Strengthen financial inclusion programmes

FE Report | Published: August 31, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

Bangladesh Bank (BB) Governor Dr Atiur Rahman has urged central bankers of the SEANZA (South East Asia, New Zealand, and Australia) member-countries to take effective measures to ensure stability in their financial sectors through strengthening of financial inclusion programmes.
"Inclusive financing, now enthusiastically embraced by the entire financial sector, is supporting micro and small-scale output initiatives of broad swathes of hitherto un-served or underserved population segments," Dr Rahman said.
He was presenting his keynote paper 'Macroeconomic Environment and Financial Sector Stability: Vulnerability and Managing Crisis,' at the SEANZA Governors' symposium at a local hotel Saturday.
The SEANZA is a regional forum comprising 20 central banks and four financial service regulatory authorities. Formed in 1956, it is one of the oldest and largest regional central bank groups, established to promote cooperation among central banks by providing intensive and systematic training courses for their staffs.
"These initiatives are adding incremental output to the supply side while also at the same time adding incremental employment and income to the demand side, strengthening macroeconomic balance," the BB Governor explained.
Environmentally sustainable financing in its turn has somewhat longer run beneficial impact on sustainable growth, he said.
"Banks and financial institutions are diversifying and reducing credit risks of their investment portfolios by moving into broadened bases of numerous new inclusion clients, reducing large exposures to big corporates," he noted.
On the other hand, they are acquiring broader bases of numerous small deposits from the inclusion clients, reducing their liquidity risks from dependence on large deposits from a few big corporate clients, the central bank chief added.
He also said: "Bangladesh's financial sector has remained remarkably stable over several decades now amid domestic shocks and global turbulences, with very few sporadic instances of institutional failures. Rather than remaining complacent about it, we intend to rapidly strengthen risk management capacities in our banks and financial institutions, enabling them to withstand the likely bigger external shocks as the economy opens up further."
Regarding the BB's recent measures to maintain discipline in the country's banking sector, the Governor said: "The central bank will remove the filth and refuse from the banking sector at any cost."
Twenty senior central bankers of India, Pakistan, Sri Lanka, Nepal, Malaysia, South Korea, Papua New Guinea, China, Thailand, Singapore, the Philippines, Macao and Indonesia took part in the symposium, organised by the Financial Stability Department of the BB.
To achieve financial stability, Governor of the Nepal Rastra Bank Yuba Raj Khatiwada underscored the need for having the governor's independence protected under legal provisions, along with his/her sound leadership.
For the financial stability, Dr Yuba Raj also stressed on, among others, finding ways to ensure governance and compliance, especially at the large state-owned banks run under bureaucrats and looking beyond the macroeconomic policy.
Deputy Governor of the State Bank of Pakistan Saeed Ahmad said the local state of development, along with the micro-and macro-economic conditions, needs to be considered while formulating a policy in order to ensure financial stability in a country.
Reserve Bank of India's Principal Adviser Michael Debabrata Patra said since the threat to financial stability is a global problem, measures also need to be global in order to address the issue.
Responding to queries from the discussants, Dr Atiur Rahman said independence of the central bank governor is 'important' both legally and ethically.
"Monetary and financial stability are of crucial importance to the effective functioning of a market economy," Deputy Governor of the Bangladesh Bank (BB) SK Sur Chowdhury said in his welcome address.
Mr. Sur, also Chairman of the SEANZA Forum of Banking Supervisors, said rational decision-makers allocate real resources more efficiently based on the assumption of a stable environment, hence improving the saving-investment scenario.
"Instability creates damaging uncertainties that can lead to resource misallocation and unwillingness to enter into long-term contracts. Sometimes, in extreme cases, disruption in the financial sector may have severe adverse effects on economic activity and even on political structures," the deputy governor noted.
Among others, Deputy Governor of the Bank Negara Malaysia Dr Sukhdave Singh, Banking Supervision Advisor of the BB Glenn Tasky and Emeritus Professor of Birmingham University Dr. Peter Sinclair also spoke on the occasion.