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Digital Financial Inclusion of the Rural Poor in Bangladesh

Anir Chowdhury's picture

Bangladesh Financial InclusionConsidering Bangladesh’s lack of development and a predominantly rural context, it would have been difficult to imagine even a few years ago that an elderly widow living in a remote corner of this impoverished South Asian country could be receiving money from her son living in Dubai sitting right at home or making petty payments through her mobile phone. Not any more, though.

Bangladesh has recently emerged as a curious case of digital innovation to widen coverage and reach remote pockets. The country reached the lower middle income country status in 2015, and has showcased the potential of combating rural poverty through inclusive digital financial services.

This has proved to be an effective weapon to eliminate poverty and secure the sustainable development goals (SDGs) while the country advances towards Vision 2021 — lifting millions of Bangladeshis out of poverty. Innovation and digitization will surely set Bangladesh firmly on the path to becoming a middle-income country. Although ambitious, it is exactly what both the government and private sector are working towards.

Access to the formal financial system remains a challenge for the rural poor in Bangladesh even though the central bank announced a plan for inclusive digital financial programmes in 2015.
 

The promise of digital banking for Nepal’s remote areas

Farhad Ahmed's picture
Rural maintenance workers engaged in culvert maintenance at Parsa District. Credit: World Bank

On a fine Tuesday morning Roghan Devi, a routine road maintenance worker from Dhanusha district visits the local branch of Mega Bank - a commercial bank in Nepal, to receive her monthly salary. She was notified about this through a text message in her mobile phone. Just a few years back, it was unimaginable for her, and for most of the women from her community, to have a personal bank account.
 
This initiative is part of a World Bank-supported Strengthening National Rural Transport Program (SNRTP) project that works in 33 districts employing over 1,800 routine maintenance workers- over 70% of them are women - to enhance the availability and reliability of transport connectivity for rural communities. To support this initiative, SNRTP forged a joint collaboration with the private sector. 

How can regional integration improve access to finance in South Asia?

Sarmad Shaikh's picture

South Asia is the least integrated region in the world. Intra-regional trade in South Asia is less than 2% of GDP compared to over 20% in East Asia. Labor mobility and regional travel is minimal, with few exceptions. Even remote communication is low – only 7% of international telephone calls in South Asia are to countries within the region, compared to 71% for East Asia. The case for closer integration has remained strong for a while now, and it is refreshing to see that some movement, albeit watchful, in addressing some of the region's deep rooted political economy issues, particularly between India and Pakistan.

The discussions around closer integration have centered on energy, trade, connectivity and stability. All of these offer strong potential to enhance growth in the region. However, financial sector integration overall, and access to finance in particular, hardly ever make it to the agenda of regional integration forums and deliberations. This is unfortunate, because the region has a long way to go in providing adequate access to financial services and insurance products, especially to the vulnerable segments of the population. Given that South Asia is home to more than half a billion of the world’s poor, this becomes a poverty reduction goal as much as a financial inclusion goal.