Dhaka, Bangladesh
Focus financial inclusion goals

Focus financial inclusion goals

For their apparent apathy to low-income groups in general and small and marginalised farmers in particular, the state-owned banks have yet to disburse any fund from the government stimulus package of Tk 3,000 crore for low-income professionals, marginal farmers and micro- enterprises. What is more regrettable is that, as per a report carried in The News Today on Saturday, the failure came despite Bangladesh Bank’s repeated advice over the issue. Moreover, the situation has reached such a pass that the central bank, the regulator of all banks and non- bank financial institutions, served show- cause notices Thursday to the seven SoBs - - Sonali, Janata, Agrani, Rupali, Bangladesh Krishi, Rajshahi Krishi Unnayan and Bangladesh Development banks. They have been asked to reply in seven days assigning the reason for their failure. In addition, they will have to submit a detailed plan on how they would distribute loans from the fund in the quickest possible time. In an effort to help the economy recover from the negative impact of the coronavirus pandemic, the government unveiled in April 19 stimulus packages amounting to Tk 106,117 crore for various sectors. As its part, the central bank set aside Tk 3,000 crore to keep the marginal businesses and farming activities of the low-income groups afloat from the economic hardship brought on by the pandemic. People with no access to banks and non-bank financial institutions are set to get loans from the revolving fund at 9.0 per cent interest. Six months have already gone by since the allocation of the package, but the SoBs, which are mainly responsible for providing banking service to the financially insolvent, have yet to take any initiative in this regard. They have been given the responsibility as the lenders have a large banking network in the rural area. As of June, the total number of branches of the country's eight state-run lenders stood at 5,208, of which 63 per cent are located in the rural areas. Of the eight banks, of course, BASIC Bank approved loans worth Tk 65.85 crore as of October 14, according to data from the central bank. Besides, a good number of private banks have already disbursed a good amount of funds among the marginal people. According to the report, forty-two banks, public and private, signed participation agreements with the central bank to disburse the funds. All banks have collectively approved loans to the tune of Tk 1,332.77 crore, or 44.43 per cent of the stimulus package. Of the approved funds, Tk 605.66 crore has been given out to the clients, thanks to the good performance of the private lenders. The state lenders, according to the central bank, initially showed a lot of interest to join the disbursement process, but they continued to show zero performance thus far. What is more alarming is that, as a central bank official has alleged, the state-run lenders have a tendency not to pay heed to the BB instructions as their de facto regulator is the finance ministry. The ministry is empowered to appoint managing directors and form boards of the SoBs, creating a roadblock to the proper supervisory authority of the central bank, analysts say. Under the circumstances, it is suggested that the government ought to take immediate measures to make the SoBs accountable to the central bank and the ministry prevail upon the latter to speed up the loan- disbursement process for the low-income groups, including marginalised farmers. It is very important as far as achieving the incumbents’ financial - inclusion goal is concerned.

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