BANKING in Bangladesh cannot be entirely divorced from the principles of extending vital services in neglected areas or extending uniform facilities in the country to meet the requirements of equity and justice. Besides, mobilisation of resources from the rural areas-- where the country's population is preponderantly concentrated, and to aid their development or economic growth--also shows up the necessity of providing ample banking facilities there. Thus, the issues are how to reconcile these socio-economic needs of creating and maintaining banking facilities in rural areas with the equally important task of maintaining viable operations of the banks in the rural areas.
One way can be a careful and unbiased study to determine the factors for the losses of the NCB branches in the rural areas to take immediate corrective actions. Many of the NCB units in rural areas are overstaffed and suffer from unscrupulous activities of their officers. In some cases, branches of NCBs are located in close proximity that undermines the gainful operations of all. Yet, there are other issues not directly linked to banking activities but their existence such as lack of infrastructures and underdevelopment that impede a rise in banking activities in the rural areas.
Operative policies are needed in response to all of the above factors that adversely impact on rural banking. Actions can be taken to amend overstaffing and this would have an effect on minimising losses. Similarly, the merger of some of the units and relocation can be tried to improve the chances of their viable functioning. Devolution of power to local authorities, the establishment of strong local government and making them resourceful enough to undertake local development activities, more investment in infrastructures in rural areas, etc., would also create indirectly the conditions favourable for improved functioning of the rural banking system.
The private banks, so far, have concentrated in urban areas considering the returns from rural areas to be small. But they can possibly have a rethink on to make private banks nationally popular and in view of the very gainful experiences in terms of profits by the bank-like operations of some NGOs in the rural areas. The private banks, of course, are not expected to emulate the NGOs by servicing their rural clients at cut throat interest rates. But there is very probably a market for them in the rural areas which they can explore to expand their own business gainfully while responsibly filling gaps in banking services in the rural areas.
Shahidul Haque
East Tsturibazar
Tejgaon,
Dhaka
Private banks may think of serving rural areas
FE Team | Published: September 18, 2007 00:00:00 | Updated: February 01, 2018 00:00:00
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