Poor people deprived of banking services:Atiur
Bangladesh Bank Governor Dr Atiur Rahman has gone few steps forward on his endeavour to make banking sector more pro-poor as he highly criticised the country's banks and financial institutions for their lukewarm approach to the poorer section of the society.
The governor in his keynote speech at a seminar, held in the Kenya's capital Nairobi last week, shared his views on the 'banking for poor issue' with a distinguished global audience when he admitted that his own country was lagging behind in providing poorer people with basic banking and financial services.
Dr Atiur, chief of the country's banking and financial sector's watchdog, said the banks and other financial institutions in Bangladesh had been depriving poor people of basic financial services, keeping them trapped in a poverty cycle.
"Despite substantial bank branch expansion and emergence of micro-finance institutions, scant access to basic financial services still remains a deprivation suffered by large segments of the poorer rural and urban population in Bangladesh, more hurtful than other deprivations in restricting opportunities of freeing themselves from the poverty trap", he observed.
He found that the expansion of rural branches of banks and promotion of co-operative societies benefited only the better off rural elite, when the broad masses of illiterate, innumerate rural poor remained out of financial services.
"The co-operatives tended to fall prey to 'elite capture' by powerful local groups uninterested in diluting control by enrolling poorer masses in large numbers. Rural branches of banks focused mainly on crop loans to farmers, their lending models were not geared towards reaching out to the poorer landless illiterate unable to handle the paperwork involved in bank borrowing," said Dr Atiur.
The governor, however, cited the Grameen Bank's micro-finance as a tool in extending credit services to the rural poor, but he said the financial coverage was still incomplete, with gaps both at the lowest end and at some patches up the income ladder.
Dr Atiur, who has already initiated a vigorous approach to make banking services available to the deprived people, said financial inclusion of the important segment of the society would result in more equitable economic growth.
The central bank, under his leadership, has already allocated Taka 11,500 crore for farm sector and another Taka 500 crore for the sharecroppers, who had never been offered such financial facility from the traditional banking sector.
The disbursement of the huge soft loan to sharecroppers will begin next month, bringing in a large number of people under the necessary banking services for the first time in the country's history.
Thousands of farmers will also start getting easy loan in October from the country's highest ever allocation of Taka 11,500 crore to revamp agri- sector aimed at achieving food security.
But still, Dr Atiur feels the necessity for certain rules and regulations for ensuring banking services to the poor people, who in fact, represent the majority of the population.
Dr Atiur apparently advocated precise policy measures to ensure poor people's access to the basic financial services. He referred to the existing rules and regulations in the United States and the United Kingdom to strengthen his gesture.
"Basic financial services including deposit, payments and credit services are recognised as entitlements of all citizens; particularly in advanced economies [US has a federal law prohibiting discrimination by banks against lower income neighbourhoods, and some state laws requiring banks to offer basic accounts for low cost banking services, UK have government programmes promoting financial inclusion], the governor noted.
Article cited from: http://nation.ittefaq.com/issues/2009/09/20/news0805.htm
