financial inclusion: general overview, central banks …...financial inclusion [general overview]...
TRANSCRIPT
Md. Perwez Anzam MoonirJoint Director
Bangladesh Bank(The Central Bank of Bangladesh)Email: [email protected]
Financial Inclusion: General Overview, Central Banks’ Role and De-Risking Practices
May 10, 2017 1
08 May 2017Intercontinental Cairo Semiramis Hotel, Egypt
Points to be discussed
• General Overview
• Bangladesh Bank’s Key Initiatives
• De-Risking Practices
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Financial Inclusion
[General Overview]
Financial Inclusion
[General Overview]
• Financial inclusion or inclusive financing is the delivery offinancial services at affordable costs to sections of disadvantagedand low-income segments of society, in contrast to financialexclusion where those services are not available or affordable.
Reality of the present World up to the date
• 2 billion adults don’t have a basic account.
• 59% of adults cannot afford financial services.
• More than 200 million MSME lack of adequate financing.
• Women, rural poor and remote people are more financially excluded.
• 80% of adults in fragile conflict-affected states are outside the financial system.
Financial Inclusion
[General Overview]
Source: Financial Inclusion Overview, The World Bank, 5th April 2017
Financial Inclusion
[Bangladesh Bank’s Key Initiatives]
Financial Inclusion – Big Picture
Financial Inclusion Initiatives by
Bangladesh Bank
Inclusive Development Goal of
Government of Bangladesh
Sustainable Development Goals of
United Nations
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Why Bangladesh Bank promote financial inclusion?
Poverty Reduction
Reduce Inequality
Women Empowerment
Financial Stability
Inclusive Growth
Combat with Informal Banking
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Key Financial Inclusion Initiatives
• Agricultural Credit
• SME
• Mobile Financing Service
• No Frill Account
• Agent Banking
• School Banking
• Financial Literacy Program
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Bangladesh Bank’s Key Initiatives
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Agricultural Credit Program
• A special collateral free low cost agriculture-loan scheme for thelandless, marginal and unbanked deprived sharecroppers which is beingdisbursed using NGO linkages.
• A concessional rate of 4% Credit facilities for cultivation of pulse , oilseeds, spices and maize to increase the production and reduce thedependency on import.
• To ensure timely and hassle-free disbursement of agricultural Credit toreal farmers BB has set up three-tier monitoring system. Such as:
• Monitoring at disbursing bank level
• Monitoring by Branch offices of BB
• Monitoring by Head Office of BB
• The performance in the Agricultural and rural credit policy and programwill also be reflected in the “M” portion of the CAMELS rating done byBB.
0%
20%
40%
60%
80%
100%
120%
140%
160%
02000400060008000
100001200014000160001800020000
2010 2011 2012 2013 2014 2015 2016
Target Disbursement Target Achievement
Target and Disbursement of Agricultural Credit: FY 2010-2016
(USD in million)
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Data Source: Bangladesh Bank
Bangladesh Bank’s Key Initiatives [cont.]
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SME Sector Developments
• Institutional Building-Creation of new dedicated departments
• Regulatory Improvements and Policy Interventions
• Launching of SME Credit Policies and Program in 2010
• Target Based Lending
• SME Cluster Development
• Broadening Financial Inclusion through SME financing led policies
• Women Entrepreneurship Development Polices that engenderfinancial Inclusion
• Women Entrepreneurs’ Financing
• Refinancing support from own and development agencies fund toprovide low cost funding to CMSMEs
• Demand side Interventions-Providing trainings and other infrastructuralfacilities.
Target and Achievement in CMSME Lending: 2010-2016
Data Source: Bangladesh Bank
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0
100000
200000
300000
400000
500000
600000
700000
800000
0
200
400
600
800
1000
1200
1400
1600
2010 2011 2012 2013 2014 2015 2016
BD
T in
Bill
ion
TargetAchievementNo.of Beneficiaries
Bangladesh Bank’s Key Initiatives [cont.]
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Mobile Financial Service (MFS)
• Bangladesh Bank has introduced bank-led mobile banking throughmobile phone operators to extend financial services to this largeportion of underserved population.
• The rapid growth of mobile phone users and countrywide coverage ofmobile operator's network have made the delivery channel animportant tool.
• Under this system anyone can open a mobile banking account throughspecified agent if he or she has a mobile phone.
• The introduction of MFS has made the transfer of money a matter ofseconds.
• The main beneficiaries are poor/lower income group people/masspeople .
• Currently 17 Banks are providing the services and the no. of activeaccounts is 2.39 crore.
