2. Present Condition:
The financial system in Bangladesh is bank
dominated, Bangladesh Bank (the Central Bank),
commercial banks, non-bank financial institutions,
microfinance institutions (MFIs), insurance
companies, postal financial service and savings,
credit rating agencies and stock exchange.
Bangladesh is one of the world’s most populated
countries with 150 where only 17.6% - 38.6%
adults are presently under the reach of the formal
financial services. This is because the present
banks and other formal financial modes consider
the outcome and profitability in a way that, the
rural and non-developed areas are always out of
the consideration. But these areas consist of the
most population of Bangladesh.
3. Private Finance Market in
Bangladesh
Financial Service Coverage
Providers Number of Service
Providers
Number of Touch Points
Banks 56 9000+ Branches
Non-Bank Financial
Institutions
31 183+ Branches
Microfinance Institutions 742 18000+ Branches
Mobile Financial Service 18 561,000+ Agents
Agent banking 4 64+ Agents
Source: Bangladesh Bank, 2015, Microcredit Regularity Authority, 2013
4. Result of financial exclusion
26% people live below the national poverty
line of us$2 per day. Malnutrition rate is
48%. The literacy rate of Bangladesh is
61.5%.These can be improved through
financial inclusion. Because still the rural
people rely on the media man, money lender,
relatives for financing.95% of 180 million poor
households have no access in formal
financing.
5. Reasons(rural people)
The reasons why rural people excluded from
formal financing-
Lack of branch availability
Higher Costs
Complex Documentation Requirements
Distance to institution
Trust in financial institution
6. Reasons(Financial institution)
The reasons why financial institution less
concentrated on rural people-
The poor are vulnerable to income fluctuation and
hence are exposed to risk
They are unable to access conventional credit and
insurance markets to offset this
Do not serve the poor because of perceived high
risk, high cost involved in small transaction,
perceived low profitability
Inability to provide physical collateral generally
required by such institution
Lack of proper documentation
7. Microfinance become popular
Recently Notable progress has been made in
promoting greater financial inclusion by
microfinance in Bangladesh. BBC declared
About 10 million people got rid of from extreme
poverty within 5years by involving in micro
financing. Currently 4 out of 5 households in
rural area have access to financial service
because of microfinance network in
Bangladesh.
8. Implementation for betterment:
MFI:
There are many problem that should be resolved for further development
Giving license to NGO-MFIs in such a way that every geographic location
be covered by NGO-MFIs with equal intensity.
Interest rate ceiling and subsidized credit limit the ability of micro finance
institution to provide service to the poor.
Inappropriate and extensive intervention by govt.
Inadequate financial infrastructure
Include legal information, regulatory and supervision system
Need adequate capacity to expand the scope to potential clients, Ability to
leverage fund,
Adequate delivery mechanism, digital payment system.
Putting special emphasis on financing women empowerment by providing
micro credit.
Agricultural Loan can be accessible without any interest like Pakistan
product ’salam’
9. Banks:
Financing services to poor people with lower
charge and minimum deposit.
Complex paper works should be decreased so
that a farmer can open deposit account at any
commercial and specialized bank against national
ID card/birth registration card and agricultural card
issued by Government.
Electronic KYC requirement for financial institution
Available ATM booth, customer service point.
Bank account for subsidies should be promote for
further use.
10. Digital financial service:
Bangladesh Bank adopts strategies and policies
on the use of mobile financial services (MFS) for
financial inclusion. Bangladesh Central Bank has
allowed 28 banks to offer MFS,19 banks have
started to work, 10 of them have gone operational.
Active financing through the mobile account
Digital financial services internet banking, mobile
banking make it easier to access insurance and
other formal products which facilitate distribution
of wages, social transfers, and subsidies to
agricultural workers.
Initiative for automation of the payments system
like-pos, ATM, credit card.
11. Payment firms:
Mobile banking can be the more convenient
way for financing.
Shopping Payment option through mobile
banking
utility bills can be paid by electronic
payments.
School fees through mobile money
12. Postal financial service and
Insurance companies:
By engaging The Post Office Department with
banks and other external and internal
remittance. And offer automatic saving account
for recipients.
Provide Crop insurance to reduce farmers’
loss from natural disaster
Medical insurance and health insurance
specially for child, women
13. Cooperatives:
Ingraining socially responsible practices within the
financial organization
Ethically cover financial services to the
undeveloped rural population segments
Community investments by way of donations
provide NGOs and financial institutions involved
in the disadvantaged population segments.
Foreign banks in Bangladesh can come forward
as mentor the new, to improve the financing
procedure
Networking and joint initiatives in financial
institutions may be useful in some cases
14. Conclusion
Our young generation can generate their
creative ideas to adopt by financial institutions
for improving Financial inclusion.