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E-Commerce in Bangladesh
Thousands of development organizations have gone online in the past five years, having realized the importance
of the Internet for the exchange and distribution of information. With the rise in e-commerce activities over the
Internet, and the subsequent decline in development aid over the past five years, development organizations
may be able to tap into this new business modality to offset their operating costs.
Exponential growth of internet population and utilization of its potentials in various sectors induce Bangladesh
to be connected with information super highway, thus performing business and transactions over internet has
become easier particularly for B2B sector. It is apparent that the developed countries like United States and
Europe are presently the market leader of e-commerce. Exponentially increasing trend of internet population
and usage of its various utilities formed a broader community, called e-community and tempted transforming its
function to a brand new market arena from being operated as a medium of communication.
The special advantages of e-commerce like, Opportunity to operations, easy global reach, lower cost of
acquiring, serving and retaining customers, easy to build an extended enterprise, improve customer service and
de-intermediation tempt the world business community to adopt e-commerce.

Types of E-Commerce
Adam (2003) categorized e-commerce in 4 categories which are
i) Business-to-Business (B2B):
Business-to-business e-commerce deals between the businesses or among the businesses. Most of B2B
applications are used in the area of distribution management, inventory management, channel management,
supplier management and payment management.
ii) Business to-Consumer (B2C):
Business-to-Consumer ecommerce is involved between the businesses and the consumers. Most of B2C e-
commerce deals with purchasing of physical goods like books or any consumer product, information goods like
software, e-book, games, song etc., and personal finance management like e-banking.
iii) Consumer-to-Consumer (C2C):
Consumer-to-Consumer e-commerce deals between individual consumers. Online auction and peer-to-peer
system for money or file exchange could be the examples of C2C e-commerce. Business-to-Government e-
commerce is involved between the business organizations and the government.
iv) Business-to-Government (B2G):
B2G is generally used for licensing process, public purchasing and other government operations. Though this
type of ecommerce is insignificant compare to other kind of e-commerce, but it could be a driving force for
operating public sectors which is refer as e-governance.
Other e-commerce classifications can
i) Government-to-Business
ii) Government-to- Government
iii) Government-to-Customer
iv) Customer-to-Business
v) Customer-to-Government and
vi) M-Commerce
 E-commerce Practice in Bangladesh
E-commerce in Bangladesh actually stated in the year of 1999 based in USA with some non-resident Bangladeshis. This
people opened some Bangladeshi sites focused on providing local news and some transactional things like sending gift
items to Bangladesh. www.munshigi. com is the first ever Bangladeshi e-commerce web site.
List of different e-commerce-type web sites
www.chorka.com
www.hutbazar.com
www.cellbazar.com
www.muktabazaar.com
www.bikroy.com
www.banglacommerce.com
www.bdjobs.com
www.premium.com
www.shoppingcard.com
www.Ecommercebank.org
www.kroybikroy.com
www.kholabazar.com
www.bestway.com
www.sonalibangla.com
www.e-bangla.com
www.bajna.com
www.bangladeshinfo.com
www.bdbazar.com
www.bdquery.com
www.quickezine.com
www.Webbangladesh.com
www.deshigift.com
www.bangla2000.com
www.banglabaskets.com

The Role of Banking in the Economy of Bangladesh

Definition of Banking: The term banking is defined as accepting, for the purpose of lending or investment, of
deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, and
order or otherwise. It is thus clear that the underline principle of business of banking is that the resources
mobilized through the acceptance of deposits must constitute the main stream of funds which are to be utilized
for lending and investment purposes. The banker is thus an intermediary and deals with money belonging to the
public.

A bank is an institution whose current operation consists in granting loans and receiving deposits from the
public. The fact that both loans and deposits are offered is important because it is the combination of lending
and borrowing that is typical of commercial bank.

