Financial inclusion in Bangladesh has witnessed 'miraculous' progress in 50 years, particularly since the advent of mobile financial services (MFS), till now that nearly 90 percent of the population is estimated to be covered by the formal banking system, MFS, and microfinance institutions (MFIs), according to the man who made financial inclusion a centrepiece of central bank policy.

Most experts agree that Bangladesh Bank's policy support and realistic measures for enhancing common people's access to the financial sector have helped the country to reach such a position.

The central bank's thrust in this regard began during the reign of Dr. Atiur Rahman, who served as governor from 2009-15. In the six years since he left, the central bank has carried forward his vision.

As a policy, financial inclusion is recognized to have significant potential for improving the well-being for all, and especially for participants who belong to the poor and marginalised groups.

According to the World Bank's 2017 Findex report, which looked at financial inclusion, the percentage of adults with financial accounts in Bangladesh rose from 31 percent in 2014 to 50 percent in 2017. Till the introduction of MFS in 2012, that number stood at around 20 percent for a long time. A financial account is broadly defined by the index as an account at a bank or another type of financial institution.

Now, Atiur Rahman believes 60 percent of adults are covered by the formal banking system, which increases to 90 percent if account opening and financial involvement through MFS and MFIs are included.

According to Bangladesh Bank data, the country witnessed a huge jump in deposit accounts with banks during the 2019-20 fiscal. As of June 2020, the number of deposit accounts in the banking sector stood at 13.24 crore as of June this year, which was a 33.6 percent jump from a year earlier. The number of dormant accounts is estimated at around 10 percent.

"The total deposits of the banking sector crossed Tk12 trillion (12,000 crore) in 2020, from Tk 678 crore in 1973, mobile finance deposits stood around Tk10,000 crore and the deposits with the MFI system crossed Tk 1 trillion (1000 crore) recently," Dr Atiur said.

Comparing the central bank's target of disbursing Tk 26,000 crore in loans to the agriculture and rural sector in the current fiscal to only Tk 100 crore set aside for the sector in 1973, Dr Atiur said it is very clear that Bangladesh "achieved miraculous success in financial inclusion and access to finance."

Bangladesh introduced the No-Frill Accounts [or NFAs, these require zero or very low minimum balance and banking facilities such as withdrawals and ATM and debit card facilities incur zero charges], opened with an initial deposit of Tk10/50/100 for various disadvantaged groups.

There are also the school banking accounts opened by the banks for under -18s and working children accounts opened by the banks through collaboration with NGOs.

According to the BB, as of June 2020, more than 22 million (2.2 crore) No-Frill Accounts had been opened through banks. All the various categories of No-Frill Accounts, including for farmers, hardcore poor, freedom fighters and social safety net beneficiaries, witnessed growth. At the same date, over 2.4 million School Banking Accounts had been opened, and 19 banks had opened 10,029 accounts for Working Children with the help of 23 NGOs.

As of June 2020, Farmers' Accounts remain the major category of NFAs, contributing around 45 npercent of the total number. Bangladesh Bank data also showed the number of accounts opened under Social Safety Net Programs increased by over 38 percent during the last quarter of the 2019-20 fiscal. The onset of the pandemic contributed to this growth as more and more people opened such accounts to access the government's increased support programs during this period.

The total amount of deposits in the No-Frill Accounts reached Tk 2,386.74 crore in June 2020, a growth of 19.1% year-on-year.

Economist Dr. ABM Mirza Azizul Islam acknowledged Bangladesh's "very impressive progress" in financial inclusion since the introduction of mobile financial services. He believes there should be even more expansion of financial coverage to include marginal people in the financial system, he said.

Mirza Aziz, however, said access to private sector credit is still lagging in the country, and policymakers have to focus on simplifying the system for providing and accessing loans.

Atiur Rahman returned to Bangladesh Bank in February 2020 to deliver the annual Nur Matin Lecture, where he talked about the various measures and philosophy underpinning the drive to increase financial inclusion. At present the country is working in accordance with the first National Financial Inclusion Strategy (NFIS), adopted in 2018, and covering the time period from 2019-2024.

Chairing the 2020 Nur Matin Lecture program, Governor Fazle Kabir said: "Measures undertaken with respect to financial inclusion like agent and booth banking, mobile banking and school banking, opening NFAs, banking for working street children and arranging fairs and creating refinancing schemes have brought a massive number of unbanked people under banking services. All these efforts proudly carry the stamp of your (Atiur Rahman's) dedication."

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