Deposits in school banking accounts drops

Deposits in school-banking accounts have witnessed a fall in the first seven months of the current calendar year, indicating a plateau in the growth of these accounts during the period.
School banking deposits stood at Tk 22.99 billion during the January-July 2023 while such deposits reached Tk 23.25 billion in the same time in 2022.
However, the number of accounts under school banking rose to 3.89 million during the period under review from 3.18 million in July 2022.
According to the latest central bank data, a total of Tk 22.17 billion was deposited in 2.82 million accounts in scheduled banks countrywide as of December 2021.
In a bid to enhance financial literacy and foster widespread financial inclusion, the Bangladesh Bank introduced the school banking initiative in 2010.
School banking deposits saw 20-per cent growth in one year during the Covid-19 pandemic, disclosed the data.
Fifty-five banks have so far embraced this programme empowering students aged 11-17 to open accounts.
This scheme aims to cultivate a culture of savings among pupils while honing their money-management skills.
These specialised accounts offer multiple benefits, including fee waivers, complimentary internet banking services, reduced minimum balance prerequisites and affordable access to debit cards.
Notably, these accounts can be activated with a modest initial deposit of Tk 100 only.
The data shows the school-banking service is now more popular in rural than in city areas as 21.37-million accounts were opened in rural areas as of July 2023 against 17.55 million in city areas.
However, the cumulative deposit balance in such accounts is still higher in urban than rural areas.
The deposit balance in urban areas reached Tk 16.49 billion until July 2023, whereas it was Tk 6.49 billion in rural areas, revealed the BB data.
Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, attributed the decline in school banking growth to the current economic situation.
Despite the challenges, he mentioned ongoing nationwide efforts by his bank and others to actively engage school students in the financial inclusion initiative.
Despite significant campaigning efforts, Mr Rahman said, the growth in his bank remained static.
He, however, underscored the need for such banking as it would create future potential customers.
Mr Rahman also highlighted the role of banks' corporate social responsibility (CSR) initiatives and loan programmes in enhancing growth and promoting financial inclusion in the banking sector.
Dr Mustafizur Rahman, a Distinguished Fellow at the Centre for Policy Dialogue (CPD), said school banking growth gets hindered due to the erosion of the purchasing power of people primarily by inflation.
The expansion of school banking could see an upswing once the runaway inflation is curbed in near future, he observed.
Dr Mustafiz further said that continuous and intensified campaigns by banks nationwide could help sustain consistent growth in the school banking sector.

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