Bank accounts for Street and Working Children in Bangladesh

Thursday 8 September 2016

Opening a bank account is an important milestone that many of us remember from our childhood or youth. That bank account often stays with us for life, enabling us to borrow money from the bank for work or our home. A bank account gives us access to finance; a safe place to keep our savings; easy access to our money; and if we are a business, a record of our trading and financial solvency.

In Bangladesh, only 20.8% of all young adults (aged 15-24) have a bank account, set against an average of 36.7% in South Asia. Moreover, only 1.6% of young adults over 15 used an account to receive wages (WB, Financial Inclusion Data Book 2015). Young people- outside of a small elite- has no access to the formal banking system and all the benefits this can provide.  This is particularly true of the 7.4 millions of children under 18 that according to the Bangladesh Bureau of Statistics are economically active, some of them both living and working on the street. For them, a day’s wages is at risk of being stolen, and any amount of savings a temptation to unscrupulous others, including at times law enforcement officials. They therefore earn and spend, earn and spend, without the opportunity to save their money in safety.

Taking this situation on board, Save the Children and the Bangladesh Bank (the central bank of Bangladesh) in 2014, launched a bank account for street and working children to be rolled out through commercial banks. The account needs to be opened under the guarantee of an NGO, enjoys a good compound interest rate, with an initial deposit of only BDT 10TK. More than 4000 children have opened this account to date.  

This year, to boost awareness amongst NGOs, banks and working children of the bank account, four divisional campaigns have been organized to orient people to the opportunity. In Rangpur on 17 August 2016, around 130 bankers received the orientation and took part in an open discussion with NGOs on how to better roll out the accounts and operationalize the arrangement between banks and NGOs to bring more working children on board.

”We have a plan to organize campaigns in all the divisions of Bangladesh and have a plan to produce new financial products for street and working children ” said Ashok Kumar Dey, Executive Director, Bangladesh Bank of Rangpur, while speaking as chief guest of the event.

Increasing the availability of the bank account for street and working children is only one element in the journey towards economic empowerment and financial inclusion of some of Bangladesh’s most vulnerable children. Save the Children is currently advocating with Bangladesh Bank to research how other financial products could be developed through the commercial banking sector to extend credit to young people to support their skills development or entrepreneurship.  Such access to credit is not only a driver of economic activity, but is also important for mitigating financial shocks relating to out of pocket expenditure on health, education or urgent domestic needs. Once credit has been extended, other innovative financial inclusion products can be further explored such as savings products, insurance (especially health insurance, education insurance) and housing loans tailored to the vulnerable group- in this case vulnerable and working children and youth. We are also increasingly promoting the use of financial literacy tools- supporting numeracy, book-keeping, knowledge of banks and banking channels- to help working and street children manage their money, and make the right financial choices.

We believe that this strategy of interventions, policy engagement and research and development around financial inclusion and financial literacy will support our ambition to ensure that Every Last Child- particularly those in urban slums and remote rural areas- is part of the economic success story of Bangladesh.