MFS growth in terms of Number of MFS registered clients
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6624
1318016710
2518628646
3184536204
41078
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Jun'13 Dec'13 Jun'14 Dec'14 Jun'15 Dec'15 Jun'16 Dec'16
No. of registered clients in '000
Data Source: Bangladesh Bank
Bangladesh Bank’s Key Initiatives [cont.]
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No Frill Account (NFA)
• BB instructed to open NFAs for farmers in January 2010 and gradually issuedpolicy guidelines for all scheduled banks comprising flexible conditions toopen account of-
• Farmers,
• poor segments of population having earning capacity,
• vulnerable part of population covered under social safety networkprograms,
• City corporation workers
• Garments workers
• Leather sector workers and so on.
• These people can open account by depositing only Tk. 10 (less than 1 USD).
• No charges will be applicable to these accounts.
• Till today, Around 1.67 crore accounts have been opened under theseprograms.
Growth of No-frill A/Cs
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14,96115,317
15,93916,138
16,755
14000
14500
15000
15500
16000
16500
17000
Dec'14 Jun'15 Dec'15 Jun'16 Dec'16
No. of Accounts in '000
Data Source: Bangladesh Bank
Bangladesh Bank’s Key Initiatives [cont.]
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Agent Banking
• Agent banking services was introduced in 2013 to providedigitized services to poor/lower income grouppeople/mass people with a new and innovative approach.
• It has opened doorway to provide banking servicesthrough an outlet by banks where branch establishment isextremely difficult or not feasible.
• Agent banking aims at serving the underserved populationthrough engaging agents under valid agency agreements inlimited scale banking and financial services.
• At present 10 banks are operating agent banking through2601 outlets.
Agent Banking (up to Dec 2016)
Accounts 544,536
Outlets 2,601
Agents 1,646
10 Banks Operating
13 Licensed
BanksData Source: Bangladesh Bank
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Bangladesh Bank’s Key Initiatives [cont.]
May 10, 2017 20
School Banking
• To make the youngsters financially literate and build the habit ofsavings by these youngsters to enhance deposit mobilization andproductivity, School Banking has been introduced in November2010.
• A guideline has been issued in 2013 to provide students withnecessary banking services by ensuring more transparent,encouraging and dynamic institutional financial supports to themunder the school banking program.
• Accumulation of these small deposits is a stabilizing factor for thefinancial system.
• This financial net covers students up to age of 18 years with aninitial deposit of BDT 100 (around only 1 USD).
• Upto December 2016, the number of School Banking accounts is12,57,370 and the total balance is USD 127.60 million.
Growth of School Banking Account and Amount of Deposit
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295.8
850.31034.95
1257.3738.22
89.69
105.52127.60
0
20
40
60
80
100
120
140
0
200
400
600
800
1000
1200
1400
2013 2014 2015 2016
Mill
ion
USD
Nu
mb
er
in ‘
00
0
No. of Accounts
Balance
Data Source: Bangladesh Bank
Bangladesh Bank’s Key Initiatives [cont.]
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Financial Literacy Program
• Awareness conferences for SME entrepreneursspecially for women entrepreneurs.
• Regional level workshops with banks and otherstakeholders.
• Banking fair and exhibition of banking services andproducts.
• School Banking conferences are being arranged indifferent districts through lead-bank system toincrease awareness and financial literacy.
• Media and web based awareness program.
Financial Inclusion
[De-risking Practices]
Drawbacks of De-risking Practices
• All the driving factors regarding de-risking practices areassociated with high cost which will eventually reduceincome/profitability in individual customer, Banks, Central Bankand Government level.
Financial Inclusion – Digitization
GoB (eNID) BB (eKYC) CB (Implement)
Cost : Profitability
Digitization (e.g. e-KYC, e-NID, Biometric)
Identification of Fraudulent Activities
Country Experience
Probable Scenario
Driving Factors for De-Risking
Elements of Risk
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Financial Inclusion – AML/CFT
GoB (AML/CFT Act) BB (Policy Guidelines)
CB (CAMLCO/BAMLCO Implement)
Cost : Profitability
AML/CFT Policies
Money Laundering
Country Experience
Probable Scenario
Driving Factors for De-Risking
Elements of Risk
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May 10, 2017 27
• Agriculture• SME• Mobile Financing
Services• Agent Banking• School Banking• No-Frill Account
• Digitization• High tech / Biometric
• High Monitoring•Customer protection• AML/CFT•Financial literacy
• High cost• Less
profitability• Long period
of time
• Generally it will hamper the growth of Financial Inclusion
• GoB• BB• Com Bank• Donor
Agencies
Financial InclusionDe-risking
Financial Inclusion, De-risking and its Impact
BD experience
Thank
YOU
May 10, 2017 28