Question

You have been doing research on how to make primary students (class 1-5) of Bangladesh financially literate . Include a 3 page report on financial literacy for Bangladeshi children. Give reference of at least 15-20 useful websites.

Answer 1

Financial Literacy for Bangladeshi Children

Ever since the global financial crisis and economic recession hit in the year 2008, worldwide global policymakers have continuously strived to minimize financial hazard and balance financial system. Over the last 10 years, the intensified financial deepening has also augmented in Bangladesh. The financial regulatory agencies in Bangladesh have devised policies for fostering and advancing financial inclusion and promoting new investment opportunities all over the country, especially for the marginal rural micro-enterprises without adopting any viable policy for ensuring nationwide financial literacy.

The national policy of Bangladesh has prioritised financial inclusion. The Bangladesh Bank is responsible for the advancement and immediate adoption of financial inclusion programmes. The Bangladesh Bank has taken multifarious policy initiatives. They include vulnerable group credit programmes, opening rural bank branches, introducing school banking and street child bank account opening.

Child labour is a fact in Bangladesh. It is predicted that around 7.4 million children in the age group of 5-17 are estimated to work to support their families or simply to survive. Some children return home at night while some live full-time on the streets, but all face the similar issue which is often overlooked by policymakers and NGOs focusing on their basic needs: how to safeguard the money that they earn?

The law in Bangladesh permits children aged 14 and above to engage in non-hazardous work, but their economic activity had been unmatched by services that enable their money to work for them. Financial exclusion creates a particular paradox for street and working children in that their resourcefulness and industry may even undermine their security with their wages making them the target of thieves and cheats.

Bangladesh’s central bank, the Bangladesh Bank (BB) pioneered a scheme with the hope to change their situation. The bank introduced a service in June 2014 that allows children to open a savings account with participating banks for as little as 10 Taka. The initiative was aimed to prevent the derailment of street children through developing their financial position.

Permitting children to open bank accounts would hopefully lead to a higher level of physical security and bring relief from the fear of their hard-earned money being taken by others.

The move was significant as it dropped an earlier requirement for the co-signature of a parent or guardian – an impossibility if the child is an orphan or has been forced to leave home. The central bank coordinated 10 banks that were piloting the scheme in partnership with approved, legally-registered NGOs working on the financial exclusion of children. New accounts require co-signature from an NGO, whose staff retain control of it until the child gains the age of 18. For the poorest children, the involvement of NGO's is aimed at ensuring the children’s money works for all their chief needs: emergencies, survival and future planning.

The accounts intended to increase the incentives for these street and working children to come into contact with community-based organisations (CBOs) and NGOs [who can then help with] building their skills in numeracy, saving and financial planning.

Financial Literacy can play an important role to make street & working a saver. They will understand the use & importance of money which may help them to come out of the distressing situation. Every child and their family must have knowledge of financial management. The lack of financial management may be an important issue behind street children scenario of Bangladesh. Financial Literacy is essential for their development. So more training is needed for NGOs and their workers.

The country's financial market has remained underutilised due to information gap between consumers and financial service providers arising out of financial illiteracy. As a result, consumers are not able to make the right decisions on their finance. Particularly in rural areas, consumers are not well informed of their rights and options. The information gap and reduced access to financial services can be taken care of by strengthening financial literacy.
If Bangladesh had a national policy on financial literacy, a greater number of people could have been made financially literate. The Bangladesh Bank has a website wherein a brief policy statement regarding financial literacy can be found (www.bb.org.bd/finedu). On the website, it has been claimed that the general people of Bangladesh have proper access to all financial goods and services of banks and other non-bank financial institutions. This highlights the importance and necessity for disseminating financial knowledge and guidelines for people to make well informed financial decisions. In addition, it motivates all the scheduled financial institutions, especially all banks, to develop and formulate purposeful financial products for all.

Bangladesh Bank initiated the school banking programme in 2010 for students to help them understand the importance of saving, develop a saving habit and start getting financially literate from an early age. But school banking in Bangladesh goes further back than that. Some private banks had earlier taken initiatives to establish the practice amongst students, albeit without much success. Finally, it got renewed impetus when the central bank issued the formal circular.

Accordingly, the Bangladesh Bank instructed all scheduled banks to open this financial inclusion policy in schools. The scheme aims to instil the habit of saving into students and make them more skilled with money management. Through the programme, students can get a hands-on, simplified banking experience from school. Any student in the age group of 11-17 years can open an account with banks supporting the service. There are also a few advantages, such as the waiving of fees and charges, free internet banking, lowered minimum balance requirement, debit card availability at lower costs, etc.

School banking is also gaining popularity across the country, according to reports that showed that deposits crossed Tk 1,500 crore at the end of 2018. Guardians should encourage their children to avail themselves of this option for their own convenience and better financial planning.

Thus, combined efforts from the government, banks, schools and parents can help to make the children financially literate.

For Reference, you can view the Unicef website.