The US-based Brookings Institution ranked Bangladesh 19th in its recent global financial inclusion report. The country scored 66 in the ratings among 26 countries. Although the ranking is the same as that of the last year, the country lags behind neighbouring India and Pakistan in attaining financial inclusion of people from various social strata.
Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society, in contrast to financial exclusion where those services are not available or affordable.
The country received, according to the report, its highest score (89 per cent) in the country-commitment category which underscores countries having enhanced their national-level commitments to advancing financial inclusion. It scored 83 per cent in mobile-capacity category in the year under review. In regulatory-environment category, Bangladesh scored 78 per cent while in the adoption category 39 per cent, the report says.
The objective of the Brookings-based project is to provide policymakers, private-sector entities, representatives of non-governmental organisations and the public with information that can help improve financial inclusion in their respective countries and beyond.
The report also noted that Bangladesh established the Financial Inclusion Department within its central bank in July 2015. The country has supported its efforts to advance financial literacy and capability among women entrepreneurs. For its 'sustainable and innovative financial inclusion and financial education initiatives', Bangladesh Bank (BB) was awarded the Global Money Week Award at the Global Inclusion Awards 2017, hosted by Child and Youth Finance International.
There is no denying that the country has made commendable progress in accelerating financial inclusion. In most cases, money is being channelled from urban to rural areas, helping the rural economy. After shaping up all these retail channels, Bangladesh has recently launched real-time gross settlement or RTGS for high value payment. Under the present system, high-value inter-bank payments are done on the same day. But under RTGS, inter-bank high-value claims and obligations is settled instantly.
The cumulative outcome of these steps is quick service and skill development in the financial sector, which has now been done into a single thread. Moreover, transparency in the financial transaction is also increasing steadily. A new dimension has also been added to the supervisory framework to combat corruption. All these concerted efforts to digitise the country have ensured rapid, transparent, decentralised and qualitative customer services.
As a part of the financial inclusion, salaries of garment workers are now being paid through bKash, a full-scale mobile phone-based payment service in Bangladesh, and the money is also being sent to villages through digital accounts. However, there is a need for ensuring poor people's access to insurance, bank accounts and credit. It's very important that poor people are insured and have access to loan and savings facilities.
Financial inclusion is not only about bringing all households under financial network through savings, it is also about deepening credit services in every part of the country. Only around 11 per cent of the households have access to formal insurance services due to less awareness of the service.
Analysts, however, say financial inclusion does not only deal with the money - it's also about opening up a door to opportunity. If the poor are provided with the financial tools, they can protect themselves against hardship, invest for the future, and build their own lives they want. Financial inclusion can contribute significantly to creating a sustainable world that works for all.
In Bangladesh, financial services are already changing lives in many different ways. As one of the cradles of modern microfinance, Bangladesh Bank (BB) has embraced the concept of financial inclusion. Today, it play a leadership role, particularly with digital financial services.
Yet the country has the ability to go even further in increasing access to financial services, especially for women. Whereas 33 per cent of men have accounts at financial institutions, only 25 per cent of women have -- a disparity that reflects a worldwide challenge. Bridging this gap will certainly help achieve gender equality, one of the Sustainable Development Goals (SDGs).
A well-planned strategy can generate significant advances in financial inclusion. For Bangladesh, this could be an important undertaking between multiple government offices and a wide range of public and private organisations. A joint commitment of public and private bodies to establish a well-coordinated plan and translate it into action could give an additional boost to the complex work of financial inclusion.
It is heartening to note that Bangladesh has responded well to this challenge positively and is taking steps to deepen financial inclusion for the poor. Fundamental changes in financial policies and market structure are now required for sustainable financial inclusion.
The country has made a broad social commitment for inclusive, equitable and environmentally sustainable socio-economic growth 'leaving no-one behind', as espoused in the new sustainable development goals. The government has accordingly led proactively with the country's progress in sustainable development, with policy thrusts on massive digitisation to support financial inclusion and inclusive growth, alongside mitigation and adaptation response to climate change threats.
The next step for Bangladesh, according to the Brooking report, is to finalise, disseminate, and implement the national financial inclusion strategy. The country needs to promote affordability of mobile phones to facilitate greater access to mobile financial services and expand the availability of services like credit, savings, and insurance.
A lot of people in Bangladesh still do not have bank accounts or digital accounts to send money to their relatives safely. The bank branches in rural areas can be very expensive but the digital finance system still has a lot of growth potential. Bangladesh Bank (BB) has promoted mobile banking and compelled many banks to open more branches in rural areas.
As the country has a lot more to do to bring the un-banked poor under financial services, the government should consider establishing rural banks or transforming some of the sound micro-finance institutions (MFIs) into rural banks with appropriate governance structures.