Financial inclusion agenda gets a lift

The central bank's order to open bank or mobile financial service (MFS) accounts for disbursing the salaries of employees of export-oriented factories from the government's Tk 5,000 crore stimulus package will give a leg up to the digitalisation and financial inclusion agenda, experts said.

But factory owners said the instruction given on Monday to complete opening of all accounts by April 20 might create some challenges for them as well as the employees as the ecosystem is not ready yet for such an uphill task.

Only half the garment sector's 40 lakh workers now get salaries through bank or MFS accounts and opening another 20 lakh new accounts in less than two weeks will be difficult, according to garment factory owners.

"This is a huge decision from the Bangladesh Bank," said Ashraful Alam, country project coordinator of United Nations Capital Development Fund.

It will give a fillip to the country's overall financial inclusion efforts and help digitalise financial services in a stronger way.

In the short term, disbursing salaries through digital means will help the employees maintain a social distance, which is key to reining in the spread of the novel virus that has already left nations reeling, said Alam, who is also a deputy general manager of Bangladesh Bank.

"It's true that opening 20 lakh new accounts will be a tough task and hence banks, MFS operators and owners need to collaborate to that end."

The government should also encourage grocers to take up digital means of payments so that people like the factory workers can easily pay grocery bills through their MFS accounts, he added.

However, Abul Kashem Md Shirin, managing director of Dutch-Bangla Bank (DBBL) that is a leader in digitalised salary disbursement for the garment sector, said opening the accounts will not be a challenge at all.

"If the factory owners share workers' database along with their national identity cards and photos, we can easily open the accounts."

DBBL is maintaining hundreds of thousands of salary accounts for garment factories and different other firms through commercial banking, agent banking and its MFS brand Rocket.

"Immediately after the notice was issued, we obtained clarification from the central bank and the process seems quite easy now," Shirin said, adding that the employees with smartphones and internet access can open accounts by themselves.

The country has a total of five lakh MFS agents and even if one-fifth of them remain operational amid lockdown, the new accounts can be opened easily, he added.

Currently salaries worth more than Tk 1,000 are disbursed every month through the MFS platform, according to BB data.

The number will double if the new accounts can be opened, which will also be a milestone in the country's financial inclusion efforts, Shirin said.

In the first two months of 2019, Tk 2,171 crore was disbursed as salary through the MFS accounts, the amount being 32 per cent higher than a year earlier, according to the BB.

A garment factory owner requesting anonymity said 90 per cent of his employees have no MFS accounts; since all of them are now in villages, it will be impossible for them to open the accounts within the stipulated time.

"Some 40 per cent workers in my factories have either bank or MFS accounts," said another owner of an Ashulia-based garment factory asking not to be named.

Over the past few days, the factory management has been working to open bank accounts for all 20,000 workers employed in the four units.

Some workers do not have authentic identity cards, which he said is standing in the way of creating bank or MFS accounts.

According to the BB instruction, the workers and employees will have to submit their NIDs or birth certificates for opening the accounts, while banks and MFS providers will not charge any fees.

The central bank also called for taking necessary steps to create awareness and encourage more people to open MFS accounts to contain the risk of coronavirus contamination through the use of cash.

After the government-announced general holidays, daily transactions through MFS, ATMs and banks have fallen drastically, Shirin said.

If customers are allowed to send money from one MFS operator to another, it would benefit more people, he said, while urging the central bank to take the matter under consideration.

"We have been robbed of a lot of things because of the coronavirus, but the pandemic has opened a window of opportunities on several other fronts like digitalisation in the financial sector. As a regulator, the central bank can take the lead here," Shirin said.

The MFS market leader bKash is also engaged in salary disbursement in garment and other factories and has already brought lakhs of employees under its network.