The State of

in Developing Countries:

Perspective

Ananya Raihan

October 24, 2001, Geneva

E-Finance

Bangladesh

Centre for Policy Dialogue

What About

• Status of Access to Credit by SMEs

• E-finance in Bangladesh

• E-finance Initiatives in Bangladesh

•Challenges of E-finance for LDCs

Status of Access to Credit by SMEs

•50.53% of SMEs have no access to formal source of finance

•Only 35.79% of SMEs enjoy unrestricted access to credit

•Bank credit is less than 20 percent of total fund outlay

•Majority of the SMEs seek finance for working capital needs

E-finance in Bangladesh

• Credit card and POS services

• Telebanking

•ATM

•Online corporate banking

•EFT

•Intenet Banking

E-finance Initiatives in Bangladesh

• E-finance for Self Employment

• Secured Transaction Law and Electronic Collateral Registry

• E- Credit for SMEs

E-finance for Self Employment

• A Grameen Bank Initiative

• A Network of ATM and POS Country wide

• Smart Card

•Initially Serving Own Clients of Micro-finance

• Gradually Other MFI members

•SME Clients

•Large Clients

•Access to Credit Will Improve by 10%

Secured Transaction Law and Electronic Collateral Registry

Problems of Access

•Collateral Security: Problem for 79.4 percent of SMEs

• Credit Risk Information

• Realisation of Credit Claim

Secured Transaction Law and Electronic Collateral Registry

Solutions

•Collateral Security: Immovable Property

• Country wide Centralised Network Based Collateral Registry System

• Secured Transaction Law

Secured Transaction Law and Electronic Collateral Registry

Impact

•Improved Access to Credit

• Improved Risk Management by FIs

• Informal to Formal

E- Credit for SMEs

•Initiator: BASIC

• Network Infrastructure and Shared ATM

• Higher Limit Credit Cards addressing Working

Capital Problem

Building Foundation for E-finance

• Online Business Information Services

• E-Credit Information

Challenges of E-finance for LDCs

•Network Infrastructure

•Capacity Building: Human, Technical and Regulatory

•Investment

•Legal Infrastructure

•Macro Policy

•E- Culture

E-finance: Bangladesh 13

• Intra-bank and Inter-bank Connectivity:

» Local and Global

• Bank-Client Connectivity

• Security of transaction

Network Infrastructure

p

E-finance: Bangladesh 14

• Central Bank: Quick Settlement, Online credit

Information, Skilled e-Manpower, Regulatory

Framework

• FIs: Understanding E-finance

Capacity Building: Human, Technical and Regulatory

p

E-finance: Bangladesh 15

• Misconceived Investment Strategy

• Inadequacy of Investment

Investment

p

E-finance: Bangladesh 16

• Amendments of a Set of Laws

• Incorporation of New Laws: Cyber Law and digital

signature law

• Digital Crime: Network Security and Penal Code

Legal Infrastructure

p

E-finance: Bangladesh 17

• Currency Convertibility: Access to Global Finance

• International Reserve: Money Laundering• Clear cut instructions for electronic

transaction in Forex Manual

Macro Policy

p

E-finance: Bangladesh 18

• Technical Assistance• Investment• Funding of Technical Assistance• Pioneering Initiatives

What to Do

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