Exploring opportunities: School banking initiatives
The core objective of school banking is development of banking sector as a model of financial inclusion by introducing banking operation and advanced technology among school going students as well as participating students into economic development by the mode of savings
Mohammad Raquibul Hasan and Kazi Abdullah-Al Zayed
It is well recognised that well-functioning financial systems are essential for economic development. Well-functioning financial systems are by definition efficient, allocating funds to their most productive uses. It also covers other vital purposes such as offering savings, payment, and risk management products to as large a set of participants as possible, seeking out and financing good growth opportunities wherever they may be.
Why does Inclusive Financial Sector development matter? Access to a wellfunctioning financial system can economically and socially empower individuals, allowing them to better integrate into the economy of their countries, actively contribute to their development and protect themselves against economic shocks and can contribute to attaining the economic goals.
Bangladesh Bank introduced a school banking policy in a bid to disseminate financial inclusion across the country and encourage the students to develop a habit of saving money. School banking is one type of banking wing towards school going students and their parents to facilitate lower depository obligation, free from operating charges, higher rate of interest on deposit with advanced form of banking transactions. It is not new in Bangladesh. Some banks, Including Muslim Bank, had introduced that type of banking program in the 1960s, before the liberation of Bangladesh, but it was not last long. Finally, school banking got renewed impetus when Bangladesh Bank, central bank of Bangladesh, issued the formal circular to all scheduled banks on November 02, 2010.
The core objective of school banking is development of banking sector as a model of financial inclusion by introducing banking operation and advanced technology among school going students as well as participating students into economic development by the mode of savings. More than 900,000 accounts by children exist, with total approximate deposits amounting to $90 million by 2015 under school banking scheme. So, school banking would be a smart form of banking activities and it would gather all school going students in Bangladesh under a uniform banking facilities.
School banking account is a savings deposit account heading with the name of student and to be operated jointly in collaboration with guardians signature who can be the nominee of the account. So, it is a special type of banking towards the school going children and their parents to know about the banking systems that helps to make a habit of savings from the early age of children. This is a new form of banking that is getting more popular day by day because of some smart advantages, such as free of charges and fees, free internet banking, a waiver of minimum balance requirement, facility of debit card at lower cost, etc. School banking scheme helps students and parents with a sizeable amount of savings after a certain period and it also aims to insist the habit of savings into the students.
School banking will help the fund in the account grow at a faster rate than conventional savings accounts. A parent can use the account to save for future expenses of the child, like higher education, marriage or any other purpose. Bank Asia Limited is one of the successful pioneers of School Banking in Bangladesh. Smart Junior Saver is a school banking scheme run by Bank Asia Limited which has made noticeable response in the target group. The bank is successfully operating its school banking in different places in the country both in rural and urban areas. Nowadays the bank is promoting school banking with rigorous campaigning in different institutions. BRAC Bank has also launched savings products for students below 18 years .The bank introduced the Future Star Account, which is a savings account for minors that offers an opportunity to save for ones childs future. The account is available for children below 18 years of age. However, the legal guardian of the child will operate the account on behalf of the minor.
Bangladesh Bank has issued some guidelines on operation of School Banking to all scheduled banks for their compliance. Bangladesh wins award for school banking in London. The Child and Youth Finance International Country Award from Asia and the Pacific region, given to Bangladesh in 2015, went to Singapore last year. Bangladeshs award was handed to the central banks Executive Director Md Abdur Rahim by Child and Youth Finance International (CYFI) in a ceremony at Londons House of Lords.
There are also some recommendations for school banking. To get the students have a better understanding on school banking, the subject could be included and studied in their text book. Currently, the initial deposit for such account is BDT 100 but it should not exceed BDT 50. Media campaign to encourage both parents and students is required. To reach students in rural and remote areas, Bangladesh Bank should find out and overcome the challenges. If necessary, extra support could be initiated in this regard.
The writers are MDS students in BRAC University and can be reached at [email protected] and [email protected]
