National Financial inclusion strategy, Bangladesh

Welcome
1Presented By: “Tahmid Zuhaer Siddique”

Financial
Inclusion
Strategy
Presentation On
Course Title: Principles of Finance
Course Code: BBA0203
National
2

Tahmid Zuhaer Siddique
ID: 01180110281
tahmid.zuhaer@gmail.com
Facebook.com/Tahmid Zuhaer
Twiter.com/TJ Siddique
Afrina Binte Haque
ID: 01180110293
afrina.haque@gmail.com
Nazmus Shakib
ID: 01180110301
nazmus.shakib@gmail.com
Linkedin.com/in/Tahmid Zuhaer Siddique
3
Meet My Team
Presented By: “Tahmid Zuhaer Siddique”

4
Introduction

Financial Inclusion
 Financial inclusion is defined as access to the full range of
financial services at an affordable rate for everyone, with
minimum risk through a competitive financial marketplace.
 Financial inclusion is a state where every individual and
enterprise have access to a wide range of financial
products they value and are able to use through open
transactional accounts, responsibly delivered by a diverse
range of regulated providers that cooperate on shared
interoperable market infrastructure and compete on
bringing value-to customer.

National Financial
Inclusion Strategy
₪ The National Financial Inclusion Strategy A.K.A NFIS for
Bangladesh is a public document roadmap to help excluded
populations get access to financial services. The Strategy
aims to:
 Assist Government to adopt a coordinated approach
across ministries, public and private sectors.
 Raise national awareness of the need for greater
financial inclusion.
 Build trust and collaboration among stakeholders.
 Implement, coordinate and monitor actions.
₪ In accordance with Prime Minister Sheikh Hasina’s vision
for sustainable financial inclusion in Bangladesh, the
country’s flagship “Ekti Bari Ekti Khamar” financial
inclusion project began in 2009.
6

 Implementation of the national Financial Inclusion Strategy
as a national economic and financing tactic is the brain
child of the non-profit organization known as BFPB,
elaborately known as “Business Finance for the Poor in
Bangladesh”
 The main objectives of this organization are:
Ω Creating Economic Opportunities for the small
businesses (8million approximately) of the country.
Ω Enhancing the Credit worthiness of small businesses
and induce private sector investment.
Ω Improving the Financial Institutions for incentivizing
the small businesses to make long-term investments.
Ω Co-investing in commercially viable business solution
to make small businesses investment ready.
Ω Expansion of digital infrastructure in creating highly
productive business models.
Ω To strengthen Bangladesh’s position internationally.
Ω Smart Contracts.
Business Finance for
the Poor in Bangladesh
7

8
Synopsis of National Financial
Inclusion Strategy

Why a Financial Inclusion Strategy?
9
₪ Financial inclusion is for social cohesion and empowerment.
₪ A national financial inclusion strategy:
 Provides a comprehensive framework with all
stakeholders’ consultation.
 Facilitates prioritization and coordination.
₪ Digitization:
 Democratizes and enhances both efficiency and inclusion.
 Expands inclusion from financial to social services.
Make
day-to-day
transactions
Safeguard
savings
Plan and pay
for recurring
expenses
Finance small
businesses or
microenterprises
Mitigate
shocks
Drive
economic
growth

03
01
04
02
The government has embraced sustainable
growth agenda, aided by the central bank’s
financial inclusion initiatives.
SDGs (Sustainable Development Goals):
Expand access to banking, insurance and
financial services for all.
7th 5-Year Plan (2018-’2024)
Financial inclusion: “No one left behind”
Digitization: For better governance,
transparency, and service delivery
services for all
Targets
10

Where we are now – Context
 From a low-income agrarian society
at its birth in 1971, Bangladesh is
now a lower middle income country
of 160 million people in the midst of
critical transitions.
35.86%
65%GDP
72.9%
124million
11
URBANIZATION INDUTRIALIZATION
EDUCATION TECHNOLOGY

Where we are now – Poverty Reduction
₪ Growth from labor-intensive manufacturing , agriculture, and remittance has been inclusive.
82%
37.80%
46.50%
48.90%
40.00%
31.50%
24.30%
>9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Percentage
Year
Poverty Rate
12

Where we are now – Financial Depth
 Bangladesh ranks well in
terms of its financial depth.
0
10
20
30
40
50
60
70
80
Domestic Credit
(in percent of GDP)
13

Where we are now – Agriculture Credit
Sri Lanka,
8 (16%)
Tanzania,
8 (16%)
Indonesia,
7.5 (15%)
India, 7
(14%)
Bangladesh, 5.5
(11%)
Nigeria, 5
(10%)
Phillippines, 4.5
(9%)
Kenya, 4 (8%)
Agriculture Credit
(in percent of total credit)
Sri Lanka Tanzania Indonesia India
Bangladesh Nigeria Phillippines Kenya
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Productivity: Agriculture Credit
(Value addedper unitof credit)
 Size of agriculture sector credit also ranks well, with high impact on output.
14

Where we are now – MFIs
0
2
4
6
8
10
12
14
Borrowers
(In percent of population)
Tanzania Nigeria Sri Lanka India Kenya Phillippines Bangladesh
0
5
10
15
20
25
Depositors
(In percent of population)
India Tanzania Nigeria Sri Lanka Phillippines Bangladesh Kenya
 MFIs (Micro Finance Institutions) are playing an effective role in financial inclusion.
15

