Stimulus cheques pave way for digital payments to RMG workers

Shefali Akter has been working in Gazipur's Fakhruddin Textiles as an operator for around five years. Prior to the coronavirus pandemic that hit Bangladesh in 2020, she used to draw her salary from a bank account.

Now Shefali gets her salary to her mobile financial service (MFS) account as the textile maker, after getting government stimulus to cushion Covid-19 fallout, switched to mobile banking.       

"I was worried about whether I would get the salary or not as the factory was closed due to the coronavirus lockdown. Later, the authorities assured the workers that they will get a portion of their wages through their mobile phones," said the ready-made garment (RMG) worker.

Like her, workers of 1,979 export-oriented garment factories are now receiving payments through mobile banking platforms, according to the Bangladesh Bank data.

The payment switchover has established women's full control over their income, and also provided the apparel-makers with hassle-free worker payments. A government policy played a vital role in bringing in the changes, which an apparel top boss termed "a social revolution".  

Last year, the government initially announced a Tk5,000 crore stimulus for the export-oriented industries, which was mostly availed by the RMG sector.  

The stimulus fund was later expanded twice to Tk10,500 crore, and apparel makers took low-cost loans from the amount for staff salaries and payments.

The government facility for the apparel sector had a string attached to it which stipulated the worker payments through the MFS accounts.     

According to the central bank data, the total number of workers and employees who got salaries from the stimulus is around 25.03 lakh. Of them, around 13.03 lakh were female and nearly 12 lakh were male.

A survey was jointly conducted by the South Asian Network on Economic Modeling (Sanem) and US-based non-governmental organisation Microfinance Opportunities in mid-May last year said though only 28% apparel workers got their salaries through MFS accounts in April last year, the number rose to a whopping 82% in May.

"Payments directly into the accounts of women workers have marked the beginning of a social revolution," said Enamul Haque, managing director of Ananta Garments, adding, "MFS payments have established women's full control over their income."

A relief to the owners too

Factory owners and officials said digital payments are secured, hassle-free and more convenient compared to hand cash or bank payments.

Referring to his experience, Ananta Garments top official Enamul Haque said collecting the cash salaries from bank headquarters and distributing those among workers at factories on the outskirts of the capital every month is a staggering job.

"With police escorts, it would take us three to four hours from the bank to the factory. Then the salary distributions at the factory would take the entire day," he said.

"But digital payment is quick, easy and secure. It has also eased the mental pressure we used to endure over on-time monthly salary payments," said Enamul.

MFS charges remain a concern

The MFS providers generally charge the customers Tk10-Tk17.5 for withdrawal of Tk1,000 each. But for the worker payments from the stimulus cheques, they made deals with the RMG owners.

Under the agreement, the owners and MFS providers pay withdrawal fees as long as the workers get salaries from the stimulus fund.

Subsequently, many apparel makers had been complaining about the hefty MFS charges. They initiated talks with the MFS providers on lowering the charges and to find out a solution about continuing digital payments when the factories would begin payments from their own pocket.

But the two parties could not reach any conclusive decision – letting some factory owners return to previous banking channels as others set to follow the lead.    

Anwar Hossain Chowdhury, chairman at AJ Group, said, "Worker payments through the MFS is convenient, but we need to think about reducing the payment charges."

He also said MFS payments need to deposit the salaries to MFS providers' accounts on time, but many factories in the pandemic have lost the ability to pay all the workers at once. So, they may go back to the old payment system.

Fazlee Shamim Ehsan, chief executive officer of Fatullah Apparels, said he has already returned to "more affordable" banking channels in the second quarter this year as his stimulus loans ran out. 

Ehsan, however, said his factory in association with a leading private bank has installed a bank booth inside the factory premises as the workers were interested in drawing salaries by using the cards.

Contacted, Shamsuddin Haider Dalim, head of corporate communications and public relations at bKash Limited, said, "We are trying to find a way out as currently both parties [factory owners and MFS providers] are sharing the cash-out charges."

Dalim also mentioned that those charges are the main income of any MFS company.

According to the Bangladesh Bank, there are 15 MFS providers in the country.

They are – Rocket by Dutch Bangla Bank Ltd, bKash by Brac Bank Ltd, MYCash by Mercantile Bank Ltd, mCash by Islami Bank Bangladesh Ltd, t-cash by Trust Bank Ltd, First Pay SureCash by First Security Islami Bank Ltd, U Cash by United Commercial Bank Ltd, OK by One Bank Ltd, SureCash by Rupali Bank Ltd, TeleCash by Southeast Bank Ltd, BCB SureCash by Bangladesh Commerce Bank Ltd, Jamuna Bank SureCash by Jamuna Bank Ltd, Islamic Wallet by Al-Arafah Islami Bank Ltd, Spot Cash by Standard Bank Ltd and Meghna Bank Tap n Pay by Meghna Bank Ltd.

A collaboration between The Business Standard and  Shojag Coalition.