Tuesday, May 07, 2024
Street urchins and working children – with support from a number of non-government organisations – owned 31,927 bank accounts, and deposited Tk 49.4 lakh in 19 banks till January-March quarter of this year.
According to recently published Bangladesh Bank report, “Quarterly Report on No-Frill Accounts (January-March 2023),” such deposits rose by 7.57 per cent from Tk 45.92 lakh, while the number of accounts increased by 37.51 per cent from 23,217, compared year-on-year.
This report presents a quarterly review of the No-Frill Accounts (NFAs), which include accounts opened with an initial deposit of Tk 10/Tk 50/TK 100 by low income people, school students under 18 years of age, street urchins and working children.
In the first quarter (January-March) of this year, the total number of NFAs is recorded as 30,446,421 with a total deposit of Tk 5,889.82 crore.
Street urchins, working children accounts
The report mentions that a street urchin or working children can open their account in a bank with Tk 10, and no fees are charged for such accounts.
It adds, “The Bangladesh Bank has advised banks to provide financial services to street urchin and working children to secure their hard earned money, and help them to develop a saving attitude.
“Children who do not have parents or legal guardians can open accounts with the designated banks with the help of a registered Non-government organisations (NGOs).”
Agrani Bank Ltd has ranked the top among the banks in opening street urchin and working children accounts. It has opened 27,191 accounts up until March 2023.
Social Islami Bank Ltd, on the other hand, has become the top bank in collecting deposits in such accounts with a total deposit of Tk 24 lakh at the end of this quarter.
School banking
School Banking Account is a part of No-Frill Accounts. The number of School banking accounts had reached 38,75,358 in the first quarter of this year, 24.93 per cent higher than that of the same quarter previous year.
Deposits in such accounts had stood Tk 2,270 crore, increasing about 2 per cent when compared year-on-year.
In light of the existing school banking policies, banks can open student accounts with a minimum deposit of Tk 100 with no service charges. Moreover, these accounts offer attractive interest rates, debit card facilities and financial education programmes.
Other accounts
The number of Tk 10 accounts for the farmers remains the largest component of the NFAs, contributing 37.77 per cent of the total Tk10/ Tk 50/ Tk 100 accounts.
On the other hand, the number of accounts for the beneficiaries of the Social Safety Net (SSN) programs constitutes 37.47 per cent of the total NFAs in the Q1 of 2023, increasing by 1.85 per cent over the Q4 of 2022.
Until March 2023, individuals with Tk10/ Tk 50/ Tk 100 accounts have received Tk 818.3 crore as credit from both the Tk 200 crore and Tk 500 crore refinance schemes for the No-Frill Accounts.
The increased demand of such credit could be attributed to the revival of the economic activities paused by the Covid-19 pandemic, said the BB report.
Recommendations
According to the BB report, No-Frill Accounts have been considered as one of the most effective ways to expand financial inclusion to the underserved segment of the population.
Yet, the growth in No-Frill Accounts needs to be accelerated in order to achieve the goal of National Financial Inclusion Strategies (NFIS-B) where it is targeted to confirm bank accounts for all adults by 2026.
To achieve the target, some recommendations are like banks should continue the on-going financial literacy campaign as well as school banking initiatives to enhance financial inclusion. Banks can incentivize their agents to open No-Frill Accounts for the underserved population.
