Sub-branches adding new horizons to banking services

The banking sector of Bangladesh is one of the most important sectors of the financial arena and the coverage of this sector is increasing at a steady rate. At the same time, the overall services of the banking sector are increasing, banking system is being modernised and customers are getting banking services faster than ever before. Now the major driving force for economic growth in any country is the banking sector. The banking sector plays a vital role in various activities including deposit keeping, money transactions, providing various types of credit services, ensuring long term investment, development of SMEs, etc. In the post-independence period, almost all the banks were state owned, besides, specialised banks were also public ones and all the economic transactions revolved around these banks. Later, some state-owned banks were left to the private sector. Private sector banks have started playing an important role in the economy since the 1980s.

Bangladesh Bank has now introduced sub-branches to bring banking services to people’s doorsteps and has already allowed more than 36 banks to open sub-branches– what used to be known as banking booths is now a sub-branch. As a result, low cost banking services are spreading to different parts of the country–creating new customers, increasing the flow of deposits, investments and remittances. As a result, new horizons have been added to the banking services under sub-branch. Concerned bankers and analysts believe that this sub-branch is helping to take the progress of financial inclusion one step further. Earlier, mobile banking, agent banking services were introduced for the financial inclusion of the people who are out of banking services, which has already spread on a large scale. The sub-branches are being operated directly under the nearest bank main branch.

A sub-branch is basically a small business center similar to a bank branch. In the language of Bangladesh Bank, a sub-branch refers to a low-cost business hub operated under the control of a full-fledged branch of the bank to provide limited range of banking services in the light of the policy guidelines prescribed from time to time. Each sub-branch is operated under the control of a branch near the concerned bank. The minimum distance from the controlling branch to the sub-branch should be more or less one kilometer. In case of setting up a sub-branch outside the district town, its distance from the branch is determined keeping in view the regular communication from the controlling branch, easy and safe transportation of cash and overall security. The distance from the branch to the existing agent outlet of the bank has to be maintained at 3 and 5 km inside and outside the metropolitan area respectively. The floor space of the sub-branch will be not more than 1000 square feet and a minimum of two and a maximum of 10 officers will be appointed for smooth running of banking activities. They will provide almost all the services that are provided in the main branch.

Cost is also low due to low manpower and equipment. As a result, banks are becoming more and more interested in setting up sub-branches. Sub-branch cash deposits such as security of bank vaults should be ensured and full insurance of cash should be ensured. In addition, vaults can be set up in sub-branches if required. The central bank has said it will ensure adequate security to open these business centers. The sub-branch should have an IT structure with adequate security to ensure uninterrupted banking services. Sub-branch works under one branch for low cost financial services. All kinds of services are being provided from these sub-branches except foreign trade activities.

According to the latest data from the central bank, there were 393 sub-branches of banks in the country in December 2019, which increased to 1,147 in December 2020. In June of this year, the number increased to 1,672 out of these, the highest 500 sub-branches are in the private sector IFIC Bank. Next in line is NRBC Bank. This new generation bank has 393 branches. Other notable banks include 194 branches of IBBL, 88 branches of First Security and 79 branches of SIBL. 

Almost all the facilities of banking are available in the sub-branch. The sub-branch is considered as an outlet for low cost banking services. As such, the cost of setting up a sub-branch will not be more than the various expenditure limits for setting up a conventional branch and the fees, charges, commissions, etc. will be less than the fees, charges, commissions for banking services provided by a conventional branch. The aims and objectives of the sub-branch are to expand banking business in Bangladesh and provide financial services to the disadvantaged people and ensure more financial services through low cost banking service outlets.

Bangladesh Bank has taken various initiatives to bring banking services to all in the country and one of them is the sub-branch through which all kinds of banking services are being provided in the villages. If everyone’s banking services are ensured, the country will move forward and everyone will benefit from it. It has been said that the initiative taken by the government to ensure banking services in rural areas of the country should be considered as a very timely step. At present, there are a total of 63 state-owned, private and foreign banks operating in Bangladesh.

At a point of time, the business of the bank was available included branch banking, agriculture branch, SME branch, booth (collection booth, fast truck, service house and electronic booth) and business development center. In December 2018, Bangladesh Bank issued a policy on setting up banking booths in the light of how low cost banking services can be made accessible to the people. It is said that the size of the banking booth will be within one thousand square feet. After that the banks strengthened the establishment of booths. It may be mentioned that last December 2019, Bangladesh Bank issued a circular to transform the banking booth into a sub-branch to remove the confusion of the people.

The country’s economic development, progress and financial performance largely depend on the banking sector. Just as blood flows through arteries in the human body to different parts of the body, so it does money flow and development in different sectors of the economy through banking channels. Consumer deposits, investments, imports, exports and remittances strengthen the country’s economic base. The well-organized role of the banking sector in economic and financial recovery during and after COVID-19 pandemic is undeniable and undeniable. Banks have played an important role in the implementation of economic and financial activities related to the COVID-19 of the government and the central bank. Sub-branches like mobile and agent banking have played an important role in banking services during the COVID-19 pandemic period. With the introduction of sub-branch and agent banking services, the overflow of customers in the branches has reduced a lot. Customers are also able to avail banking services with ease. Undoubtedly, new horizons have been opened for financial inclusion through sub-branch.

Bangladesh is moving forward and is now recognized for its booming economy worldwide. Bangladesh’s progress in social indicators is now an example for many countries. The country has been steadily advancing since independence. According to the World Bank, Bangladesh will become a middle income country by 2026 and will surpass the Western countries in terms of growth. In this case, the role of the banking sector is the most vital and the sub-branch has added new horizons to banking services for financial inclusion.

The writer is a banker. He can be contacted at [email protected]