Financial sector leaders, central bank officials, and researchers gathered in Dhaka today to discuss how an Inclusive Instant Payment System (IIPS) could transform Bangladesh’s financial ecosystem by lowering transaction costs, reducing reliance on informal remittance channels, and driving digital inclusion.
The inception workshop, titled “Analysis of the Inclusive Instant Payment System (IIPS) in Bangladesh and Cross-Border Remittance as a Use Case,” was organized by the Policy Research Institute of Bangladesh (PRI) with support from the Gates Foundation.
Opening the session, PRI chairman Zaidi Sattar emphasized the critical macroeconomic role of remittances, which currently account for roughly 6% of Bangladesh’s GDP.
He called for strategic policies to shift these financial flows from basic consumption toward productive investment.
Sattar also highlighted the ongoing digital divide, pointing out that many migrant workers—such as the roughly 700,000 Bangladeshis living in Oman—still prefer informal hundi channels over formal banking due to existing barriers.
Addressing the technical groundwork, Mohammad Jahid Iqbal, additional director of the Payment System Department at Bangladesh Bank, revealed that the central bank is developing the IIPS using the open-source Mojaloop platform.
Launched in November 2025, the system aims to lower costs and connect banks, payment service providers, and eventually microfinance institutions.
It will also feature-phone access, simplified account opening, reduced transaction failures, and enhanced fraud protection using the Tazama toolkit.
Presenting research on the topic, PRI research director Bazlul Haque Khondker explained that an IIPS would make the payment ecosystem truly interoperable across banks and mobile financial services (MFS). Real-time, low-cost payment corridors could significantly curb reliance on informal channels and generate major savings for households.
PRI director MA Razzaque added that formalizing remittances will strengthen household resilience and national foreign-exchange reserves. To better understand migrant behaviors regarding speed, exchange rates, and trust, PRI is conducting a survey of Bangladeshi migrants across six key destination countries to inform practical policy solutions.
Single strategy for a cashless future
Ezazul Islam, director general of BIBM, noted that the long-term success of the IIPS will require a robust governance framework, fair commercial incentives, effective dispute resolution, and sound settlement risk management.
Sayed Shaikh Ibna Jilany, vice president of remittance at bKash Limited, added that private-sector integration must prioritize consumer protection, affordability, and user trust.
Ahsan H Mansur, distinguished fellow at PRI, argued that financial inclusion, IIPS deployment, and the transition toward a cashless economy must be treated as a single, unified national strategy.
He revealed that Bangladesh Bank currently spends approximately Tk20,000 crore annually on cash management—a cost that continues to rise.
To accelerate the shift to digital, he suggested that temporary incentives or subsidies for digital payments could offer greater long-term economic returns than subsidies in other sectors.
He also called for measures to make smartphones and internet services more affordable, restore public confidence in the banking sector, and create dedicated investment mechanisms to help repatriate an estimated $2 billion to $3 billion from the Bangladeshi diaspora.
