Policy Research Institute (PRI) and Bangladesh Economists’ Forum (BEF) jointly organized a workshop titled “Policy Making and Institutions of Bangladesh” where Professor Nurul Islam was the Keynote speaker. Throughout his long and distinguished career as an economist, researcher, social scientist and public intellectual, Professor Islam has worked tirelessly to uphold the welfare and interest of Bangladesh. Through his many books, articles and speeches, he has contributed to a corpus of knowledge that has improved our understanding of economic theory and planning, poverty, the process of economic growth, and the role of politics in a society.
Prof. Islam in his keynote speech shared out his long experience the ideas to debate and discuss on i) importance of effective Planning Commission, ii) role of statistics as a precondition to proper policy making and iii) role of central bank for monetary an financial stability. He made a comparative analysis of various models of economic planning and policy frameworks in various countries of the world.
The keynote speech was followed by a panel discussion where Prof. Wahiduddin Mahmud shared his view on prioritizing credibility of policy makers with definite credibility of facts and figures in behind. Dr. Mustafa K. Mujeri pointed out the policy making attuned with quality of autonomy and governance that institutionalizes good work culture.
In the discussion Governor Atiur Rahman pointed out that, all macro sector issues, and most of the micro sector issues are interrelated with host of others; thorough understanding of trends of these interrelationships is essential for meaningful, useful policy making. This requires well thought out institutional arrangements, including inter alia:
- Good quality research based on reliable data clearly bringing out the interrelations, policy options in the areas needing intervention, and the potential gainers and losers from the interventions;
- Multi-level stakeholder consultations by policy making public institutions to assess feasibility of the various policy options in the ground realities of extents of support for or resistance to the policy options. These stakeholder consultations can often be also useful as advocacy initiatives creating constituencies in support of intended policy reforms.
Bangladesh Bank (BB) has over the years been proactively strengthening its in-house research and policy analysis, alongside forging research liaisons and partnerships with academia and think tanks. In formulating and implementing monetary and financial sector policies BB engages extensively with the concerned government agencies, think tanks, civil society organizations, eminent scholars and former top level policy makers, trade and industry forums etc. Furthermore, Fiscal-Monetary Coordination Council, role of the BB in preparing Govt, Five Year Plan and in the Foreign Private Loan Committee (where BB Governor is the Chair) along with BOI and other ministries are fostering a better level playing field to serve as central bank of the country.
BB has taken the financial inclusion as the key strategy to reaching the unbaked and undeserved keeping it mandates intact. The linkage program formalized by BB regulation allowed private and foreign banks to provide at least 2.5% of total credit to farmers and small entrepreneurs. They have used regulated MFIs to enhance this access. Sharecroppers can now access to agricultural loan from a revolving BB fund of BDT 5 billion channeled through BRAC; more than 9 lakh sharecroppers have been financed till September, 2014 since its launching in 2009. In order to promote renewable energy and green financing in Bangladesh, BB has initiated a refinance scheme of BDT 2 billion in 2009.
The end results of these inclusive interventions have been positive. For example there were 48 bank branches per 1000 sq km in 2009 which increased to 59 by the end of 2013. The number of branch per 1 lakh population increased from 5.1 to 5.7 during that period. Number of ATMs per 1000 sq km increased from 8 to 35 during this period. Deposit accounts per 1000 population increased from 267 to 413. Banking sector asset increased from 59% of GDP to 80% of GDP during this period.
For the development of SME sector including women entrepreneurship, BB has established a refinance fund of BDT 21 billion from its own source along with IDA, ADB and JICA and disbursed refinance facility of BDT 3.45 billion to 41,952 entrepreneurs where 21.86 percent of credit was distributed among 9612 women entrepreneurs. In its latest move in August 2014, BB has launched new Entrepreneurs Fund and Jute Sector fund amounting to USD 13 and 25 million respectively. Till September 2014, out of the permitted 28 banks, 19 banks have provided mobile financial services to more than 2 crore and 7 lakh beneficiaries through 4 lakh and 77 thousand agents. These indicate significant financial inclusion and deepening.
A key challenge in BB’s policy making and implementation efforts in scaling down of capital market exposures of banks, in enforcing international best practice standards of asset classification and provisioning, in enforcing accountable and transparent corporate governance, and so forth. Structural reforms for attaining longer term growth and stability objectives in various sectors require consistent, resolute and evenhanded implementation; overriding resistances from vested interests in status quo. Of late there have been some progress in empowering central bank and it has been trying hard to bring discipline in the financial sector. We are already getting some results from this empowering process.
Former President of Bangladesh Economic Association and a key organizer of Bangladesh Economists Forum(BEF) Dr. Mohiuddin Alamgir appreciated the Financial Inclusion campaign which, according to him, is playing a significant role in achieving inclusive growth and financial stability.
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