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Banks Mostly Work For Defaulters

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16th-May-2020       
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Prof Dr. Muhammad Mahboob Ali:
[This is second part of the article]
This alternative framework was an attempt to develop a theory on how social networking facilitates to empower people which were developed by Muhammad Mahboob Ali (2016)   to test  any country.  The study will extensively tries to display an integral part  regarding different dimensions of empowerment before involving in social networking and after involving in social capital, social  along with business and social investment along with social intelligence, social enterprises along with micro savings transformed to micro investment. Social intelligence is also one of the key components to readdress to come out from poverty. In Current century a greater role is being played by social media for which interpersonal connectivity in vital. Environmental scanning for doing the business is vital especially to ease the business process and local economies. Empowerment of people rises from decision making process when people do have purchasing power capability. Societal banking framework should be developed under a regulatory framework may  work starting in joint effort of Pali Sanchya bank, Karmasonsthan bank and postal savings deposit and creating   investment sector.
Societal banking idea is larger than agent banking or mobile banking. It will give the scope of financial inclusion and current 80% people who are working informal sector will gradually transformed to the formal sector.
Technological diffusion, innovation, creativity and suitable regulations by the local level planning with local level law are the key to deepening financial inclusion analysis where nano saving must be transformed to nano investment. Societal banking will help to expedite the process of social networking and ultimately empowerment of people.
A model as concept developed by Ali (2016) based on aforesaid discussion in this section as Social Networking Model and empowerment of people through transformation of Micro savings to micro investment with the help of Societal banking. However social education in the form of formal or non-formal is very important to act as a complementary.
The Rabobank view (2005) described that Rabobank was founded in the Netherlands more than a hundred years ago as a co-operative bank providing access to financial services for small farmers and offering a secure option for savings to the local community. The driving force behind the Rabobank Group has always been to create opportunities for individuals and organisations to participate fully and independently in economic activities. Rabobank has developed an integrated concept of sustainable rural financing in developing countries. In addition, Rabobank participates through its different departments in international platforms and partnerships concerning the challenge of economic development in developing countries.
Dupas et al. (2012)  depicted that while simply expanding access to banking services   will benefit a minority, broader success may be unobtainable unless the quality of services is simultaneously improved. There are also challenges on the demand side, however. More work need to be done to understand what savings and credit products are best being suited for the majority of rural households.
Ngalemwa (2013) described that village Community Banks (VICOBA) have benefited people in reducing their income poverty by playing an important  role in enabling the poor to save and access credits. VICOBA lending model is a unique and an effective tool for development of rural communities.
Halim et al. (2016) found that the series of income inequality and savings demonstrate a nonlinear relation in Bangladesh. Savings behave differently at different level of income inequality. Moreover, this nonlinear relationship is due to changes in economic policy. From our data set we can see that economic liberalization has improved the inequality situation of our country and caused savings GDP ratio to increase.
Ali et al. (2017) commented that policy makers should come forward to think how Societal banking with the applicability of the social networking can be used in local level planning system of the country. They also argued that people must be cautious about misuse of social media as reported by different dailies.
Rural savings will be turned to rural investment lead to social entrepreneurship for which we need implementation and help from local level planning. It will be found that in dimensions the people started to become more empowered than before involving in social networking. This may be supported by Technology, innovation and suitable regulations -the key to deepening financial inclusion analysis where nano saving must be transformed to nano investment. Leadbeater (1997) proposed social entrepreneurship can be systematically developed through Societal banking which can act for social welfare. Societal banking will reduce the informal lending at the rural area. Mallick's (2009) observation on Micro Financial Institutes (MFIs) needs to reduce interest rate and his observation for involving in the productive production process can reduce the interest rate.
Social networking and societal banking may be applied for transforming micro savings to micro investment through creating social capital. This will also help to transfer to formal sector from informal sector. Employment opportunity accompanied with economic growth should be raised in the formal sector. This will help to attain equitable growth, social justice and removing income inequality. If we cannot take the benefits of demographic dividend then it may transform to demographic bomb. Actually financial inclusion is feasible thorough arranging Societal banking under regulatory measures otherwise it may create a disorder.
Macroeconomic stabilization depends on successful implementation of investment and positive return on investment. Situation of the Gini coefficient ought to improve so that social justice and equitable distribution can be arranged and removing income inequality can be attained in the country. Empowerment of people may arrange the aforesaid situation to attain.
Systematic procedure and legal status for Societal banking should be developed which will replace current agent banking system also. To implement sustainable development goal there is no other alternative but to creative alternative banking system in the rural areas so that poor people can not only save but also interested to invest in the local level planning process for which employment can be generated. As such productive investment through social entrepreneurship in the rural areas and changing the structure of the rural economic dynamics is very much important to add value in the domestic and global value chain with efficiency and effectiveness. Social education is also work as an important component to come out from the vicious circle of poverty.  PESTEL analysis is for doing the business is needed which stands for Political, Economic, Social, Technological, Environmental and Legal. During Covid-19, when people are suffering from unemployment but government of different countries have  declared stimulus packages, if the low income group have banking account at a low cost  then directly government can give  them monetary packages directly, if they are unemployed. Covid-19 created pandemic scenario in the world. As such air pollution was decreased as most of the country is following social isolation under pressure from lockdown /shut down or emergency situation. But business processes of different countries have been changed. At the time of Covid-19, China is doing remarkable business. Other countries if such pandemic situation continues for long time then great stagflation will occur. Those that are not financially included will have to bear the devastating effect as they are unbanked. In that case, if God forbids great stagflation starts, other nations will face the problem and as China did well for temporarily. When other nations will fall victim then China cannot no longer sustain in the production process. As such environment is very much important for economic development. Govt. of Bangladesh tried to open accounts for RMG labors payment which is a good sign to include them in the banking sector. But recently Janata bank, Bangla Motor Branch  cut Tk.58 against the salary account on 4th May, 2020  which was actually due to pandemic situation salary was delayed while the bank which was clearing bank cut only Taka 10. As such heavy charges by the nationalized bank are not acceptable and create hindrance of the financial inclusion. Banks mostly act for the defaulters not for masses. There is a govt. directives that all charges should not be deducted during the pandemic situation, but who cares?

(Professor Dr.Muhammad Mahboob Ali, Dhaka School of Economics email: pipulbd@gmail.com, mahboobalidsce@gmail.com)

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