Where we are now – MFS
 Digital inclusion through MFS represents a gradual shift.
 Bangladesh has made impressive strides in financial
inclusion.
0
5
10
15
20
25
30
Dec '11 Dec '12 Dec '13 Dec '14 Dec '15
Dec '11, 0
Dec '12, 3
Dec '13, 12
Dec '14, 22
Dec '15, 30
Clients
(In percent of adult population)
0
500
1000
1500
2000
2500
3000
3500
2013 2014 2015 2016 2017 2018
NumberofTransactions(million)
Year
MFS Transactions
No. of total Transactions Volume of Total Transactions

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Bangladesh
India
Kenya
Pakistan
Uganda
21%
63%
30%
10%
10%
20%
2%
14%
2%
4%
14%
10%
43%
49%
67%
45%
24%
14%
39%
20%
PERCENTAGE
COUNTRIES
FINANCIAL INCLUSIONS
Bank Inclusions Other Formal Inclusions Informal Inclusions Exclusions
Comparism of National Financial Inclusions
 Bangladesh performs well in
formal financial inclusion.
 Informality is commendably
low but this has implications
for access.
17

₪ Sector (agricultural micro-Businesses)
₪ Refinancing of MSME (Micro, Small and Medium Enterprises )
₪ Gender priority
₪ Rural access (promoting rural branches, more access to banks)
₪ No Frill Accounts
₪ Green financing
₪ Life-cycle approach toward inclusion(school banking, pension)
₪ Insurance (crop, livestock, fishery)
₪ Digital inclusion initiatives
Key Thrusts
18

1.NFIS-B National Council
2.NFIS-B Steering
Committee
3.NFIS-B National
Secretariat
Coordination structure
 Periodically review financial inclusion strategy.
 Ensure timely undertaking of responsibilities.
 Provide technical, administrative & research support.
19

Thank you
For Your Time & Patience
20

Present Condition of National
Financial Inclusion Strategy
21

WORKSHOP
And
Decisions
 Finance Minister AMA Muhith was the chief guest at a
workshop held by the BFPB regarding the same topic on
may 24th 2018.
 At the discussion, Finance Minister AMA Muhith stressed
the need for increasing the number of bank branches in
the country to ensure financial inclusion.
 Finance Ministry Senior Secretary Md. Eunusur Rahman
moderated an open discussion on the NFIS at the
workshop.
 According to the National Financial Inclusion Strategy of
Bangladesh, 100 percent of the country’s people will get
financial access by 2024, as it can help attain the target of
the Sustainable Development Goals (SDG) by 2030, as well
as in becoming a developed country by 2040.
22

23

Current Financial Inclusion Rates
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Dependants Farmers Labourers Micro
Entrepreneurs
Others SME Professionals
Dependants, 50%
Farmers, 58%
Labourers, 63%
Micro Entrepreneurs, 69%
Others, 72%
SME, 74%
Professionals, 84%
Financial Inclusion Rate of different groups in Bangladesh
Dependants
Farmers
Labourers
Micro Entrepreneurs
Others
SME
Professionals
24

Sectors of NFIS Already
Developed in
Bangladesh
 Digital Bank Records
 TK.10 accounts for farmers
 Low Cost Savings Accounts
 Student Accounts
 Technology Based Business Models
 Agent Banking
 Micro-Financing
 Mobile Financial Services
 Women Enterprise Financing
 No-Frill Accounts
25

Ways to Improve National Financial
Inclusion Strategy
26

Recommendations
Policy Recommendations for Modified Unit Banking System:
 To realize the precise necessities of the target group in terms of where, when and how
to provide support, and the areas to be covered.
 To make cross-referrals, recognizing that financial exclusion may be only one of several
problems faced by an individual.
 To supply more confident, long-term funding to money and debt counsel and financial
skill schemes. This will ensure that expert personnel are not wasted to the sector, and
acknowledge the long-term character of clients’ necessity.
 To carry on investing in the financial training of guidance workers, mainly those
working mostly with a definite vulnerable client group.
 To ensure that the current government pushes for generic financial advice is
sufficiently targeted, since the most successful projects are tailored to clients’
circumstances.
 Continue to monitor the impact of technological, macro-economic and demographic
changes on access to financial services by the specific vulnerable groups identified in
this report.
 When planning services, consult those groups who are likely to be financially excluded
so as to understand their needs.
 Ensure that consumers receive clear, simple and understandable information. 27

Budgeting
 It is widely recognized there must be a strong link between a strategy
and the budget required to execute that strategy.
 Dealing with the financing aspects of strategy implementation is not a
practice that has taken root.
 In fact, very few national strategies provide budgetary details. For
example, despite having otherwise very comprehensive strategies,
Pakistan’s NFIS, Paraguay’s NSFI, Nigeria’s NFIS and Tanzania’s NFIS do
not deal with budgetary issues.
 In contrast, Burundi’s NFIS includes a detailed budget broken down by
objectives and sub-objectives.
 Given the range of public and private sector stakeholders that may be
involved in implementing an NFIS, it may be difficult to provide
details on budgetary requirements in most cases.
 However, overlooking the budgeting side entirely cannot be
considered good practice.
 So, Budgeting can prove to be a progressive solution to our NFIS.
28

Ideas
 Increasing Banking Sectors.
 Increasing Bank Facilities.
 Financing Agricultural and Industrial Micro Businesses.
 Introducing Smart Contracts.
 Internet Banking.
 Faster and Cheaper Loan Processing.
 Developing Union Digital Centers.
 More access to financial services.
 Access to Credit Histories of different micro and small businesses.
 Improving the policies and regulatory environment for financial institutions.
 Making Small businesses investment ready by co-investing in business solutions.
 Lower interest rates for MSME in both formal and informal sectors.
 Green Insurance.
 Developing a digital Infrastructure.
29

Thank you
For Your Time & Patience
30

31

National Financial inclusion strategy, Bangladesh

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