Inclusive Banking Role of Commercial Bank Compiled by

Inclusive Banking : Role of Commercial Bank Compiled by JBSC, Dhaka. 1

Introduction : Commercial banks play a vital role in the economic development of a country like Bangladesh. In Bangladesh, economy in general and banking services in particular have made rapid changes in the recent past. A sizeable section of the population, particularly the vulnerable groups, such as weaker sections and low income groups, continue to remain excluded from even the most basic opportunities and services provided by the financial sector. 2

To address the issue of such financial exclusion in a holistic manner, it is essential to ensure that a range of financial services is available to every individual. Financial Inclusion should not be seen as a social responsibility of the Governments and the banking system, but it is a potentially viable business proposition today which provides the poor with opportunities to build savings make investments and get credit. 3

Definition of Inclusive Banking: Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society, in contrast to financial exclusion where those services are not available or affordable. Thus, ‘Financial inclusion’ is the inclusion of more people under the umbrella of financial system with a view to strengthening financial deepening. As a part of broadening financial inclusion, banks in Bangladesh have opened savings account of farmers with only Tk. 10. An estimated 2 billion working-age adults globally have no access to the types of formal financial services delivered by regulated financial institutions. 4

Goals of Financial Inclusion: The term "financial inclusion" has gained importance since the early 2000 s, a result of findings about financial exclusion and its direct correlation to poverty. The United Nations defines the goals of financial inclusion as follows: v access at a reasonable cost for all households to a full range of financial services, including savings or deposit services, payment and transfer services, credit and insurance; v sound and safe institutions governed by clear regulation and industry performance standards; v financial and institutional sustainability, to ensure continuity and certainty of investment; and v Competition to ensure choice and affordability for clients. 5

The financial services include the following : Ø savings, Ø loans, Ø insurance, Ø credit, Ø payments etc. The financial system has to provide its function of transferring resources from surplus to deficit units that includes but low incomes, poor background etc. By providing these services, the aim is to help them come out of poverty. 6

Following are the role of commercial banks to be performed as part of financial inclusion programme: a) Financial literacy b) Credit counseling c) Business Facilitators(BC) model d) Know you Customer (KYC) norms e) General Credit Card(GCC) 7

Contd…. . f) No-frill accounts g) Branch expansion, h) Mobile banking, i) Agent banking K) School banking and l) Other measures like small saving, Micro credit, Micro insurance, 8

Thank You. 9