The governors of eight South Asian central banks in Dhaka last week deliberated on ways to strike more financial inclusion as a tool of furthering the pace of growth in the region. This has provided a unique opportunity for all the top central bankers in this region to share each other's experiences in bringing into the banking mainstream the un-banked millions through easy-to-handle tools. Internationally-acclaimed economist and governor of the Reserve Bank of India (RBI), Dr Ragunathan Rajan has particularly provided very useful inputs to heads of seven other South Asian central banks for soul-searching in order to take appropriate actions for better banking practices to lift the region out of extreme poverty and inequality.
On its part, Bangladesh has already earned acclaim during interactions of the central bank governors for its innovative tools to help widen access to banking as part of financial inclusion. Even the RBI governor commended the Bangladesh Bank's (BB's) initiatives like mobile and agent banking in a path-breaking financial inclusion of millions of the poor who had never known what banks and how cumbersome banking practices are. The BB deserves kudos for bringing banking transactions to the doorsteps of all, including the extreme poor, farmers and school students.
Achievements of the BB have, on many counts, outshone others in this region, in terms of financial inclusion. Even India is yet to make headway to its desired level in this field. It is surprising to note that a half of a record 160 million accounts opened in India as part of a drive to offer banking to all, are still empty. This illustrates a massive task ahead for one of the Indian government's most high-profile campaigns and the strain on banks. India had launched a scheme last August to end 'financial untouchability', an ambitious programme to enable tens of its millions to have access to a bank. It offers free insurance and even an overdraft facility and aims to eventually help deliver all subsidies and other social benefits to the poor directly. But while millions signed up -- the volume of accounts made a Guinness World Record and the RBI hit its target, 53 per cent of such accounts have never been used the services as of June 03 last, as records showed.
Promotion of inclusive financing and environmentally benign green financing are going together in this country, largely because of the BB's initiative for ingraining a socially responsible financing ethos in its financial sector. There is also a concerted package of sustained thrusts on motivation, enabling measures and appropriate policy support. Most banks and financial institutions are by now on board with their enthusiastic engagement in inclusive and green financing initiatives. The government has also helped with interest subsidy in financing for farming of some high-value exotic crops. Inclusivity and environmental sustainability are now issues being routinely reviewed in formulation of the BB's monetary and financial policies.
It is also a positive development that all the South Asian central banks are already actively engaged in financial inclusion and green financing initiatives with encouraging performance in upholding broad-based growth and macro-financial stability. With the Dhaka meeting, the central banks of South Asia are expected to work more close together through exchange of ideas and experiences for better sustaining growth and stability over the longer term (The Financial Express Editorial on 15/06/2015).
