Half of the adult population is still unbanked

Bangladesh lags far behind on financial inclusion, as nearly half of its adult population still does not have a bank.

And the government will need to bring nearly 18 million adults under at least one regulated financial service account over the next four years in order to meet its goal of 100% financial inclusion by 2025.

“The curve appears to be steep,” said Bazlul H Khondaker, director of the Policy Research Institute (PRI).

Citing data from the World Bank, he said that 50% of the adult population had been covered until 2017 and it was 60% at best today.

“We are lagging behind the Asian average,” he added.

Khondaker mentioned that according to the Economist Intelligence Unit’s Global Microscope Finance Report 2020, Bangladesh ranks 44th out of 55 countries for global financial inclusion.

He said financial inclusion was very important to reduce poverty. “So we should include the poor and women in digital financial services,” he suggested.

He suggested developing associated infrastructure alongside government policy support for advancing financial inclusion.

Khondaker was giving a presentation on “The National Financial Inclusion Strategy: Challenges and Implementation” at the opening of a training session on “Financial Inclusion in Bangladesh: Imperatives and Practices”.

The PRI and the Economic Reporters Forum (ERF) jointly organized the program in the latter’s auditorium, chaired by Sharmin Rinvi, ERF President.

“People don’t save money in their accounts. Only 18% of people save money in their accounts,” said Debdulal Roy, executive director of Bangladesh Bank.

“If people save money, they will deposit money into bank accounts, which will increase financial inclusion,” he said.

Roy focused on increasing the number of sub-branches and mobile banking and financial services (MFS) agents.

He said people should not fear the challenges of the coming 4th industrial revolution, as artificial intelligence would be adopted into the digital banking system.

Roy said government officials generally work within a set framework of regulations and rules, for which there was no original thinking that could have led to innovation.

SM Rashidul Islam, ERF General Secretary, moderated the program while Ahsan H Mansur, PRI Executive Director, and Abdur Razzak, Research Director, also made keynote presentations.

Mansur said the MFS has proven to be very effective during the pandemic as it has allowed transactions to continue.

He also said that digital services, on the other hand, help people manage financial risk by making it easier for them to collect money from distant friends and relatives when times are tough.

Mansur said the prime minister was unable to provide 50 lakhs in cash assistance due to poor financial inclusion. People could not be subjected to this service due to the lack of a proper database, he said.

Citing the lack of political support for the expansion of mobile banking services, he said: “Thanks to MFS, we are now able to send money, make purchases, pay hospital bills, electricity and gas, all government utility bills and remittances. from abroad.”

Stating that microcredit activities can also be started through mobile banking with the support of government policy, he said that bKash and City Bank are already making small loans.

Referring to a study, Mansur said that women’s financial inclusion helps households save and improves financial stability.

“It would bring transparency and government services would reach everyone’s threshold,” he noted.

He also said that between December 2018 and May 2021, Bangladesh saw an 81% increase in the number of online banking customers and now 16 companies offer mobile financial services and 21 banks offer agent banking. .

In a presentation titled “Social and Financial Inclusion through Government Disbursements at the Individual Level” Abdur Razzak said the government will spend Tk 28,000 crore on social security in this year’s budget.

If this money is distributed through the banking channel, financial inclusion will increase, he said.