Extreme poor’s bank deposits halve in pandemic

Deposits the extreme poor keep in bank accounts opened with Tk10 halved at the end of the third quarter this year compared to the same period last year, but the number of accounts has increased slightly.

According to the central bank's report on these no-frills accounts published on Tuesday, at the end of September, the balance in these accounts stood at Tk191 crore, which was Tk365 crore in the same period last year. Deposits decreased by Tk174 crore (48%).

The report said many had withdrawn money from their accounts as the Covid-19 pandemic had reduced earnings. Moreover, many could not make fresh deposits.

As part of financial inclusion, in addition to the extreme poor, farmers, beneficiaries of social security programmes, freedom fighters, apparel workers, street children and the socially disadvantaged groups have the facility to open accounts with a nominal amount of money.

In addition to Tk10, accounts can be opened with Tk50 and Tk100. These are known as no-frills accounts.

At the end of September this year, the number of such accounts was 22,056,710, and deposits in the accounts stood at Tk2,180 crore. The number of accounts increased by 8.48%.

However, the amount of deposits did not increase in line with the rise in the number of accounts. At the end of July-September quarter this year, deposits increased by only 0.33% compared to the same period last year. At the end of September last year, deposits stood at Tk2,173 crore.

Eighty-three percent of these accounts and 79% of the deposits are held in five government and specialised banks.

Farmers hold 44% of no-frills accounts. The highest deposits in these accounts belong to beneficiaries of the social security programmes, which is about 28% of total deposits.

At the end of September this year, farmers had Tk404 crore, the extreme poor Tk191 crore, freedom fighters Tk515 crore, social security programmes' beneficiaries Tk605 crore, garment workers Tk178 crore and others Tk286 crore.

During this period, Tk497 crore came to the country in remittance through 1.25 lakh no-frills accounts. The highest amount of remittance, Tk412 crore, was sent to farmers' accounts.

The Bangladesh Bank launched a Tk2,000 crore refinancing programme in 2014 to help marginal farmers and small entrepreneurs in order to keep the rural economy afloat. Under the programme, loans are disbursed through no-frills accounts.

In July-September this year, loans amounting to Tk363 crore were disbursed against about 70,500 accounts, which was 5% less than last year's September figures.

At the end of September this year, the number of no-frills accounts of students increased to 24.5 lakh. During this period, deposits stood at Tk1,821 crore.

Of the student accounts, 60% are in urban areas, and 40% in villages. Boys have more accounts than girls. About 70% of school banking accounts are in private banks.

At the end of September, the number of street children opening Tk10 accounts has increased a bit. They have deposits of Tk39 lakh against 10,652 accounts in 19 banks.

During the same period, the number of accounts of persons with disabilities exceeded 3.54 lakh and their deposits stood at Tk51 crore.