Functions of Modern Bank:

As a financial institution Bank perform the activities mainly: collect deposits, give loan and advances etc. as
well as works for social and economic development of a country. Here the bank consists of Central bank,
Commercial bank and development Bank. The Modern function of a bank is divided into two parts mainly.
1. Micro Functions,
Receiving Deposit: Banks mobilized scatter small savings across the country through current, saving and fixed
deposits account.
Allowing Interest:Banks allows interest on depositors money depends on the nature of deposit account.
Extension of credit and receiving Interest: From the accumulated capital, bank gives loans to manufacturing
and trading firms (deficit households). Interest received on these loans represents the main revenue and sources
of income for the bank.
 Creation of credit Deposit: Bank accepts and collect loan through the borrowers account, by the opening of the
borrowers account bank tactfully create deposit by this.
Creating Medium of Exchange: Banks issue cheque and other negation instruments which can be transferred
money many times for payment settlements.
Giving Cheques: Commercial bank provide cheque facilities to his account holder for the withdrawal of their
deposit.
Formation of Capital: Bank accumulates small saving from public and thus form large amount of capital.
Issuing Notes: Central bank enjoys the monopoly right to issue notes and coin as per requirement of the
economy. The Central bank performs this operation through the commercial bank. So, central Bank is called the
Issuing Bank.
Circulation of Money: Banks issue cheques and other negation instruments which can be transferred money
many times for payment settlements. Thus velocity of money increases many times and economics activity is
boosted.
Act as a trustee: Commercial bank act as a trustee by providing their customer by locker facility to deposit their
valuable asset and securities and perform certain function for the benefit of the customer.
Exchange Negotiable Instruments: Banks issue, purchase and sells different types of negotiable instrument like
promissory notes, bill of exchange etc.
2. Macro Function:
Investment of Capital: Banks accumulate small saving from public and thus form large amount of capital. Banks
invest this capital as the form of loan and advances and direct investment in profitable sector. By investing
capital in productive sector will boost up the economy of a country.
Role in Economic Development: Specialized banks chennelize fund for development and growth of a specific
sector of the economy. As a result, a balanced economic development of all sectors is ensured.

What types of Demand/ market face for their product and Services?
Product of the Bank: Various types of deposit accounts, special saving schemes and different categories of loans
are the product of the Banks. Different banks offer for its clients to different type of account and loans which is
convenient to its client.
Various types of account:
1. Savings account.
2. Current account.
3. Short-term deposit account.
4. Fixed deposit account.
5. Foreign Currency account.
Various types of Schemes:
1. Deposits spinner Scheme.
2. Monthly Income Scheme.
3. Marriage saving Insurance.
4. Double deposit Insurance Scheme.
Different Types of Loans:
1. Term Loan (Industrial)
2. Agricultural loan.
3. House building Loan.
4. Transport Loan.
5. Secured Overdraft Loan.
6. Cash Credit Loan.
7. Packing credit Loan.
8. Consumer Credit Loan.
9. Lease Finance.

What is the risk in banking business?

There are mainly three types of risk banks are facing when they perform their operational activities. The
management of risks, in the full acceptation of the term, can be seen as the major activity of banks. Commercial
banks have to control and select the risks inherent in the management of deposits, loans portfolios of securities,
and off-balance-sheet contract.
Three types of risk in the operational viewpoint of a bank are stated below:
Default risks.
Liquidity risk.
Market risk.
Default risk:
The credit activities of a bank are affected by default risks, which occur when a borrower is not able to repay
debt (principal or interest). Defining and measuring credit risk is equivalent to determine how the market
evaluates the profitability of diversification and hedging provided by financial markets. In part, the level of risk
depends on the institutional arrangements which the banks are subject, either through the interbank money
market or through specialized institutions created for this purpose. This connection between the institutional
framework and the different elements that determines the pricing of credit risk is particularly important in
applied work.
Clearly the riskiness of a loan will be affected by the existence of
o Collateral.
o Compensating balance.
o Endorsement.
Liquidity Risk:
Liquidity risk occurs when a bank must make unexpected cash payments. This types of risk essentially comes
from the specificity of the demand deposit contract: unlike the creditors of other kinds of firms, depositors are
allowed to demand their money at any time. Consequently, the deposit activity is affected by the risk of an
unexpected massive withdrawal by depositors.
Without regulation, bank run and bank panics are inherent to the nature of banking, and more specially to the
fraction reserve system. Indeed, bank deposits contracts usually allow depositors to dispose of a nominal
amount on demand. As soon as the fraction of these deposits is used for financing illiquid and risky loans or
investment, there is a possibility of a liquidity crisis.
The conventional explanation for a bank run is that when depositors observe large withdrawals from their
banks, they fear bankruptcy and respond by withdrawals their own deposits. Withdrawing in excess of the
current expected demand for liquidity generate a negative externality for the bank experiencing the liquidity
shortage, since they imply an increase in the banks probability of failure. But they can also generate
externalities for the whole banking system if the agents view the failure as a symptom of difficulties occurring
throughout the industry. In such a case the bank run may develop into a bank penic.
How central Bank prevent such contagion by playing Lender of the Last resort:
When the banks are fall in Bank run situation, the commercial bank has the following alternative course of
action:
o Going for short term borrowing from other commercial bank.
o Liquidating some of its short term financial instrument.
o Rediscounting of available discounted bills with other financial institution.

