Monday | 7 October 2024 | Reg No- 06
বাংলা
   
Monday | 7 October 2024 | Epaper

Banking for masses

Published : Friday, 8 April, 2022 at 12:00 AM  Count : 1396
Rajib Chakraborty
The financial sector in the country has experienced revolutionary changes. The recent developments in banking technology have transformed banking from the traditional brick-and-mortar infrastructure like staffed branches to a system supplemented by other channels like automated teller machines (ATM), credit/debit cards, internet banking, and online money transfers, etc.

Though the recent improvement in providing digital financial services to the mass people throughout the country with affordable cost brought a section of the financially excluded people within banking boundary, still, a large section of rural people is unbanked and access to such technology is restricted only to certain segments of the society.

It is well known that well-functioning financial systems are prerequisites for economic and equal development. A strong and efficient financial market plays an important role in mobilizing money without obstacles. The imperfect financial market is not only liable for inequality but also responsible for slower growth.

In Bangladesh, financial markets comprise three broad segments. The formal financial institution discussed below is one that includes all commercial, development, and agricultural banks.

Banking sector: The banking industry in Bangladesh comprises four types of banks: state-owned commercial banks (SCBs), state-owned development financial institutions (DFIs), private commercial banks (PCBs), and foreign commercial banks (FCBs). These four types of formal institutions including agricultural banks play a significant role in the banking system of Bangladesh.

They are the main players in the case of providing financial services with affordable cost to all segments of people as part of their responsibility to connect people with Financial Institutions (FI) so that the general mass can avail government subsidies and other benefits even though many branches of public banks incur loss due to the access cost of the branches exist in the rural areas.

Instead of making a recurring loss, Bangladesh bank permits the public banks to open branches, especially in remote areas for the upliftment of the underprivileged people to intensify the mass banking drive.

According to the periodical Financial Access Survey (FAS) conducted by the International Monetary Fund (IMF), an up-gradation of infrastructural development of the banking industry has been observed and revealed a comparative analysis between the years 2015 and 2020.

It shows that there was an increase in the number of commercial bank branches per 100,000 adult persons from 8.61 in 2015 to 8.99 in 2020 (4 percent increase in 5 years) and also an increase in the number of ATMs per 100,000 adult persons from 7.09 in 2015 to 10.18 in 2020 (44 percent increase in 5 years).

Again, the ability to provide financial services through bank branches or ATMs varies across the different administrative divisions (Dhaka and Barisal as the highest and lowest branch density per 100 sq KM). With these improvements, the ratio of branch density per 100 sq KM is very less so the majority of the people especially those living in rural areas don't get access to financial institutions.

As per the instructions are given by the Bangladesh Bank to extend banking services to the less privileged people of the urban and rural areas, more specifically, the target groups of people like farmers, cleaning workers, physically challenged persons, street working children, and school students, all public and private banks speed up their process through following services to expand their operations even in extremely rural areas.

No-Frills Accounts (NFA) for Farmers: The commercial and specialized development banks are engaged in opening no-frill accounts, primarily for the farmers to connect them with the financial system since 2010. Now, these banking facilities are expanded by including other vulnerable segments of the society including garment workers, and physically challenged persons.

School Banking: With an aim to strengthen the banking network, banks are instructed to include school-going students under the age of 18 within the financial system through their parents as legal guardians by opening an account depositing a minimum of TK.100.

Agent Banking: To reach geographically remote locations in rural areas where making brick-and-mortar infrastructures is not feasible, agent banking is instrumental as an alternative delivery channel for providing banking services. A nationwide survey conducted by the UnnayanShamannay, in 2018 revealed that 52 percent of the users expressed satisfactory opinions because of the doorstep's services to their work/ residence.  

Refinance scheme for 10-taka account holders: It is another approach formulated by Bangladesh Bank to bring financially unbanked people within the banking boundary to boast the banking activities at the grass-root level.

Mobile Banking Services: Mobile banking is another emerging sector that speeds up the process of mass banking. In recent years mobile banking has been playing a significant role in boosting the mass banking approach in Bangladesh.

 Due to the lower transaction cost, paperless financial transactions, and easy money transfer without visiting any bank, mobile banking influences people especially those living in the villages to use mobile technologies for making financial transactions.

A vast majority of the population are not properly getting scopes to avail the different schemes like zero banking account, savings a/c, seasonal loan, marriage loan, small entrepreneurship loan provided by the public banks due to the long distance of the existence of the financial institutions from the homestead existed in remote areas in villages.

The central regulatory bank, The Bangladesh Bank (BB) has permitted few banks to engage themselves in the full range of mobile financial services. As a result, banks have adopted the technology and developed networks with mobile phone companies that reach even the most remote parts of the country.

At present, there are 18 players including Nagad, a government postal department's mobile financial service providing financial services, and bKash and Dutch Bangla Mobile have emerged as having the largest customer bases and agent networks in the country.

In an attempt to revolutionize banking for the poor, The Bill & Melinda Gates Foundation, the world's largest philanthropic organization invested in bKash in 2014. Every year number of registered mobile money accounts, active accounts, registered outlets, money transactions even the number of service providers has also been increased.

 Transferring cash service (cash in and cash out) through agents or bank branches, and mobile Operator's outlets have the maximum market shares (86 percent) out of the different services delivered by various mobile financial providers.

In spite of taking the number of initiatives by public and private banks, there is a need for banks to redesign their business strategies to incorporate specific plans to promote mass banking campaigns as a business opportunity.
Dr. Rajib Chakraborty, Former Chairman,  Dept of Business Administration , Additional Director (IQAC), Port City International University





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