam In Dhaka City
Causes of Traffic Jam
1) Traffic rule violation,
2) lack of Planning of city road,
3) Low road space,
4) Unplanned stoppage/ parking,
5) Different speed vehicle,
6) Over population,
7) Rickshaw,
8) Insufficient road,
9) Lack of law implementation,
10) Private car,
11) Important establishments in Dhaka,
12) Lack of driving training/ sense.
13) Lack of awareness,
14) Not enough space for U turn,
15) Not enough traffic police,
16) Presence of hawkers beside the roads,
17) Huge number of vehicles in the road,
18) Poor signalling system.
19) Traffic rules violation
20) Inefficient traffic police
21) Reckless driving
22) Inadequate road length to Dhaka City,
23) Unplanned City growth,
24) Over population,
25) High migration from rural to urban area,
26) Inadequate traffic management,
27) Absence of Mass traffic system,
♥♥Impact of Traffic Jam on Dhaka City
The impact of traffic jam on Dhaka City can be viewed in three ways. The ways are –
a. Impact on Economy,
b. Impact on health, and
c. Impact on environment.

Impact on Economy Traffic jam has great economic impact on Dhaka City. Due to traffic jam
we are loosing money in four ways – a. Loosing man-hours, b. Extra transportation cost, c.
Extra fuel consumptions, d. Vehicle operating cost, and e. Miscellaneous cost.

♥Impact on Health Due to heavy traffic jam, the main sufferers are –
a. General people, and
b. Vehicle operators.

73% of people in Dhaka City are suffering some kind of physical or mental discomfort due
to traffic jam. It is very alarming. Few main ways of sufferings that we have got from our
survey are – 1) Breathing problem, 2) Headache, 3) Mental stress, 4) Hearing problem, 5)
Unexpected sweating, 6) Tiredness, and 7) Eye problem.

Impact on Environment Traffic jam causes environment pollution in two main ways.
It causes – a. Sound pollution, and b. Air pollution.

Solutions of Traffic Jam in Dhaka City

The solution of traffic jam in Dhaka City is not easy. We will discuss solutions from three
points of view.
a. General people’s point of view, b. Vehicle operators point of view, c. Expert’s point of
view.

Solution Provided by General People The main solutions provided general people are –
1) Awareness building,
2) Flyovers,
3) Public transportation,
4) Strict traffic law implementation,
5) Office/School time scheduling,
6) Subway, and
7) Removing rickshaw.

Solution Provided by Vehicle Operators The main solutions provided vehicle operators are –
1) Strict traffic law implementation,
2) Flyovers,
3) Dedicated road for vehicles, and
4) Decentralization.

Solution Provided by Experts

Experts mainly suggest solution in term basis. There should be dedicated roads for
difference types of vehicles. They think it should be –
a. Short term basis (less than 5 years),
b. Mid term basis (5 to 10 years) and
c. Long term basis (more than 10 years).

♥Short Term Solutions :

The main short term solutions are stated below:
i. Increasing pedestrian facilities,
ii. NMT (Non Motorized Transport) free road, iii. Maximum use of road width, iv. Banning
unauthorized parking, v. Controlling road side activities, vi. Modern signalling system, vii.
Speed wise dedicated road for vehicles, viii. Car free days, ix. High Parking charge,
Discourage private cars, xi. Effective use of underpass and over bridge, xii. School bus, xiii.
Time rescheduling, xiv. TIA (Traffic Impact Assessment) before plan pass of any
construction, xv. Increase the number of public vehicle, and xvi. Training of traffic polices.

♥Mid Term Solutions

Mid-term solutions according to experts are given below:

i. BRT (Bus Rapid Transit)

ii. Elevated express highway,
iii. Only one authority to control traffic of Dhaka City,
iv. Construction of roads through East-West,
v. Adequate parking facilities,
vi. Circular embankment-cum-road along periphery of Dhaka City,
vii. Connecting the missing links of important roads, and
viii. Improving the efficiency of railways and river ferries.

Long Term Solution

Long term solutions that experts suggest are –
1) Environment sustainable transport,
2) MRT (Mass Rapid Transit), and
3) Grade separated road network.