Cash Reserve Requirement (CRR):

The cash Reserve Requirement (CRR) of the schedule banks with the Bangladesh Bank which was fixed on 21
July, 2004 at 4.0 percent of their total demand and time liabilities (excluding inter-bank items). It was also
mentioned in the circular that this amount of reserve must not be less than 3% in any single day. In pursuance of
the objectives of monetary policy, CRR has been increased to 4.5% from 4% of their total demand and time
liabilities effective from March 1, 2005. However, banks are allowed to maintain CRR @ 4.5% daily on bi-
weekly average basis subject to the condition that CRR so maintained should not be less than 3.5% in any day.

Statutory Liquidity Requirement (SLR):

The statutory Liquidity Requirement (SLR) for the scheduled banks, excepting banks operating under the
Islamic shariah and the specialized banks, has been re-fixed at 16% from 20% on November 08,2003 and
remained unchanged thereafter. The SLR for the Islamic banks remained unchanged at 10 percent. The
specialized banks continued to remain exempt from the SLR.

Different type of Social Responsibilities Bank does:

Provide financial aid to the Educational Institution to development of education of a country.
Provide financial aid to Medical facilities for poor people.
Provide financial aid For Cultural Development.
Provide financial aid if Sports Development.
Provide financial aid and Training facility for the poor people of rural area.
Provide financial aid during Natural disaster face by the country.
Provide finance in sectoral development of the country.
Provide finance in Infrastructural development of the country.

