UNIVERSITY OF ASIA PACIFIC, BANGLADESH (UAP)

ASSIGNMENT TOPIC:

“A Critical analysis on Regulation of Internet Banking in

Bangladesh”

SUBMITTED TO

Ms. Noor-E-Medina Suraiya Jesmin, Lecturer

Department of Law and Human Rights, University of Asia Pacific

SUBMITTED BY

Anisur Rahman

Id No: 18211003

LLB (Hons.)

Department of Law and Human Rights

April 25th 2022

 A Critical Analysis on Regulation of Internet Banking in
Bangladesh

Anisur Rahman
Department of Law and Human Rights, University of Asia Pacific
Dhaka, Bangladesh
E-mail: 18211003@uap-bd.edu

Abstract:

In Bangladesh, Banking industry is mature generally than prior period. It has created amazing
picture in their different exercises including internet banking. Presently current banking
administrations have sent off by some multinationals and new nearby private business banks.
Internet banking is one of the most requested and most recent advancements in financial area.
This paper intends to identify overall condition and rules regulation regarding internet banking in
Bangladesh.

Keywords:

Internet Banking, Bank, Bangladesh.

Introduction

Information technology has turned into an important instrument for the present associations and
banking industry isn't an exemption. Internet banking is current innovation based electronic

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procedure for furnishing banking frameworks to client with minimal expense and fast
administrations. However, Bangladesh was similarly a late adoptee yet presently practically
every one of the banks are giving web banking to their clients. Nonetheless, Internet banking is
picking up speed in Bangladesh. For a really long time, banking investigators have been
anticipating the approaching of the credit only and cheque-less economy as an ever-increasing
number of installments are made electronically. In the American Banker's Century Edition,
Marianovic (2000) expressed, "In 1963, Dale L. Reistad of the American Bankers Association
said at the principal ABA National Operations and Automation Conference that we would be a
checkless society by 2000. Internet banking gives banking office nonstop as well as assists a
country with getting joined to the global economy as well as business. Individuals all through the
world are presently getting drawn in with greater action and business and henceforth need the
quick and whenever admittance to his/her financial balance. Internet banking likewise works
with trading different items which fluctuates country to country. As the world economy is
becoming quicker and banking area is making mark every single day, internet banking is vital
and compelling to be a piece of it. Bangladesh just began its excursion in web banking and banks
are approaching to make it a triumph. Internet banking is obviously a gigantic advantage for the
clients and saves a ton of time and things finish with such ease. A non-industrial nation like
Bangladesh can make the best out of internet banking and banks are totally into it.

As per the view purpose in Internet-banking specialist co-ops the significant difficulties of
internet banking in Bangladesh distinguished are given following below:

 Bankers are not happy with the ongoing framework accessible for them to serve e-
banking proficiently
 Bankers are very little happy with the ongoing master accessible for them to serve
internet banking
 Weak mindfulness administration and
 The lacking and deficient guideline and digital regulation practices. Security is
additionally a main issue and challenge of internet banking reception in Bangladesh.

Banking is exceptionally regulated business however with regards to internet banking in

Bangladesh, sufficient legitimate system, strategy bearings are viewed as lacking. Internet

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banking is currently an overall acknowledged peculiarities and its improvement is striking.
Along these lines, challenges recognized by the specialist organizations should be addressed
opportune to further develop the internet banking in Bangladesh.

Background of the study

Internet banking is Known as online banking which offered by banks and financial institutions
that allow clients to utilize keeping money administrations over the internet.

In order to access the service, clients need to register for their banks online banking service. In
order to register they need to create a password. Once that’s done, they can use the service to do
all their banking through internet.

This paper intends to give an idea of regulation of internet banking and find out its advantage
and disadvantage as well as provisions regarding internet-Banking offense in Bangladesh.

Problem Statement

Looking at our daily lives, it can be seen that the internet is being used more now than ever
before. And it is used not only for good deeds but also for bad deeds. In the case of coronavirus,
for example, the general public starts transacting online instead of going to ATM booths or
directly to banks. On that occasion, some unscrupulous people used to swindle money by online
banking fraud. When RAB arrested 13 members of this ring on 09-01-2020, the security of
online banking was questioned. I have tried my best to present in this report mainly on the basis
of security system of online banking and crime prevention in this sector.

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Aim & Objective of the study

This paper identifies the features and rules & regulation regarding internet banking in
Bangladesh.

The main objective of the study is to make comparative analysis of the internet banking in
Bangladesh. In line with the main objective, the following specific objective are formulated:

 To find out the common features of internet banking in Bangladesh.

