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For Development Environment And Financial Inclusion Needed

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15th-May-2020       
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 Prof. Dr. Muhammad Mahboob Ali :
Economic development refers to change in growth domestic product and fulfillment of basic needs of a country for a particular time period. Economic development refers to environmental scenario and financial inclusion scenario of the country. The rationale of the procedure of examining environmental scenario has been offering the economic enhancement with the bidirectional way to the adjustment the probable happening in the organizations are to go on righteous manner. Consequently this approach can becoming accustomed with the production process to get the better of the intimidation and taking advantage of the chance is impending on the system. Expansion of financial inclusion can alleviate recognition to restraint on commercial behavior by tumbling in sequence of irregularity in monetary dealings, and in adding up this result is superior in production by means of subordinate fence to access. The growth of financial inclusion is frequently helpful to the arrangement of economic scenario of the country in segment with significant manner to access from the barrier. Financial Inclusion helps to promotes Innovation, increasing credit access to allow the upper income starta of the people which substantially increase profits availability and credit led to higher self-employment and business ownership may rise. The accessibility of credit allow to financing sustainability up-gradation. Through CSMEs women can expand and rise investment in their businesses process. Unbanked people are highly correlated to the environmental scenario of low progress of formal business. Informal expansion doesn't have too much sustainable situation in the business process.
Weak rule of law leaves banks reluctant to lend low income starta people. Economics sustainability upgrades among CSMEs Financial services to assist people: - create investments to get away from burden of poverty - survive economic shocks & avoid becoming have-nots and pauperization. Financial inclusion ways that people have access and can effectively use appropriate financial services. Such services must be provided responsibly and sustainably in a well regulated environmental framework. Too ease doing business environment is very much important. To slot in environmental eminence is concerning on keen to the economic analysis of projects, programs, and development strategies. The relationship between certain indicators of environmental quality and income, ultimate that mostly an inverted-U shaped link, which has been called as an environmental Kuznets curve (EKC).Environmental sustainability refers to the income-environment relationship is motionless awfully difficult and so as to unwavering environmental strategy will be necessary if prospect of income enlargement is to be well-matched with sustainable expansion. Precise connections flanked by a purpose calculate to supporting constraint and disparity in national growth rates. Pollution is linked to the scale of production where optimum scale of plant cannot be attained. It has a depressing collision situation on output together in steadfastly energetic manners and in the intelligence technique. This consequence will mitigate by disruptive actions of the competence of which can   better by spending in disruptive technology. A reduced amount of pollution is linked with elevated enlargement in the stable procedure. In addition at the small period there may be   most advantageous government rules with esteem to disruption and taxation. "Economic   force Enterprise" who may take action because   one-stop services for all the monetary requirements of their rural community, including: microcredit, appropriate financing, insurance, small banking, savings schemes and remittances. Need to integrate its economic services offering in a value addition process with its recognized business to allow financial inclusion at a low cost, while empowering entrepreneurs and promoting bottom up economic growth. But this may be in the formal sector. What will be the scenario of informal sector where around 6.5 crore people in Bangladesh depends?
Societal banking idea is larger than agent banking or mobile banking especially to look into the matter in the informal sector. It will give the scope of financial inclusion and currently 83% people who are working informal sector will gradually transform to the formal sector in Bangladesh. It will help to transform micro savings into micro investment, improve local economy and empower people in the community.
Societal banking framework should be developed under a regulatory framework may  work starting in joint effort of PaliSanchya bank, Karmasonsthan bank and postal savings deposit and creating  investment sector.
Social intelligence and emotional intelligence both are also working as components to readdress to come out from poverty. Poor people of the country often did not getting any sort of banking services. Without banking involvement they have to depend on informal sector. As such informal sector have been playing vital role in the economy without accountability and transparency. Micro savings ought to come under the operational purview of the micro investment through social networking and Societal banking based system is required. Otherwise micro savings cannot give good results rather it will have some problems which was raised in Uganda ,Rawnda etc. countries. In case of Pareto's optimality criteria of utility theory, Hicks, Kaldor and Scitovsky described that social welfare could be increased without making value judgments. As such Pareto optimality of the people can be attained in line of social welfare   so that compensation package can be attained. In the free market economy govt. can intervene at least invisible manner. For poorer people, govt. need to set up some procedure of redistribution, arranging equitable righteousness, removing income inequality and to attain social justice.
Social networking is the exercise of intensifying the quantity of one's business and/or social contacts by constructing acquaintances from side to side entities, often through social media along with social capital, social business and social investment. Social entrepreneurs are the people most able to deliver that innovation (Leadbeater, 1997).
Interest rate on lending in the informal sector is very much high in Bangladesh than the formal sector of the country (Ali,2016). Still in Bangladesh informal sector is much larger than formal sector where employment opportunity is very high. In the country, 87 per cent of the labour force is employed in the informal economy according to the labor report on 2010. Those who working in the informal economy include wage labourers, self-employed persons, unpaid family labour, piece-rate workers, and other hired labour. Informal credit market in the absence of regulatory framework is working without any sort of hindrance in the country which needs to bring under supervisory framework.
In the country credit is provided by informal lenders who may be friends and relatives, by mahjans who are intermediaries with trade and/or production relationships with ventures, and by traditional money-lenders. The informal market is potentially large and expanding.
Interest rate in the informal market is much higher than formal market and job security as well as obtaining direct taxation form the informal sector is not feasible. As such social networking and Societal banking may help to convert formal sector.
In the informal sector 87.8 percent totally is working while 11.4 percent is working in the formal sector. As per the following data formally employed in multiple job is zero percent. Formally and informally employed in multiple jobs is 0.1 percent in totality basis. Informally employed multiple jobs are totality basis is 0.6 percent.
Current banking system of the country has missing services for a larger portion of the people. As such the country needs to develop alternative banking framework at a least cost combination and helping the underprivileged people. Moreover, some NGOs are not working due roles as they are charging higher interest rate which is not feasible for borrowers to repay without cutting welfare and social ignorance. Micro savings need to be encouraged to bring the unprivileged people to the banking system. With the introduction of the electronic banking current commercial banking rate is much higher.
Karnani (2007) summarized following problems of microcredit from various studies: Microloans are more beneficial to borrowers living above the poverty line than to borrowers living below the poverty line microcredit; seems to do more harm than good to the poorest; microcredit is the businesses it is intended to fund.
Ali (2016) suggested that establishment of integration fund to encourage creative entrepreneurship so that poor downtrodden people can come out with innovative business process through financial inclusion process, to remove poverty. More intensive and pragmatic policy should be developed for the development of the social enterprises particularly for self-motivated entrepreneurs. Experiences from the research work observed that the rural poor are mobilized and working together in self-controlled community based organizations which ensures social welfare and Pareto optimality. Not only small and medium enterprises but also micro enterprises should get special priority and inclusion through financial organizations are being required for developing proper steps to poverty alleviation, public-private and foreign strategic alliances are required in the small and medium enterprise sector with special emphasis on micro enterprises of the country. [Next part of the article will be published tomorrow]

(Professor Dr. Muhammad Mahboob Ali, Dhaka School of Economics (Constituent Institution of University of Dhaka, Bangladesh) ,specialization: Macroeconomics, Financial economics, Entrepreneurial  expert, Management, Finance area and educational expert  e-mail:pipulbd@gmail.com ,mahboobalidsce @gmail.com)

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