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ECONOMY
THE YEAR IN REVIEW
Top three challenges
Lack of investment.
Fulfilling revenue target was a big challenge.
Lack of implementation of infrastructural projects. The government has taken many initiatives but we see poor
implementation of these projects. For example, in power sector, except for the Rampal power plant, which is also
controversial, there is no development in big power projects.
Top three achievements:
Maintaining macroeconomic stability
Relative strong position in export. Many strong economies suffered from double digit shrink in their export
while Bangladesh maintained a stable position.
Last year, the political climate was stable which really supported the production environment.
Top three suggestions for 2016
Fiscal steps should be taken to increase investment.
Do not go for ambitious infrastructure project. For example, the government has declared to establish
one hundred EPZs within the next one year which has little prospect of being implemented. The government
should prioritise projects that need immediate attention.
The revenue structure needs to be reformed. NBR and other custom related organisations need urgent
reform to increase revenue.
Dr. Biru Paksha Paul
Top three Challenges
Weak infrastructural governance: We are building various infrastructures but governance of these structures is really
poor. For example, we do not have spacious approach roads for flyovers; traffic jam is also an important part of
infrastructural governance. If we can improve street governance, our GDP growth would get 1 percent higher.
Absence of robust growth in the capital market: We could not stimulate the capital market. By and large the stock
market index remained below 5000-point.
 High lending rate: At the backdrop of global low interest regime high lending rate in Bangladesh remained as a
challenge. Currently it is above 12 percent.
Top THREE Achievements
GDP growth well off the track. Service sectors performed very well.
Stable inflationary trend
Sustained export growth amid global export slump.
Top THREE Suggestions for 2016
Urgent reform needed for better revenue mobilization.
Exploring new export destinations and diversifying export items
Expedite critical infrastructure projects such as power plant, the Dhaka-Chittagong four lane highways and EPZ.
Dr. Selim Raihan
TOP THREE Challenges
1. The economy has suffered from political uncertainties which affected private investments leading to
stagnant private and overall investments.
2. There has been a rise in economic inefficiency, resulting in a fall in the productivity of investment,
which has led to a situation where achieving the same level of economic growth is getting costlier.
3. Growth rates in exports from other sectors, apart from the RMG, have been weak, which is not
conducive for export diversification.
TOP THREE Achievements
1. The country has been upgraded from a status of low income country (LIC) to a status of lower-middle
income country (LMIC) as per the World Bank's classification.
2. There has been significant rise in the generation of electricity, which has helped reducing the gap
between demand and supply of electricity.
3. The RMG sector experienced sizable growth, despite numerous challenges at home and abroad.
Top Three Suggestions for 2016
1. We need to initiate second generation economic reforms in the areas of trade, industrial, fiscal and
monetary policies and implement them with the aim of rising economic efficiency, diversification of the overall
economy and exports, and inducing private investments.
2. The cost of doing business needs to be lowered by addressing general and sector specific infrastructural
bottlenecks and corruption.
3. Political uncertainties need to be minimized by generating political capital for economic reforms with a
higher degree of contested politics.
DR. Fahmida Khatun
Top Three Challenges
1. Boosting revenue mobilization effort: Shortfall in the revenue collection continued in 2015 as well.
Political turmoil during the early months of 2015 and decline in import duty may be the reasons, but efficiency
of the National Board of Revenue has to be improved through higher human and financial resources.
2. Increasing public investment: Public investment during July-October 2015 has been lower than that of
the same in the previous year due to slow implementation of the Annual Development Programme. Given that
there are large infrastructural requirements in the country, ADP implementation needs to be expedited.
3. Remaining competitive in the international export market: Export growth has been volatile in recent
years. Higher demand for compliance is putting pressure on readymade garments exports. Productivity
enhancement through skill development and technology are to be pursued by the RMG sector to absorb such
pressure.
Top Three Achievements
1. GDP Growth: Though lower than the target of 7.3 percent in the national budget, GDP growth for the fiscal
year 2015 was 6.5 percent, higher by 0.4 percent compared to the previous year's growth.
2. Lower Middle Income Status: Bangladesh's economic growth has been translated into higher per capita
income. As a result, in 2015, Bangladesh has moved to World Bank's category of Lower Middle Income
Country (LMIC) with a per capita income of USD 1314.
3. Tamed inflation rate: Lower prices of fuel, fertilizer and food at the international market have given respite
on inflationary trends. Restrained monetary growth and a stable nominal exchange rate between the
Bangladeshi taka and the US dollar have also contributed to lower inflation.
Top Three Suggestions for 2016
We have targeted for 7 percent growth for the fiscal year 2016. Indeed, growth momentum has to be
geared up for creating employment for the young population in high productive sectors and reaching Upper
Middle Income Country (UPMIC) status. The target has to be to move now from reduction of poverty to
achievement of prosperity.
Maintaining a stable macroeconomic environment has always been a major task. Fiscal prudence
through generating adequate resources and investing them for infrastructure, education and governance has to
be exercised. The unfinished agenda of institutional reforms for improving economic governance should be
taken on board.

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Climate change and Bangladesh

