Digitalisation

The ‘Digital Bangladesh’ strategy was launched by the Government of Bangladesh in 2009. It was designed to translate Bangladesh’s Vision 2021 into action. The Vision 2021 was envisioned to make Bangladesh a middle-income country by 2021— the year in which the country celebrates its 50th anniversary. Prior to the adoption of Vision 2021, Bangladesh lacked the policy framework needed for the digitisation of governance system which was prevalent among similar countries.

The philosophy behind Digital Bangladesh was to equip a new generation with skills in order to develop into a technologically advanced nation. The strategy consists of four components: digital government, human resource development, IT industry promotion and connecting citizens. The initial phase focused on expanding the use of digital technology for information and communications, improving governance and integrating ICT in the education sector. The next phase would develop the support instruments through a legal framework, public-private partnerships, institutional foundation, time-befitting policies, long-terms plans, innovation strategies and implementation programmes.

Information and Communication Technology (ICT) Policy

Bangladesh formulated its first Information and Communication Technology (ICT) Policy in 2002 to build an ICT sector-driven nation. However, the policy attempt failed to accomplish its goals within the stipulated time. The ICT Policy 2009 was subsequently formulated by amending the ICT policy of 2002 and incorporating the Digital Bangladesh vision. The ICT Policy 2009 involved a timeline and support framework to build a sustainable ICT sector in Bangladesh with 10 objectives, 56 strategic themes and 306 action plans. The policy was amended twice, in 2015 and 2018, to keep pace with the ever-changing digital landscape. Bangladesh is currently implementing the ICT Policy 2018.

Right to Information (RTI) Act 2009

Bangladesh enacted the Right to Information (RTI) Act 2009 to give its citizens the legal mean to seek public information. The legislation was passed to ensure free flow of information with the principle that every individual has the right to know about the functioning of their government. The Act promulgates the importance of good governance in all public – autonomous or government – and non-governmental organisations.

e-Government Masterplan for Digital Bangladesh

Bangladesh formulated a holistic ‘e-Government Masterplan for Digital Bangladesh’ with the support of international development partners in 2019. The masterplan provides a strategic guideline of government innovation using ICT. The objectives of the strategy are to formulate a thematic implementation plan, conduct pilot projects and build the capabilities of government officials in relation to e-governance. The masterplan envisages the digitalization of all citizen services by 2021.

Ministry of Information and Communication Technology (MoICT)

Bangladesh established the Ministry of ICT in 2011 as part of its the established of its ICT-enabled governance system. Subsequently, the government merged the Ministry of ICT and the Ministry of Posts and Telecommunications. The Ministry of ICT turned into the ICT Division under the Ministry of Posts and Telecommunication and Information Technology.

Bangladesh Hi-tech Park Authority

The Government of Bangladesh established the Bangladesh Hi-Tech Park Authority (BHTPA) in 2010 under the ICT Division of its Ministry of Posts and Telecommunication and Information Technology. BHTPA is the regulatory agency which oversees the ICT establishment such as to the foundation of hi-tech parks, software parks, IT training and incubation centers. Ultimately, the primary goal of forming BHTPA is to channel investments and skills into the ICT sector.

National Data Centre

Data centres are large physical IT facilities that house data processing computers. In 2019, Bangladesh established its National Data Centre, which is the seventh largest ICT facility in the world. The Centre has state-of-the-art facilities, maintaining the Uptime Institute Tier-IV standard. Its purpose is to support the digitalisation process of Bangladesh’s governance, business entities and education sector.

Union Digital Centres (UDCs)

The creation of Union Digital Centres (UDCs) is a Bangladeshi initiative to provide e-services to its rural communities. UDCs are one-stop shops in local government designed for people at grassroots level. Services provided at UDCs include: birth registration, citizen certificates, registration for migrant workers, job applications, checking standardised exam results, mobile financial services and computer training. Operating through a micro-enterprise model, there are currently around 7,600 UDCs providing more than 300 services across Bangladesh.

 

Financial inclusion

Bangladesh’s agenda of financial inclusion, led by its central bank, the Bangladesh Bank, is designed to alleviate poverty, promote enterprises and encourage inclusive growth. A concerted agenda of financial inclusion in Bangladesh came to prominence in the late 2000s. In Bangladesh, financial inclusion is a major strategic instrument for achieving mid-term and long-term national development goals. The drive for financial inclusion gained traction with the Digital Bangladesh vision. Subsequently, the government stepped in with steering initiatives to improve financial access to all. In particular, Bangladesh Bank and different government agencies have adopted a policy to expand financial services to disadvantaged groups.  

