School banking deposits in Bangladesh mark sudden jump in July-Sept

HM Murtuza | Published: 00:00, Nov 21,2019 | Updated: 21:05, Nov 21,2019

 
 

Deposits in the school banking accounts posted the highest quarterly growth — 20.95 per cent or Tk 313 crore — in the July-September period of the current fiscal year 2019-2020.

Bangladesh Bank officials could not confirm why the deposits in the accounts, opened by parents against their school going children, marked such a jump suddenly.

They said that tightening of savings certificates sales by introducing mandatory use of tax identification numbers and online system and increase in tax on the savings tools might have prompted many parents to deposit money in the school banking accounts that offered relatively higher interest rates.

They also said that the government’s anti-corruption drives from mid-September also might have an impact on the increase in deposits in the school banking accounts.

They, however, said that the steps taken by the central bank and the other banks to increase awareness among students about banking also had a positive impact.

The BB’s financial inclusion report released on Monday showed that deposits in the school banking accounts at the end of September this year increased to Tk 1,807.53 crore, the highest after nine years of the introduction of scheme in 2010, from Tk 1,494.40 crore three months ago.

But, the July-September deposit growth of Tk 313.13 is the highest since the banks started reporting to the BB the school banking data in March, 2015.

The previous highest deposit growth in school banking accounts was 11.12 per cent or Tk 125.5 crore in the July-September quarter of 2017.

Bankers said that the bank accounts of the school children were mainly maintained by their parents although the intention of the central bank’s move in creating the scope was to bring the students under financial services.

On November 2, 2010, the BB for the first time instructed banks to facilitate opening bank accounts of the school children with just Tk 100 as initial deposit.

An official of the central bank said that they had dealt with issues where parents were found keeping significant amount of money in their children’s bank accounts to avoid taxes.

He said that many of the banks were also offering relatively higher interest rates on deposits in the school banking accounts.

For instance, Trust Bank was offering additional one per cent interest for its Trust Porua, an special deposit product for the school going children, than the prevailing interest rate it offers for the savings account holders.

As per an AB Bank interest rate chart available on its web site, the bank was offering highest interest to the students.

The BB report also showed that the number of school banking accounts increased by 3.84 per cent to 20,72,597 at the end of September this year from 19,96,030 three months ago.

In terms of deposits, Dutch-Bangla Bank held the highest — Tk 477.49 crore— deposits  in the school banking accounts, followed by Eastern Bank Tk 262.93 crore, Islami Bank Bangladesh Tk 213.64 crore, Dhaka Bank Tk 87.53 crore and United Commercial Bank Tk 85.18 crore.

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