Climate change is now a looming unprecedented threat to humanity. Although caused by the now developed
countries through emission of huge quantities of greenhouse gases (GHGs) from the time of industrial
revolution, leading to global warming, which in turn has brought about increasing natural disasters, melting of
permafrost, and sea level rise. Its adverse impacts are mostly falling on the poorer and vulnerable countries and
on the poor and vulnerable people in those countries. Eventually, however, the whole world will face the
consequences of climate change, signs of which are already visible given that droughts, floods, bushfires,
hurricanes, etc. are occurring more frequently and more devastatingly in the developed countries as well.
Bangladesh is one of those countries which are in the forefront of climate change impacts.
Goal 13 of the 2030 Sustainable Development Agenda is: 'Take urgent action to combat climate change and its
impacts'. Indeed, environment is one of the three legs of sustainable development, along with economic and
social development. Climate change impacts, not only hamper poverty and inequality reduction, but also
accentuate them by causing damages and destruction to crops and other economic activities, houses,
infrastructure, and even homesteads turning many non-poor into poor, many poor into extreme poor, and many
extreme poor into destitute. A major consequence is also now taking place in the shape of displacement of
increasing numbers of people, either because their homesteads and assets are washed away or lands become
unproductive due to prolonged drought or salinity ingress. Hence, in any approach to poverty reduction,
extreme poverty eradication, and inequality reduction must embrace appropriate actions to combat climate
change impacts. The various issues surrounding climate Change and its impacts and how to address the
phenomenon are dealt with internationally under United Nations Framework Convention on Climate Change
(UNFCCC). After long negotiations over the years, The Paris Agreement [on Climate Change] for the period to
2030 was adopted on 12 December 2015. Indeed, climate change issues cannot be addressed meaningfully
unless it is integrated with economic and social development processes. In fact, in both the 2030 Sustainable
Development Agenda and The Paris Agreement, an integrated approach to economic, social, and environmental
issues have been advocated for sustainable development.
Although everybody will not agree with everything in the Paris Agreement, it has opened the door for
delineating and implementing future course of actions to combat climate change. The Agreement will be
implemented with effect from 2020 so that there is a period of four years to work out how best the Agreement
can be implemented by further strengthening its strengths, minimizing its weaknesses, and bringing about
policy, strategy, and institutional congruence at the international, national, and local levels.
In Bangladesh, there is a strong political will to combat climate change, but it is a global issue. Bangladesh
alone can do only so much. Over the past six years, Bangladesh has used Tk. 30 billion from its national budget
to implement climate actions, largely adaptation projects but also mitigation projects. Indeed, Bangladesh must
focus mainly on adaptation to climate change impacts inflicted on it extraneously; it has not contributed to the
climate change episode at all. Surely, Bangladesh may seek to mobilise as much resources as possible from
internal sources, but that will be very limited. Therefore, Bangladesh needs finances and transfer of
technologies from the international arena to make a dent in terms of reducing climate change inflicted sufferings
of the people as well as climate risks and vulnerability. In this context, capacity enhancement is also very
important.
But, Bangladesh or any other country facing similar circumstances cannot go one adapting years and years on
end unless the worsening climate change is arrested soon and reversed. In fact, in The Paris Agreement, the goal
of containing global warming to well below 2oC and possibly to 1.5oC by the end of this century over pre-
industrial level has been set. But as analyses show, commitments made so far for reducing global GHG
emission will keep the world on a path for 2.7oC to well over 3oC warming, which will spell disaster not only
for countries like Bangladesh, but, in fact, for the whole world. There is a provision that the Agreement will be
reviewed every five years and it is expected the large emitters will raise their mitigation ambition in terms of
further emission reductions commensurate with the agreed global warming goal. The future will tell how things
play out.
Although as an LDC, Bangladesh is not required to reduce GHG emissions. Moreover, the country emits only
0.3 tonne per capita per year, compared to 10-20 tonnes in developed countries, about 7 tonnes in China, about
8 tonnes in South Africa, and about 2 tonnes in India. Bangladesh's per capita annual emission constitutes only
about one- sixth of the average of the developing countries. Overall, currently, Bangladesh's contribution to
annual GHG emission is only 0.35%. Yet, Bangladesh, in solidarity with the global emission action, has
unconditionally committed to reduce emission in power, industry and transportation sectors by 5% by 2030
compared to business-as- usual scenario, and another 15% if necessary finance and technologies are provided
by the international community.
Given the awareness and commitment of the Government of Bangladesh and other stakeholders in the country,
the future course will depend how best we can turn that awareness and commitment into concrete action and
ensure their effective and transparent implementation. But, obviously, adequate external resources and
technologies will be needed.
Past experience in relation to delivery on commitments by the developed world is not very encouraging. For
example, way back in 1970, the developed countries promised to give 0.7% of their GNIs as official
development assistance (ODA) to developing countries. After 45 years, the delivery reached about 0.32%, i.e.
about half of the promised figure. Can the future be different, particularly with reference to implementation of
The Paris Agreement and the 2030 Sustainable Development Agenda? In both the documents, it has been
recognised that all countries of the world will make their contributions on the basis of CBRD & RC. This is a
cornerstone of the negotiations for partnerships to be built to implement these two global compacts. But, as of
now, we may prepare to work hard and hope for the best; but uncertainties are rife and future unclear. Yet,
undeterred Bangladesh must press on and not deflect from its continued efforts as much as practicable, taking
on board suggestions offered in this paper, to eradicate extreme poverty, sharply reduce poverty, and bring
down inequality of all manners to tolerable levels within the next decade or so, well ahead of the conclusion in
2030 of the international SDG and Climate Change compacts.

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