Despite pandemic, school banking deposits see 20% growth in one year

Deposits in school banking accounts jumped sharply over the past one year, even though educational institutions are closed due to the Covid-19 pandemic.

The number of school banking accounts also posted a significant growth during the same period.

At the end of April this year, students deposited Tk1,986 crore in the accounts, up from Tk1,654 crore a year ago, according to the Bangladesh Bank's updated data released on Monday.

The 20% growth in deposits recorded in April this year is also higher compared to the 14.24% annual growth registered in April 2020.

The number of school banking accounts stood at 27,85,513 at the end of April this year, up by 23% from 22,52,933 a year ago.

The central bank's data reveal that the lion's share of school students' deposits is in urban areas. Of the total deposits, Tk1,493 crore was in urban areas and Tk493 crore in rural areas.

The urban-rural divide is also visible in growth as well as total number of accounts.

According to the Bangladesh Bank, the number accounts under school banking in rural areas rose 4.27% to reach 12.59 lakh. On the other hand, the number of accounts in urban areas increased by 11.32% in the last one year and stood at over 15.25 lakh in April this year.

Of the total accounts, around 15 lakh have been opened by male students, while about 12.5 lakh are held by female students.

Asked, Sirajul Islam, executive director and spokesperson of the central bank, told The Business Standard that both deposits in and the number of accounts under school banking are increasing, as guardians are becoming more aware.

Besides, many educational institutions collected tuition fees through the banking channel amid the pandemic, he mentioned, adding this also might be one reason behind the increase in the number of accounts and deposits.

To popularise school banking, the central bank sent a letter to the National Board of Revenue in November last year requesting a reduction in source tax on the profits of these accounts.

Since accounts held by students below 18 years of age are managed under the supervision of their guardians, 10% tax can be deducted for those accounts whose guardians have E-TIN numbers and for those without E-TIN numbers the tax rate might be 15%, the Bangladesh Bank recommended.

However, no response to this suggestion is seen in the proposed budget for the forthcoming financial year.

Asked about this, the Bangladesh Bank's spokesperson Sirajul Islam said he did not have any detailed information about the request for exemption from source tax.

He, however, expressed belief that the popularity of school banking will increase, if such initiatives are taken.