Risks and challenges of the economy of Bangladesh

The key challenges on the domestic front continue to be the acceleration of private
investments and the better use of public sector resources to implement important
infrastructure and social programs. The investment outlook is clouded by uncertainties
pertaining to the dynamics of domestic politics; structural reforms; developments in
infrastructure and energy; and global economic prospects.
Bangladesh has the potential to attract FDI from a wide range of countries, including
relocation away from China that is currently underway. If the government fails to provide
necessary infrastructural support in the areas of power, gas and serviced land by
establishing Special Economic Zones (SEZ) rapidly, and improved transport facilities
through better connectivity and ports, many of these new opportunities will be lost to
international competitors such as Vietnam, Cambodia and Myanmar.
The Challenges
♦The inability to realise the 8% growth target under the Sixth Five Year Plan was
primarily attributable to shortfall in both domestic and foreign private investment as
supply side constraints did not ease. With increase in the size of public investment to
nearly 7% of GDP, which by international standards is rather sizable, the quality of
spending has become all the more important for economic efficiency. Overall, the 8%
growth target by the end of the Seventh Five Year Plan is attainable, provided necessary
supporting reforms and policies are put in place.

♦Macro-economic policies have been congenial for the development of the private sector
in Bangladesh, but the general state of the business environment has remained
problematic.
The pace of recovery of the European Union economies, the primary destination of
Bangladeshi exports, following the European Debt Crisis will be critical.

♦Macro-economic policy space is generally limited in a developing economy like

Bangladesh.

♦Risks to fiscal sustainability stem from both direct and indirect contingent liabilities,
including those from the large, unfunded General Provident Fund, and from State-Owned
Enterprises. The recent increase in pension from 80 to 90% of basic pay has increased the
government's future pension liabilities. Fuel subsidies also present risks if global fuel
prices increase, as the government has not yet taken advantage of the lower prices to
change policies for fuel and fertilizer subsidies, as has occurred in India, Pakistan, Egypt
and Indonesia.

Priority Areas Of Reforms

Structural reforms are particularly challenging in the following areas:
Financial
There has been no visible reduction in non-performing loans as habitual defaulters
continue their delinquent behaviour with impunity. The banking sector remained
entrenched in high non-performing loans and uneven interest rate spreads, reflecting the
inadequacy of competition and contestability. Regulatory capital to risk-weighted assets
were just 7.5% (as of June 2015), placing banks in some risk in the event of significant
defaults.
Energy
The drop in oil prices generated substantial fiscal savings because fuel prices were heavily
subsidised. Bangladesh has not made sufficient use of this opportunity either to build fiscal
space, which would allow an effective counter-cyclical response in the event of an
economic slowdown, or to invest in infrastructure or human capital. In fact, subsidies for
electricity increased in FY 2015 because of increased reliance on costly liquid fuel-based
power plants, keeping total energy subsidies nearly unchanged as a share of GDP.
Fiscal
The government is still committed to implement the new VAT law. There has been some
progress in the automation of tax registration, reporting, administration, and collection.
Also, local government finances need to be brought on to a more sustainable footing,
addressing expenditure and revenue mismatches across different levels of government and
reinforcing local government revenue capacity, including that through better property
taxation.
Administrative
Administrative reforms to streamline court proceedings to facilitate contract enforcement
have generally stagnated. Much of the reform agenda, including a broad-based reform of
state-owned enterprises, remains to be implemented. Issues that need to be addressed
include: implicit and explicit government guarantees; non-binding budget constraints; low
efficiency; and a lack of transparency and accountability.
The Likely Headwinds
♦Balance of payments (BOP) pressures could emerge from lost export production and
slower remittance growth. Prolonged slow growth in advanced and emerging markets can
particularly have an adverse impact on garment exports, thereby widening the trade
deficit. Remittances have been flat so far in the year 2016 despite 5.4% growth in the stock
of Bangladeshi workers abroad in FY 2015.
♦Greater downward flexibility in the taka-dollar exchange rate would be needed while
resisting further nominal exchange rate appreciation against the dollar.
♦Deterioration in the solvency of state-owned banks is also likely, assuming failure to
recover all non-performing loans and measuring capital on a conservative basis.
♦Greater attention is needed to swiftly reach the standards of safety and labour rights
compliance in garments; to complete the critical ongoing road, electricity and gas
development projects; to improve the efficiency and financial solvency of the banking
sector.
♦Establishing a sound financing framework to meet the country's growing infrastructure
needs remains a key challenge for policy makers.
♦Efficient transport, reliable energy, safe drinking water, and modern
telecommunication systems are critical in attracting foreign direct investment, expanding
international trade, and achieving long-term investment and growth