The book Inclusive Finance and Sustainable Development by Atiur Rahman, the Bangladesh Bank Governor, brings together diversified financial and development issues which cover a vast span of focus comprising areas of central banking, banking ethics, risk management, corporate governance, financial inclusion, SME (small and medium enterprises) financing, microfinance operation, green economy, women's entrepreneurship development, corporate social responsibility, digitisation of banking, infrastructure financing, automation of banking system, world financial crisis, global business challenges etc.
The book consists of nine parts, each of which is a rich commentary on the trends of current Bangladesh economy. The analyses make a sketch of the mind-map of a visionary development economist, who delves into the relevant issues and determines the place of Bangladesh in the global context.
The book also deals with subjects other than finance and economics, when we come across the treasure trove of Rabindranath Tagore's literary ideas, all of which are laced with contemporary development thoughts. Tagore is the hero of Dr. Atiur, not only for songs and poems, but also for his far-sighted thoughts on development which still guide us.
In this book, we find a dedicated economist expressing concern over the 'missing middles' of the Bangladesh economy. His relentless efforts to use financial inclusion as a tool for combating poverty work as a remedial measure to bridge the gap between poverty reduction, growth amplification and human development. Dr. Atiur's ideas create the scope of financial inclusion as a major aspect of the broader notion of social inclusion or people's opportunity for contributing to and benefiting from social and economic progress.
The book nicely presents how Bangladesh Bank has guided the financial sector over the last few years in utilising the liquidity glut in productive pursuits, which include lending in agriculture, SMEs, renewable energy and effluent treatment projects etc. Bangladesh Bank's initiatives have strengthened domestic demand by increasing employment and income opportunities; export sectors were provided fiscal support (modest subsidies, tax/fee waivers etc.) from the government. There has also been increase in social safety net expenditure for the weak and vulnerable population segments. At the same time, Bangladesh Bank has successfully addressed the issues of challenges to central banking in the context of global financial crisis. The ongoing revisions and refinements in macro-prudential regulations and related policy tools have led to more resilient and stronger financial institutions, market mechanism and supervision regime.
It was one of the major successes of Dr Atiur Rahman that he made poverty reduction a central bank task under his inclusive financing theory. As an 'econocrat', he has applied some noble philosophies in practical fields like poverty eradication, rural development and micro-credit; and as a governor, his idea of financial and social inclusion gets related to the notion of inclusive growth, a growth process participated by and benefiting all segments of the population. From the viewpoint of a development economist, he argues that inclusive growth stresses equality of advancement opportunities rather than equality by redistribution of income. And added with financial inclusion, inclusive growth is likely to be more broad-based and robust, in terms of income and other matrices of well-being including human development, food security and environmental sustainability.
Conscious readers will surely find Dr. Atiur Rahman as a dedicated and responsive development economist using his authority as a central bank governor to translate his development ideas into reality. For him, financial inclusion means access to basic financial services, such as transaction services, money transfers, credit services, settlement of payments etc. In his ideas, these basic financial services are recognised as entitlements of citizens and these could be used as tools for inclusive economic development with equity approach. During Atiur's tenure, Bangladesh Bank (BB) and the government have adopted several remedial and promotional measures to bridge the gaps in, and to deepen financial inclusion. BB has been exhorting banks and financial institutions to embrace financial inclusion as a Corporate Social Responsibility (CSR) obligation. The Remittance and Payments Partnership project is promoting innovations of faster and cheaper remittance and money transfer services; broadening and deepening financial inclusion, particularly of rural recipients of remittances.
Dr. Atiur's effort towards integration of financial inclusion process for agricultural development deserves a separate discussion. His inclusive banking policy is part of a continued effort of reconcilement with Agriculture/ Rural Credit Policy for fiscal year 2009/10, which has been formulated as a guideline for banks and other financial institutions to facilitate agricultural/rural credit system at the field level properly. By considering agriculture as a special sector of financial inclusion under central banking system, he expresses his aim of expanding agricultural production and employment-generating activities through increasing the flow of credit to the agricultural/rural sector. This, in turn, will revive the rural economy by increasing internal demand.
Attaching priority to char, haor and coastal areas in disbursing agricultural credit and bringing the landless, the marginal population and sharecroppers represents Dr Atiur's equity approach toward financial inclusion initiatives. Provision of credit disbursement also for irrigation, harvesting, storage, power and energy management, opening bank account with Tk. 10, option for landless farmers to become self-employed with the credit help of BB are the policies, that not only outline a welfare economist's vision, but also represent a true reflection of the deeper concept of bottom-up development.
BB - and specifically Dr. Atiur Rahman - is a pioneer in advancing the idea of inclusion of central banking for green economy and sustainable development. Atiur floats the new idea that banks can play a significant role in the area of environmental sustainability by refusing to finance potentially harmful corporate activities. Bangladesh Bank took a proactive role by formulating the Green Banking Policy and Strategy Framework and an Environmental Risk Management Guideline in close consultation with the financing institutions. The Bangladesh Bank has introduced a refinance scheme to help the banks finance loans for effluent treatment plants, solar panels, bio-gas plants and hybrid technology at a low interest rate of 5.0 per cent.
As a whole, the book Inclusive Finance and Sustainable Development by Dr Atiur Rahman offers the readers a picture of the evolving nature of policies and strategies of the central bank to meet emerging needs of the economy and society. The book reveals not only a development economist's attempt to take the central bank out of the box of traditional banking to inclusive growth facilitating banking, but it also presents a philosopher, whose thoughts on development speak of his conviction to improve the society we live in.
Dr. M. Abu Eusuf is professor, Department of Development Studies, and director, Centre on Budget and Policy, University of Dhaka. afm.asad@bb.org.bd
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Inclusive Finance and Sustainable Development
Occasional Speeches
of Bangladesh Bank
Governor 2009-13
By Atiur Rahman