Bank-Insurance
Internet Banking Surges 5% in Bangladesh, Records 200% YoY Growth
Internet banking transactions in Bangladesh experienced a significant upswing in November 2023, recording a 5% increase compared to the previous month, according to data from Bangladesh Bank. The total transactions through Internet banking reached Tk82,866 crore, reflecting a 5.07% rise from October. Notably, Internet banking showed an exceptional 200% year-on-year growth, as transactions in November 2022 amounted to Tk27,426 crore.
In contrast, mobile banking and card transactions, including credit and debit cards, witnessed a marginal decline. Mobile financial services (MFS) transactions dipped by 1% to Tk119,600 crore, while card transactions (covering ATM, POS, CRM, and e-commerce) also saw a similar 1% decrease to Tk42,638 crore compared to the previous month.
Bankers attributed the surge in Internet banking to its widespread availability across most banks, making it a popular choice among users. They emphasized that fluctuations of 1-2% on a monthly basis are typical and may not necessarily signal a trend change. However, larger variations, ranging from Tk10,000-20,000 crore, could indicate potential errors.
The head of the card division at a private bank noted that the internet banking revolution, spurred by the onset of the COVID-19 pandemic, continues to gain popularity. Customers are increasingly opting for online transactions, reducing the need for in-person visits to banks.
Data from Bangladesh Bank highlighted a substantial increase in average monthly internet banking and app transactions, growing from Tk45,000 crore between April and September 2023 to Tk82,000 crore in November 2023. This represents an 80% growth in just four months.
Among the banks in Bangladesh, the majority of app transactions are conducted through Islami Bank’s CellFin and the Internet. Islami Bank customers account for almost half of these transactions, followed by Dutch-Bangla Bank’s Nexus Pay, City Bank’s City Touch, BRAC Bank’s Astha, and Eastern Bank’s Sky Banking.
In a related trend, foreign currency transactions through banks’ cards witnessed a decrease in November 2023, reaching Tk798 crore, a Tk14 crore drop from the previous month. The reduction in new card issuances, attributed to a shortage of dollars, contributed to the decrease in dollar endorsements through cards. To endorse dollars on cards, banks have to do so at Tk110, while open market customers must buy dollars at Tk124.
The Bangladesh Bank has adjusted the dollar price to Tk117 from Tk110 by introducing the crawling peg exchange rate mechanism.
Under this new approach, the bank will buy and sell dollars with Tk117 as the mid rate.
This decision was reached during a meeting of the monetary policy committee on Wednesday, May 8th.
Additionally, the committee has opted to discontinue the SMART lending rate mechanism, allowing banks to set their lending rates based on dollar demand and supply, according to a circular issued after the meeting.
The crawling peg system permits a currency with a fixed exchange rate to fluctuate within a specified band of rates, combining features of both fixed and floating exchange rate regimes.
On May 5th, Bangladesh Bank Governor Abdur Rouf Talukder announced the adoption of a market-based interest rate and the implementation of a crawling peg system to stabilize the foreign exchange rate.
He stated that the central bank is collaborating with prominent economists and bankers to devise a contractionary monetary policy aimed at curbing inflation and restoring macroeconomic stability.
Earlier, on April 2nd, the World Bank stressed the importance of a crawling peg mechanism aligned with market-clearing exchange rates to narrow the gap between formal and informal exchange rates, as outlined in the latest Bangladesh Development Update report.
Meanwhile, the International Monetary Fund (IMF) has advocated for a market-based dollar rate. In January 2023, the IMF attached several conditions to a $4.7 billion loan facility over a three-and-a-half-year period. Bangladesh has received two installments of the loan by fulfilling nearly all conditions, except for the reserve requirement.
On Sunday (May 5), the Bangladesh Bank (BB) once again dissolved the board of directors of the National Bank.
In a letter addressed to the managing director of the National Bank, the central bank announced the cancellation of the existing board of directors.
Furthermore, the banking regulator established a new board of directors and appointed Khalilur Rahman, the bank’s sponsor director, as the new chairman, according to the BB’s communication.
Mezbaul Haque, spokesperson for the Bangladesh Bank, commented on the development, stating that the action was taken to bolster the bank’s board of directors.
This move comes after a similar action in 2023 when the central bank ordered the dissolution of the National Bank’s board and formed a new one.
Prime Bank PLC has recently received Bancassurance Business commencement approval from Bangladesh Bank.
Mohammad Shahriar Siddiqui, director, BRPD, Bangladesh Bank handed over the approval letter to Nazeem A Choudhury, deputy managing director – consumer banking of Prime Bank PLC, at a ceremony held at Bangladesh Bank recently.
Mohammad Ashfaqur Rahman, additional director, BRPD, Bangladesh Bank, Ashraful Alam, joint director, BRPD, Bangladesh Bank, Miah Mohammad Rabiul Hasan, chief bancassurance officer, Prime Bank PLC were also present at the ceremony.
Bancassurance is a partnership between a bank and insurance company that will allow a Bank to sell insurance products of the insurance company through its distribution channels.
To offer a wide range of products to its customers and ensure best in class service, Prime Bank has partnered with leading insurance companies National Life Insurance Company Ltd. and Reliance Insurance Ltd.
Being one of the leading banks of the country, Prime Bank hopes to cater to the needs of insurance requirements of its customers through Bancassurance, in Bangladesh market.
