Mobile banking services in Bangladesh have the potential to register 100% financial inclusion if the government offers adequate policy support, such as reducing charges on transactions, mobile banking operational costs and taxation on mobile phones, according to economists.
"We have realised during the pandemic how important financial inclusion is. Even the prime minister could not reach out to around 14 lakh people with cash aid owing to poor financial circuits," economist Ahsan H Mansur told a workshop in Dhaka on Tuesday.
At the programme, jointly organised by the Policy Research Institute (PRI) and Economic Reporters Forum (ERF), he noted that around 10 crore people in Bangladesh are now getting mobile banking services through some 16 companies.
"But our progress towards inclusion is slow as mobile banking services are not easy. Besides, service providers have been incurring losses due to a lack of proper policy support," the PRI Executive Director stated.
He said people now can send money, purchase things, pay hospital, electricity, gas and government bills and remit money from abroad through the mobile financial service provider bKash. But bKash's market peers are yet to offer similar facilities to citizens.
"Though the digital financial service provider Nagad has made significant progress, it is yet to get the government licence. Plus, there has been fragile customer confidence," said Ahsan H Mansur, who is also chairperson of Brac Bank – the parent company of bKash.
He said bKash has introduced microcredit recently, a measure that will help the poor free themselves of payday loans by some non-governmental organisations.
Ahsan H Mansur said many people could have come under the financial inclusion network if the government had released money in the private sector through formal banking channels. This would also have ensured transparency and government services at the doorsteps of people.
Echoing Ahsan H Mansur, PRI Research Director Mohammad Abdur Razzaque said the government spends Tk28,000 crore in budgetary allocation on social safety per year. If the money is distributed through formal banking channels, financial inclusion will scale up.
He remarked that better inclusion could help reduce growing social inequality.
Referring to the Global Microscope Finance Report 2020 by the Economist Intelligence Unit, PRI Director Professor Bazlul Haque Khondker said Bangladesh ranks 44th out of 55 countries in overall financial inclusion.
He said digital financial services should focus on the poor and women, and the government should determine its financial strategy.
Debdulal Roy, executive director of the central bank, told the programme that even with some limitations, the central bank has been facilitating mobile banking services in the interest of inclusion.
He, however, said that the mentality in Bangladesh is one of the reasons for poor financial involvement as only 18% people have savings. The central bank official said despite the government's remarkable spending on social safety, disbursements come up against issues due to an absence of accurate data of beneficiaries.
ERF President Sharmin Rinvi presided over the workshop. Journalists at the session raised several issues about bank borrowing, credit card, savings and insurance.