 To find out the advantage and disadvantage of internet banking in Bangladesh.
 To identify the offence under internet banking in Bangladesh.
 To explore the provisions regarding internet banking provisions in Bangladesh.
 To recommend some ways to improve the system.

Limitation of the study

I have faced some limitations, when I was setting up this report which is mentioned
below:

 Due to time constraint;

 As a beginner it's very hard to neatly written;
 Insufficiency of information;
 Lack of experience, etc.

Scope of the study

The paper gives the readers an idea of regulation of internet banking in Bangladesh. It also
makes the reader aware of the fraud-ness, offence and provision regarding that particular
offence.

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Methodology of the Study

This study is fundamentally based on secondary data collected from a few reliable sources other
than these some primary data also collected from an employee of a bank.

Sources of primary data:

 Face to face conversation

Sources of secondary data:

 Related articles
 Books
 Other researches
 Bank website
 Publications etc.

A thorough research was carried out for a period of very short time and finally this article is
chalked. This paper will be helpful for the readers and researchers.

Discussion

History of Internet Banking

In Bangladesh, Dutch-Bangla Bank Limited first started Internet banking in 2003

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In 2013, there were 27 banks that launched internet banking and there were 46 banks in 2018 that
launched internet banking.

Features of Internet Banking:

 Banks provided booths for online exchange in all around the country.
 Cash withdrawal facility from the booths (24/7).
 Quick cash withdrawal facility without any queue
 Facilities for account checking from any ATM booth in any time
 Statement collection from ATM.
 Through internet banking there is also money transfer facilities from one account to
another.
 Quick balance inquiry.
 Check account balance through text massage.
 PIN can be change through internet-banking.
 Getting the slip of bill for every transaction.
 Facilities to paying utility bill.
 Withdrawal cash utilizing Visa Card, MasterCard, Maestro and other banks debit card.
 Withdrawal cash from dollar account, which gives taka by converting foreign currency.
 Facilities to collection the remittance.

Advantages of Internet Banking:

Many advantages of the internet banking most of these are:

Availability: Most of the services offered are not time-restricted that’s why we can check our
account any time and transfer funds without wait open for the bank.

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 Easy to Operate: Using these services offered by online banking and it is simple and easy.
Many find transacting online is lot easier than visiting the branch.

Time Efficient: now a days it is very important time management every person. We can see any
transaction internet banking matter of a few minutes and Funds can be transferred to any account
within short time.

Activity tracking: when we are making a transaction at the bank branch, we will receive an
acknowledgement receipt. There are possibilities may lose it. But when any transactions perform
on a banks internet banking it will recorded and it show this proof of the transactions if it need.
Details such as the payees name, bank account number, the amount paid, the date of payment
and remarks if any will be recorded as well.

Disadvantages of Internet Banking

Disadvantages of internet banking are given following below:

Internet Requirement: If any person do not have use to the internet, he cannot any facilities
offered internet banking. Likewise, if the bank servers are down due to any technical issues on
their part, then cannot access internet banking services.

Transaction Security: No matter how much awareness banks take to provide a secure network,
online banking transactions are still capable to hackers.

Difficult for Beginners: our country many people who have been lives far away from the web
internet. So, they are not easily deal how internet banking works. It will be very complicated for
the beginners to figure out for themselves.

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Securing Password: every internet bank account requires the password entered use the work.
The password plays an important role in maintaining integrity. If the password is published to
others person, then this person may take advantage of the information to devise some fraud.

Internet banking offences

 Password fraud
 Risk of debit or credit card forged.
 Hacking problem
 illegal access into network system.
 The use of the laying devices
 The enforcement of computer viruses and other ways of disruption.
 Deactivate protected ingredient
 Forming, transferring, accepting, transforming, and keeping some information
 Access in the restricted automated systems.
 logging with reference to the forbidden resources
 Hiding information of computer system
 The implementation of computer viruses, etc.

Provisions regarding E-Banking offense in Bangladesh

According to ICT act 2006

Sec 56 Hacking or access without authorization

If any person:

Does any kind of offence knowingly then, it will hamper the resource, erase or change any
computer system which will loss public assets?

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Access into any device, server, and network system without authorization. It should treat as
hacking crime/offence.

Penalty: not extended10 year, one crore taka or both of this penalty

Sec 61 penalty of accessing in restricted device

illegal's access into any computer system knowing that it is restricted by controller of
government should be treated as unauthorized access.

Penalty: not extend 10 year, 1,00,000 taka or both of this.

Sec 54 penalty of destruction into computer, device, etc.

Damage any file, structure, instrument, data, program, network system should be treated as a
crime.

