Banking Sector for Low Income People in Bangladesh [BB Officer CASH]
“Financial services should not be a privilege reserved for the rich, but a right accessible to all.” -David Malpass
The banking sector in Bangladesh has been instrumental in fostering financial inclusion and empowering low-income
populations. Basic financial services such as deposit, credit etc. are considered as entitlement of all people in a society, this
is particularly true in developed countries. Inclusiveness of a greater segment of people in financial system is pre requisite
for economic development of a country like Bangladesh to ease credit facilities to facilitate employment. Despite a large
number of bank branches and micro finance institutions in our country, a large segment of our population, particularly rural
poor, has scant access to financial services.
Banking Sector in Bangladesh: After the independence, banking industry in Bangladesh started its journey with 6
Nationalized commercialized banks, 3 State owned Specialized banks and 9 Foreign Banks. In the 1980's banking industry
achieved significant expansion with the entrance of private banks. Now, banks in Bangladesh are primarily of two types:
Scheduled Banks:
The banks that remain in the list of banks maintained under the Bangladesh Bank Order, 1972.
Non-Scheduled Banks:
The banks which are established for special and definite objective and operate under any act but are not Scheduled
Banks. These banks cannot perform all functions of scheduled banks.
There are 60 scheduled banks in Bangladesh who operate under full control and supervision of Bangladesh Bank which
is empowered to do so through Bangladesh Bank Order, 1972 and Bank Company Act, 1991
Initiatives for helping lower income people:
“Technological innovations will be the heart and blood of the banking industry for many years to come and if big banks do
not make the most of it, the new players from FinTech and large technology companies surely will.”- David Brear
Bangladesh's banking sector has undergone significant transformation in recent years, to financial services to underserved
communities, including low-income individuals and marginalized groups.
Microfinance institutions:
One of the key initiatives in this regard is the establishment of microfinance institutions (MFIs) and specialized
banks targeting the low-income segment.
Mobile financial services:
The country has become more financially inclusive, with its citizens using mobile financial services (MFS) to
send, receive, and save money. Presently, over half of the adult population in Bangladesh owns a bank or MFS
account. From the convenience of transactions to security and ease of saving, MFS has generated many positive
impacts in society.
Providing loans with easy conditions:
“Low-income people to get loans at 9% interest” -TBR Report
The Bangladesh Bank has launched a Tk3,000-crore refinancing scheme for low-income people, including farmers and
marginal or small businesses, at 9 percent interest rate.
The loans will be distributed through microcredit entities in order to ensure they reach the grassroots level.
Distributions of Bank loans: “If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the
bank's problem.” J. Paul Getty
Every year Bank provides loan according to Bank-order 1991.
Grameen Bank distributes more loan than any other bank but micro finance distributes more than that.
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Fig. Distributions loan in different bank (G= Grameen bank, GOB=Government bank)
According to the Global Findex Database 2023, financial account ownership in Bangladesh – be it a digital wallet or a
traditional bank account – has grown substantially over the past decade. Specifically, among Bangladeshi adults, it grew by
32.3 percentage points, from 35% to 62%, over the ten-year period of 2013 to 2023.
Easy to open a bank account:
Uttaran Taka 10 SB Account is a special Savings Account for the Small/Marginal/Landless farmers, lower income
professionals and the Small/Marginal businessmen under the activities of financial inclusion.
Implementation of policies to support :
The government of Bangladesh has implemented various policies and programs to promote financial inclusion and support
low-income individuals. For instance, the government's social safety net programs, such as old-age pensions and disability
allowances, are often disbursed through bank accounts, ensuring that beneficiaries have access to formal financial services.
Financial inclusion initiatives of Bangladesh Bank are outlined below:
No-frill Account: One very important feature of these accounts is that opening of these accounts requires only a
nominal opening balance. No minimum balance is required and banks do not charge any fees for maintaining these
accounts.
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Mobile Financial Service (MFS): Mobile Financial Services (MFS) is a system or way by which a financial
institution provides services to the people with the combination of banking and mobile wireless networks that
enables users to perform banking transaction. Bkash has been successful to offer better services since 2011 even if
DBBL was the pioneer in this market.
Agent Banking: The agents own outlets which provide banking services on behalf of a bank under a valid agency
agreement with the concerned bank and agent. As establishment of sufficient number of branches in the rural areas
are expensive, agent banking has become an economy way out in many parts of the world and works as an important
channels for financial inclusion.
Agricultural and Rural Credit: The oldest endeavor for reaching out with financial services to excluded
population segments is the enhancement of agricultural and rural credit. BB has undertaken Inclusive Agricultural
and Rural Credit Policy for ensuring access to finance for those who are engaged in this sector.
Small and Medium Enterprise: SME, especially the small enterprises are the engine of economic growth as well
as financial inclusion for the underdeveloped economies.
Challenges:
Despite these efforts, several challenges persist in providing banking services to low-income people in Bangladesh.
the lack of financial literacy and awareness among low-income populations.
limited access to physical banking infrastructure
poses a barrier to financial inclusion.
the high cost of banking services, including transaction fees and interest rates.
limiting their ability to access credit and savings products.
Solutions:
“If banks can't offer something more valuable than Amazon Prime, then we're probably in the wrong business.” -
A Bradley Leimer
Despite these challenges, the impact of banking sector initiatives for low-income people in Bangladesh has been
significant.
Requires innovative approaches, including financial education programs,
The expansion of mobile and digital banking solutions, and the development of low-cost financial products tailored
to the needs of low-income clients.
Enables them to invest in income-generating activities, build assets.
Improve their overall quality of life.
Increased financial inclusion contributes to economic growth, poverty reduction, and social development by
fostering entrepreneurship
Promoting savings, and facilitating access to credit for productive purposes.
The banking sector in Bangladesh plays a crucial role in promoting financial inclusion and empowering low-income
populations. Through initiatives such as microfinance, mobile banking, and agent banking, banks are reaching underserved
communities and providing them with access to formal financial services. Despite challenges, the impact of these initiatives
on socio-economic development in Bangladesh is significant, paving the way for a more inclusive and prosperous future
for all citizens.
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