The implementation of the Digital Bangladesh vision has paved the way for the introduction of digital financial services (DFS) which have allowed banks to reach the last-mile clients. The policy support for new technologies has also upgraded the payment system for services such as automatic clearing houses, electronic fund transfers, national payment switches and automatic credit information bureaus. Finally, the use of Financial Technology (FinTech) in Bangladesh has facilitated the aim of achieving financial inclusivity. The central bank readily endorsed the use of FinTech and its role as an innovative platform for financial services. 

National Financial Inclusion Strategy (NFIS)

As a signatory to the Maya Declaration, the global alliance for financial inclusion, Bangladesh has committed to developing a National Financial Inclusion Strategy (NFIS) in 2014. In November 2020, the Government of Bangladesh approved the draft of the NFIS in order to bring as many people as possible into the financial system and secure financial benefits for them. A five-year strategy, in 2021, has since been adopted to bring everyone into the financial system by 2025.

Financial Inclusion Department at the central bank

In a move to consolidate and better coordinate the financial inclusion initiatives of the central bank and relevant public and private sector stakeholders, Bangladesh Bank established the Financial Inclusion Department in 2015.

Central bank’s financial inclusion initiatives

Bangladesh’s central bank has adopted various policy measures, including targeted credit programmes, requiring banks to open branches in rural or remote areas. In 2010, it introduced no-frill accounts with an initial deposit of a sum as small as BDT 10 (around USD 0.15), BDT 50 (around USD 0.60) and BDT 100 (around USD 1.2) by people who are excluded from financial services. The target groups of these accounts include farmers, persons with disabilities, the extreme poor and the beneficiaries of social security schemes. The central bank has also introduced two innovative policies for financial inclusion: school-banking and street-child banking. It also mobilises credits for underprivileged people through refinance schemes such as no-frills accounts. Finally, the central bank has established new departments, like Agricultural Credit and Special Programmes, which are geared towards financial inclusion.

Regulatory support for digital financial services  

Bangladesh’s central bank has extended important regulatory intervention for digital financial services. It introduced Real Time Gross Settlement (RTGS) to facilitate a common electronic platform for the settlement of any transactions through electronic devices. It also launched a digital payment system, Bangladesh Electronic Fund Transfer Network (BFFTN), which replaced the paper-based payment methods with a paperless process. The BFFTN has since proved a transformative innovation for Bangladesh’s banking system.

Agent banking service

In 2013, Bangladesh introduced Agent Banking (AB), a model where banks contract third party retail networks. The Agent Banks have become a catalyst for financial inclusion in Bangladesh, allowing a large number of the excluded population to access financial services. Most of the agents – indeed more than 85% in 2021 – are located in rural areas.

Mobile financial services (MFS)

In Bangladesh, mobile financial services (MFS) are a pillar of financial inclusion policy. They began to take shape in the 2010s at different junctures. Central bank-issued regulations, such as the Guidelines on Mobile Financial Services (MFS) in 2011 and the Bangladesh Mobile Financial Services (MFS) Regulations in 2018, act as the basis for the entire MFS industry. These regulations enable a competitive environment for cost-effective and real time MFS.

Bangladesh only requires government-recognised identification to open a mobile wallet account. For example, a national ID card or a mobile phone number would suffice. The central bank has offered a license to 28 banks for the provision of MFS. As of December 2020, Bangladesh has 99.3 million registered MFS accounts, one of the highest figures in the world.

Financial services by Post Offices

Bangladesh’s post service, the Postal Department, is the oldest formalised network spread out in every corner of the country. It provides financial inclusion services such as money saving instruments, saving schemes (both short-term and long-term) and cash deposit services. The Postal Department accommodates innovative financial transactions for marginalised populations under different projects by development partners such as the World Bank, Red Cross, UNDP and the a2i innovation hub at the prime minister’s office in Bangladesh. Notably, the Postal Department has launched a mobile financial service called Nagad in 2019.

Micro-credit Regulatory Authority (MRA)

Micro-finance institutions have historically been the drivers of financial inclusion in Bangladesh. Indeed, Bangladesh arguably has the largest microfinance programme in the world. Bangladesh established a regulatory agency for microfinance, the Micro-credit Regulatory Authority (MRA), under the Microcredit Regulatory Authority Act, 2006. The MRA monitors microfinance operation in the country and provides policy support for the growth of the sector. An NGO utilising microfinance operation requires a license from the MRA. Finally, as part of its role, the regulatory body also fixes interest rates for microloans.

 

Photo ©️ Mahmud Hossain Opu