Penalty: not extend10 year, 1, 00,000 taka or both of this.

Sec 55 penalty of cracking

If anybody does any hamper to any source code, hide code and desolate of any computer, device,
computer system and computer network or does by another body will be treated as cracking
offence/crime.

Penalty: not extend 3 year, 3, 00,000 taka or both of this.

Digital security Act,2018

Section 18 Illegal entry into any secured computer system

Penalty: 3/10lac ---6/20 lac

Section 30 said about the e- transection

Penalty: 5/5 lac------7/10 lac

section 34 hacking

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Penalty: 14years/1 cocor Further, life time imprisonment or 5 coror or both

According to penal code of Bangladesh:

Sec 03: Punishment of offences committed wide, but which by law may be treated within,
Bangladesh.

Management Challenges

The management challenges for Bangladeshi banks are mainly quadruple.

First, they need to satisfy customer requirements that are complicated and ever changing.

Second, they need to deal with increased emulation from old as well as new entrants coming into
the market.

Third, they need to address the pressures on the supply chain to distribute their services quickly.

Finally, they must continually develop new and innovative services to separate themselves from
the competition, as having a large branch network is no longer seen as a main source of
competitive advantage.

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So, these challenges for banks shut in increased customers’ expectations, security problems,
technological challenges, eChannel’s specific marketing, change management, project
management, winning customer trust, human resources management, managing exterior
relationships, marketing & sales and regulations management.

There are so many problems have been identified in on-line banking system in Bangladesh.
Some of them are the following:

 Inability and inadequate knowledge of the bank management about the on-line banking.
 Lack of proper strategic plan to gain and retain market share of the internal banks.
 Lack of international standard communication process.
 High cost of creating on-line banking system.
 Inapplicable back and front office management.
 Lack of compact plan among the banks and the Central Bank authority.
 Unskilled Clearing House facilities.
 Improper software and less trust by the bank
 Authorities on local software.
 Bias of the bank management towards external software.
 Legal barriers and adequate policy framework

Recommendations

 Internet-banking services should try to make more deposit schemes through better
marketing and innovative measures.
 Internet-banking system should be much flexible.

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  Internet-banking should develop their communication into branches.
 The decision-making method should be faster
 SME section of banking should be much flexible.
 Need to establish more ATM booths with adequate fund.
 Internet-banking service should be according to the customer expectation and
gratification.
 Internet-banking service should be resolve the

Furthermore, for achieving the best possible results from the Internet banking system we can
offer some recommendations. These are as follows:

 The whole country should be associated under fiber optic backbone for electronic
banking infrastructure as soon as possible.
 internet banking sector depends on telecommunication and Internet services. So
government should implement the National ICT policy 2002 as soon as possible.
 Government should provide legal framework for electronic commerce, so that domestic
and international trade is allowed to prolong their horizon and basic rights such as
privacy, intellectual property, and prevention of fund and customer protection can be
taken care of.
 We should expand in house software for our banking system. So it will be cost efficient.
 BTTB should improve their extensive network so that the corporate users can connect
their banks and major business institutions. The corporate lines provided by the BTTB
are suitable for e banking and e-business, in the sense of reliable data transfer and
compatible price.
 Every transaction should have some desirable properties like Authenticity, secretly,
Unforgivable, Integrity and not reusable.

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Conclusion

Current Internet banking idea in the financial administrations is new for Bangladeshi people. The
greater part of our bank has no showcasing or deals powers to execute the crude and cold
business of electronic banking for their own association. people are not likewise cognizant about
the upsides of the innovation. A few worldwide banks are now presented their advertising
exercises over their designated clients for particular items like electronic items which is seen as
extremely powerful. The multinationals are coming up towards individuals with assortment of
exceptionally specialized items, which can tackle individuals' concern and can ready to
modernize their way of life. The development of Internet banking clients expanding is a huge
way. Notwithstanding, most recent 10 years it has enormous significance over the bank client
and ideally it will increment step by step after support the item by the expert bankers.

References

https://bangladeshpost.net/posts/online-banking-fraud-34968

https://www.dutchbanglabank.com/electronic-banking/internet-banking.html

https://www.researchgate.net/publication/
343857923_Understanding_Internet_Banking_Use_in_Bangladesh_The_Role_of_Internet_
Banking_Apps_Customers'_Perceptions_and_Green_Concern

https://www.bb.org.bd/en/index.php/about/guidelist

https://core.ac.uk/download/pdf/234624296.pdf

https://www.thedailystar.net/business/news/internet-banking-gaining-traction-2054009

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www.academicjournals.org

www.bangladesh-bank.org

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