Bangladesh's central bank rolled out an ambitious plan in 2014 to improve the financial well-being of street children and workers. However, nearly a decade later, the programme is struggling to gain traction.
The number of bank accounts, account holders and account balances did not grow as expected, despite the rapid expansion of other minor accounts such as school banking.
The Bangladesh Bank initiated the programme to promote financial inclusion in the country by incorporating street children, orphans and working juveniles. Bangladeshi law permits children aged 14 and above to engage in non-hazardous work. These accounts would also provide future financial security.
Bangladesh now has nearly 1.0 million street children and this number is projected to increase to 1.62 million by 2024.
According to the National Child Labour Survey 2022 conducted by the Bangladesh Bureau of Statistics (BBS), the child population (5-17 years) is about 39.964 million and the number of working children is 3.537 million.
People familiar with the matter say commercial banks did not participate in the programme to the anticipated extent due to the charge-free nature of these accounts, which limits profits for banks.
They also pointed out that children were not adequately motivated to participate, as some of the kids expressed concerns about losing their hard-earned money by depositing it in the bank.
A senior central bank official told The Financial Express that banks are profit-driven entities and did not participate as extensively as anticipated.
"There have been many initiatives in the past, but the circular issued in 2014 still remains valid," wishing anonymity, said the official with extensive experience in financial inclusion.
In March 2015, the number of such accounts held by 11 commercial banks was nearly 1,800, with a cumulative end balance of Tk 3.0 million. The average account balance was Tk 1,700, according to Bangladesh Bank's quarterly publication on no-frill accounts.
Three years later, in 2018, the number of accounts with 19 banks increased to 4,381, but the end balance had decreased to Tk 2.7 million (approximately). The average account balance was Tk 600.
In March 2023, there were 31,927 accounts, with a cumulative end-balance of Tk 4.9 million. The average account balance was Tk 153.
Over the past decade, the number of participating banks has remained at 19 out of 61, and the number of participating NGOs has remained at around 20 out of 2,601.
Here, NGOs act as signatories and guardians for street and working children who do not have parents.
Bangladesh Bank's law department argued that there is a need for a National Identification Card (NID) or a signature from a local authority, union council or at least a registered organisation to open such formal bank accounts.
The Bangladesh Bank no-frill account quarterly report often recommends the need to incentivise the schemes to grow faster.
This financial inclusion is needed to achieve Sustainable Development Goals (SDGs). Without incorporating a large number of children into the mainstream financial system, achieving sustainable goals may not be possible.
According to the Bangladesh Bank, financial exclusion negatively impacts prosperity, inclusive growth, income equality, social cohesion and financial stability.
Of the 19 participating banks, state-owned banks mainly open such no-frill accounts. Privately owned commercial banks Social Islami Bank (SIBL) and Dutch-Bangla Bank (DBBL) also have a good number of such accounts.
One senior official at Agrani Bank headquarters, which has the biggest stake in such accounts, told the FE that they receive on average 150-200 accounts each quarter. He said his bank does it as social responsibility.
He said that these accounts -- having initial deposits of Tk 10, Tk 50 or Tk 100 -- are completely charge-free and provide interest-like savings accounts.
The bank works in the northern belt of the country. However, the activity of such accounts in Sadar branch in Rangpur is poor now, according to Agrani. Many of the account holders continue banking transactions independently after crossing 18 years of age.
Dr Atiur Rahman, former governor of the Bangladesh Bank, said that some children return home at night, while others live full-time on the streets. He suggested that banks should be open during evening hours.
"We wanted to bring them under a formal system so that they keep the money they earn is safe," he said.
The former central bank governor added that there is a need for close monitoring of such accounts and banks should do it from their Corporate Social Responsibility (CSR) funds.
Dr Atiur suggested that mobile financial services (MFS) may be partnered with the matter as they can do it much more easily.
Many children withdraw money from the bank on the grounds that they need it to supplement their livelihood, for medical expenses or to support family members.
Aparajeyo-Bangladesh, an NGO and pioneer in opening such accounts, said that they face a huge problem in the bank during account opening. This is because most of the banks do not ensure a child-friendly environment on their premises.
"It was also a problem as a guardian, the [organisation] we had to produce legal documents and declare 1 or 2 focal persons on behalf of the organisation as the signatory for the children," said Ms Wahida, the executive director of the NGO.
She also said that most of the bank staff did not behave with the children in a welcoming manner or create a friendly environment.
Mr Sk Rahmat Ullah Rumi, manager at the international NGO Save the Children, which contributed much to initiating the scheme in Bangladesh, said that there was a communication gap that led to the scheme not being popularised.
"I think lending facilities through the central bank's refinancing scheme may be considered. Many children need money when they become sick," he said.
Refuting the slow progress, central bank spokesperson Md Mezbaul Haque said that there is growth in the accounts.
"Actually, getting a lot of street children and working children to open an account is difficult as they are poor in numbers," he said.
© 2024 - All Rights with The Financial Express
