Private banks need to serve rural areas
Monday, 17 March 2008
BANKING in the context of Bangladesh, cannot be entirely divorced from the needs of extending its services in the neglected rural areas. Besides, while mobilising resources from the rural areas -- where the country's vast majority of population live -- the banks can play a role in the development or economic growth of the rural areas by providing banking facilities there. The question is how to reconcile the socio-economic needs of creating and maintaining banking facilities in rural areas with the equally important task of maintaining viable operations of the banks.
A careful and unbiased study is needed to determine the factors causing losses to the branches of the government owned banks in rural areas for remedial steps. Many of the overstuffed branches of these banks in rural areas allegedly sustained losses due to unscrupulous activities of their personnel. Some branches located in close proximity, undermined their gainful operation. Lack of infrastructure and underdevelopment also impeded healthy banking in the rural areas.
Proper policy to address the above factors could change the scenario by infusing dynamism in rural banking. Cutting down extra staff would have positive impact. The merger of some of the branches and relocation could be tried to improve the functioning. Devolution of power to local managers, the establishment of locally accountable local government with the resources to undertake development activities and greater investment in rural infrastructure would create the conditions for improved functioning of the rural banking.
The private banks, so far, concentrated in urban areas considering the returns. But they should rethink to go for operations in the rural areas. The private banks, of course, are not expected to emulate some of the non-government organisation (NGOs), making profit out of their banking like operations. There is a market for the banks in the rural areas which they can explore to expand their own business.
Shahidul Haque
East Testuribazar
Tejgaon, Dhaka
A careful and unbiased study is needed to determine the factors causing losses to the branches of the government owned banks in rural areas for remedial steps. Many of the overstuffed branches of these banks in rural areas allegedly sustained losses due to unscrupulous activities of their personnel. Some branches located in close proximity, undermined their gainful operation. Lack of infrastructure and underdevelopment also impeded healthy banking in the rural areas.
Proper policy to address the above factors could change the scenario by infusing dynamism in rural banking. Cutting down extra staff would have positive impact. The merger of some of the branches and relocation could be tried to improve the functioning. Devolution of power to local managers, the establishment of locally accountable local government with the resources to undertake development activities and greater investment in rural infrastructure would create the conditions for improved functioning of the rural banking.
The private banks, so far, concentrated in urban areas considering the returns. But they should rethink to go for operations in the rural areas. The private banks, of course, are not expected to emulate some of the non-government organisation (NGOs), making profit out of their banking like operations. There is a market for the banks in the rural areas which they can explore to expand their own business.
Shahidul Haque
East Testuribazar
Tejgaon, Dhaka