The myriad commercial banks that have started up in Nepal seem have done at least one thing right: identify their clients.

This target group trusts its cash to their chosen bank and expects more services facilities and in return, like e-banking for instance. This latest service may seem a distinct oddity in a country that lacks cyber laws, and where less than 0.1 percent of the population has access to a computer, but for educated city dwellers and the Nepali upper middle class, e-banking is now a mouse click away.

Bank account holders now have all kinds of services at their finger tips such as checking their balance statements by SMS. It is just a question of time before they can start paying telephone, electricity and other bills online.

While this may be old hat in developed countries, these services are seen as a big stride in Nepal. Had there been proper cyber laws in place, our banks could have attempted more advanced transactions. In its absence, commercial banks are cautious about introducing basic e-banking facilities, although they are encouraged that most clients are educated enough to understand e-banking, and fortunate enough to access the Internet with ease.

After the successful launch of its Internet banking two years ago and mobile banking recently, Kumari Bank is at the forefront of the innovation. Customers need no longer stand in queues to pay bills or fees. All they have to do is log on to the net, go to the bank website and enter their account number and password. The final click of the mouse will transfer money from their account to their service providers. "This is possible for clients who are authorised to make such transactions," said Kumari Bank's Surendra Bhandari. "For that, both the parties must have accounts with us."

Other banks have not reached as far. Some are planning to introduce basic services like allowing their clients to check their accounts through the Internet. "We have begun a pilot project for this facility," says Himalayan Bank's Suman Neupane. "We will gradually expand the periphery of this service."

Banks have yet to install a third party payment system through the Internet. Even Kumari Bank's arrangement works only among group accounts. Banks can increase their transactions through e-banking only if they use the technology for activities like shopping. In the recent CAN exhibition, the stall for muncha.com promoted Internet browsing of the outlet's different products and placing an online order.

E-shopping would pick up dramatically if consumers can use their bank accounts to make payments to shopkeepers or service providers through the Internet. Without this, the service is very basic and likely to remain static.

The banks are in no rush. Most of them feel that bigger transactions through the Internet means risking fraud. Payments may not reach the desired destination or false claimants could result in heavy settlement expenses. "Risks are always there in business," says Neupane. "And there is no protection in the laws of the land."

His view is shared by every bank looking into e-banking. "If we have cyber laws, then only digital signatures are recognised," says Bhandari. "Right now, whatever transactions we are doing through the Internet are just limited to one-to-one deals." This means the unlimited reach of the Internet has been limited to only few basic services.
Bankers are aware that the government has not been able to do anything about cybercrime, for example when ISPs fall victim to hackers. "How can we operate banking services when there is no way to nab criminals in the cyber world?" asks Neupane.

ISPs say they have raised the issue with the government. "It wasn't any use," said Binay Bohara of Vianet Communications. "They don't even understand what we are talking about." Another ISP provider says the last time a hacker was taken to the police, the officer asked whether he had used a knife or a khukuri. "The police had no idea what hacking was all about," he said.

Officials at the Ministry of Science and Technology say a draft cyber law is ready. "But we have not been able to take further steps because it needs to go through parliament," a senior official said. "The government has other priorities at the moment so we have no choice but to wait."