• Friday, Feb 26, 2021
  • Last Update : 09:52 pm

No-frills bank accounts help to keep economy vibrant amid pandemic

  • Published at 12:05 am January 24th, 2021
Farmers aid beneficiaries

As of September last year, banks opened 2.20 crore accounts for those who receive allowances under the social safety net schemes

The no-frills bank accounts, especially for farmers, the extreme poor and the beneficiaries of social safety net programmes, have played a vital role in keeping the country’s economy vibrant as a huge number of the unprivileged and poor people came to the banking sector through the accounts. 

As of September last year, banks opened 2.20 crore accounts for those who receive allowances under the social safety net schemes, farmers and extremely poor, while the deposits stood at Tk 2,180.79 crore, according to the central bank’s latest data.

The accounts have increased by 8.48 per cent from a year earlier. 

The no-frills account under the financial inclusion agenda played a crucial role in maintaining the livelihood of the underprivileged mass during the COVID-19 pandemic, said Md. Serajul Islam, executive director and spokesperson of the Bangladesh Bank.

The accounts help the government to disburse subsidy and salaries to the various segments of underprivileged people, he said, adding that despite severe constraints on economic activities, the increasing trend of No-Frill accounts indicates solid progress in financial inclusion of the marginal people. 

A no-frills service or product is one for which the non-essential features have been removed to keep the price low. 

These accounts require neither a minimum balance nor any service charge or fee.  

On the contrary, they often offer higher interest rates than the existing savings rates to augment the welfare of the marginal people.

The BB has launched a wide range of financial inclusion since 2010 by allowing a vast population to open an account with an initial deposit of Tk 10 to Tk 100 as the government looked to bring the unbanked people under the umbrella of the banking sector.

The farmers, the Freedom Fighters, disabled persons, the extreme poor and the beneficiaries of the social safety net (SSN) scheme are the target groups for the account. 

As of September last year, the government has used 61.66 lakh accounts out of 2.20 crore No-frill accounts to disburse subsidy and salaries to the various segments of underprivileged people of the society, as per the BB data. 

Not only subsidy disbursement, but the accounts have also played an important role in channelling inward remittance.

As of September last year, 1.25 lakh accounts have brought inward remittance amounting to Tk 497 crore. 

The financial inclusion agenda has played an active role in keeping the country’s economy vibrant, said Atiur Rahman, a former governor of the BB.

Farmers, extreme poor and disabled persons are coming to the formal banking channels through the Tk 10 bank account, he added. 

Not only no-frills accounts, but agent banking and mobile financial services under the financial inclusion agenda are also helping to keep the economy in a strong position amid the ongoing pandemic.

Accounts for the Freedom Fighters and the beneficiaries of the Social Safety Net (SSN) have increased 28.29 per cent and 5.10 per cent respectively in the July to September quarter of last year.

The Tk 10 accounts for farmers remain the largest component of the No-Frill accounts. 

Banks have extended Tk 363.64 crore in credit to the underprivileged people under the Tk 200 crore refinance and other schemes through the No-Frill accounts.  

As of the reporting quarter, 1,25,846 such accounts have brought Tk 497.61 crore in foreign remittance to Bangladesh.

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