Tuesday, March 12, 2013

Jumana Rezwan's Canvass



BB to impose charges on essential banking services.

Bangladesh Bank has decided to impose charges for ATM banking services such as balance inquiry, inter-bank account transfers and mini-statement. The new charges, ranging from Tk5-10, will be applicable to users of all ATM’s except for those under Q-cash agreement. This move is in direct contrast with a recent statement from the National Payment Switch Bangladesh NPSB, which had promised to lower transaction charges. The NPSB was opened to facilitate expansion of card based payment channels, e-commerce, and to reduce circulation of fake currency notes.

While the new fee structure may generate additional income, it is likely to hinder the acceptance of electronic banking among important sectors of the society, such as low wage workers, who prefer to save every penny they earn.  In developed countries a good majority of the population is already part of the banking system.  They tend to use the different banking services despite the fees levied, as the actual value of the services are higher than the perceived costs. However, in the case of Bangladesh, levying charges for baking services may serve as a disincentive for new customers to enter the banking system. If the vision for Digital Bangladesh at 2021 is to be realized, perhaps expanding financial access and educating the population through affordable technology in mainstream areas such as telecommunication and banking systems may be a strategy that will reap greater benefits on the long run.

BRAC Saajan to offer remittance services

BRAC Saajan Exchange, a subsidiary of BRAC Bank Ltd has been granted permission from British authorities to operate remittance operations across Europe. The new exchange service will allow funds to be transferred from Europe to local beneficiaries in Bangladesh within 10 minutes, making it one of the fastest exchange houses in the country. Moreover, non-resident Bangladeshis (NRBs) will also have the option of investing in Bangladeshi capital markets through BRAC Bank’s Probashi Biniyog and in the Bangladesh Bank’s  Probashi Wage Earners’ Development Bond.

In addition to facilitating remittances, BRAC Saajan is likely to help boost the foreign currency reserve by offering NRBs an option to invest money in Bangladesh rather than Europe. However, given the current political turmoil and its resulting impact on the economy, it will be interesting to see if NRBs prefer to invest in the more stable, yet declining European economy.

BRAC Saajan already has the advantage of belonging to one of Bangladesh’s premier business groups, and hence has brand equity similar to other BRAC subsidiaries. As UK has already approved BRAC’s  operation in the country, they may well be able to take advantage of this and slowly begin expanding to other parts of the EU. Attracting investments from patriotic NRB investors may be easier if BRAC Saajan looks into the possibility of creating Europe based investment schemes.

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