Dhaka, Bangladesh (BBN)– Bangladesh should further enhance its drive for financial inclusion for navigating domestic and external shocks, former governor of the central bank of Bangladesh Dr. Atiur Rahman has said.
The former governor made the suggestion while addressing at a seminar held at the International Monetary Fund (IMF) headquarters in Washington DC on Thursday, according to a message received in Dhaka from Washington on Friday.
“In many ways Bangladesh has been the Silicon valley of pro-poor financial innovation, embracing and empowering the people at the base of the pyramid, mostly through bottom up experimentation” Dr. Rahman explained.
Chaired by Director of IMF for Asia and Pacific Dr. Changyong Rhee, the former Bangladesh Bank (BB) governor spoke on Bangladesh’s experiences on Financial ‘Inclusion and Inclusive Growth’.
Dr. Rahman argued that Bangladesh’s existing social cohesion and broad-based empowerment owes a great deal with innovative Financial Inclusion campaign, driven by the central bank.
He also credited the government for providing this space for innovation by giving highest emphasis on digitization.
Indeed, he said, this policy move for faster digitization has been democratizing and enhancing efficiency and inclusion of financial services.
“The central bank’s campaign for financial inclusion complemented with the core objective of government’s SDGs, which focuses on the notion of none should be left behind,” the former governor noted.
In addition to supporting inclusive growth strategy based on labor-intensive manufacturing, agriculture, & remittances, this drive for financial inclusion of the BB together with cheaper health and social solution helped improve the human development indicators of the country, according to Mr. Rahman.
“All this have led to faster reduction of poverty and enhancement in life expectancy. Agriculture added more value per unit of credit to a great extent due to financial inclusion,” he pointed out.
Additionally, it helped minimize income inequality. Mobile financial services, encouraged and regulated by the central bank, further boosted quality of financial inclusion.
“Targeted credit to MSMEs also pushed the growth of smaller rural economic units in recent years. All this have been effecting deeper structural transformation of Bangladesh economy, which is witnessing a number of critical transitions,” he observed.
Given these initial gains, Bangladesh is now moving towards a national strategy of financial inclusion. This strategy aims at developing ecosystem where all actors, private and public, can work together to include the excluded, minimize the marginalization and vulnerabilities, and leverage the technology for developing efficient delivery system.
The government and central bank of Bangladesh have already built the technology infrastructure, connecting the “first and last mile” financial inclusion with delivery of various public goods, mostly through digital payment system, according to the former governor.
He also said a virtuous cycle of innovation (in terms of products, distribution channels, and payment system), demand and trust has already been put in motion through desired regulatory framework.
“Now the challenge is how to leverage digitization strategically for enhancing efficiency, reducing market gaps, and ensuring price discovery,” he noted.
Dr. Rahman invited multilateral financial institution like IMF to conduct research and process documentation for understanding the impact of financial studies on the macroeconomic stability and social cohesion.
Since, Bangladesh is currently undergoing critical transitions in the areas of urbanization, industrialization, demographics, and technology that are in-turn creating various social and other related tensions, the former governor opined that Bangladesh should further enhance its drive for financial inclusion for navigating domestic and external shocks.
Dr. Rhee, the chair of the seminar, appreciated former Governor for his ‘out of box policy’ interventions, not only in the arena of financial inclusion, but also for maintaining stunning macroeconomic stability in Bangladesh, during his tenure. The two, of course, tend to be closely inter-linked, asserted Dr. Rhee.