The State of in Developing Countries: Perspective

1
The State of in Developing Countries
Perspective
E-Finance
Bangladesh

• Ananya Raihan

Centre for Policy Dialogue
October 24, 2001, Geneva
2
What About

• Status of Access to Credit by SMEs
• E-finance in Bangladesh
• E-finance Initiatives in Bangladesh
• Challenges of E-finance for LDCs

3
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

4
E-finance in Bangladesh

• Credit card and POS services
• Telebanking
• ATM
• Online corporate banking
• EFT
• Intenet Banking

5
E-finance Initiatives in Bangladesh

• E-finance for Self Employment
• Secured Transaction Law and Electronic
  Collateral Registry
• E- Credit for SMEs

6
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

7
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

8
Secured Transaction Law and Electronic Collateral
Registry

• Solutions
• Collateral Security Immovable Property
• Country wide Centralised Network Based
  Collateral Registry System
• Secured Transaction Law

9
Secured Transaction Law and Electronic Collateral
Registry

• Impact
• Improved Access to Credit
• Improved Risk Management by FIs
• Informal to Formal

10
E- Credit for SMEs

• Initiator BASIC
• Network Infrastructure and Shared ATM
• Higher Limit Credit Cards addressing Working
  Capital Problem

11
Building Foundation for E-finance

• Online Business Information Services
• E-Credit Information

12
Challenges of E-finance for LDCs

• Network Infrastructure
• Capacity Building Human, Technical and
  Regulatory
• Investment
• Legal Infrastructure
• Macro Policy
• E- Culture

13
Network Infrastructure

• Intra-bank and Inter-bank Connectivity
• Local and Global
• Bank-Client Connectivity
• Security of transaction

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14
Capacity Building Human, Technical and Regulatory

• Central Bank Quick Settlement, Online credit
  Information, Skilled e-Manpower, Regulatory
  Framework
• FIs Understanding E-finance

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15
Investment

• Misconceived Investment Strategy
• Inadequacy of Investment

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16
Legal Infrastructure

• Amendments of a Set of Laws
• Incorporation of New Laws Cyber Law and digital
  signature law
• Digital Crime Network Security and Penal Code

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17
Macro Policy

• Currency Convertibility Access to Global Finance
• International Reserve Money Laundering
• Clear cut instructions for electronic transaction
  in Forex Manual

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18
What to Do

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

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