In Bangladesh, financial inclusion is conceived of as access to and use of a range of quality financial products and services provided by formal service providers to all segments of the population.
A multi-dimensional concept, financial inclusion requires products to be affordable, suitable, and convenient; service delivery to protect consumers’ interests and dignity; consumers to have strong levels of financial awareness and literacy; and the financial market to be diverse and competitive (AFI, 2018a).
Bangladesh Bank has identified financial inclusion as a cross-cutting, high-priority objective that supports poverty reduction and contributes to inclusive and sustainable economic development.
Financial inclusion increases households’ ability to invest and save, making them less vulnerable to shocks. It is therefore seen as a critical tool for improving Bangladesh’s resilience to both environmental and social risks, and is strongly linked to the sustainable finance agenda (AFI, 2018b).
Bangladesh Bank’s approach to financial inclusion has been three-pronged:
• developing facilitating policies for banks and financial institutions, such as for mobile and agent banking;
• providing funding support through low-cost refinancing schemes; and
• coordinating and providing knowledge support to other regulatory and government bodies.
Bangladesh Bank is unique in mandating that banks expand access to the financially excluded.
In 2010, Bangladesh Bank mandated that banks must open half of their branches in rural areas. It also introduced No Frills Accounts, where state-owned commercial banks are obliged to administer basic accounts without fees or minimum balance requirements; these have been made available to farmers, garment sector workers, cleaners, recipients of social security, and other underserved groups. The accounts enable their holders to perform other financial operations such as receiving remittances and accessing formal credit.
The regulation and policy support for financial inclusion has been delivered in conjunction with key financial infrastructure and innovation.
Since 2010, initiatives have included a fully automated payment clearings system; Electronic Fund Transfer; and National Payments Switch and Real Time Gross Settlement.
Bangladesh Bank has experienced substantial success in its efforts to promote financial inclusion.
The proportion of adults with a financial account increased from one-third in 2011 to one-half in 2017. This is supplemented by substantial growth at the level of specific service delivery channels. Between June 2017 and 2018, the number of agent banking accounts more than doubled, to 18 million.
Bangladesh Bank aims to publish a National Financial Inclusion Strategy.
This national strategy will provide a roadmap for ensuring cooperation and coordinated action by the government, the private sector, and other stakeholders, and should help support increased integration of financial inclusion and broader sustainable finance goals and delivery approaches.