The Government of Bangladesh has rolled out an effective and efficient G2P payment system that quickly transfers cash to Millions of Social Safety Net (SSN) beneficiaries who are not only poor and vulnerable but also financially illiterate. While the GoB has done its duty in launching the G2P platform, the financial service providers have entered the Rat Race to open accounts to Millions of such people, but who is responsible for developing the capabilities of Millions of poor to operate digital accounts and manage money?
Bangladesh has done a commendable job in digitizing Government payments to the poor and vulnerable. As part of the cross-cutting reforms in areas like Social Protection, Digital Bangladesh, e-Governance and Public Financial Management the system has largely mitigated the risk of manual accounting, recordkeeping, malpractices and long delays in transferring cash under the safety net schemes.
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The G2P payment system rolled out by the Government has successfully cracked many challenges. It now allows the poor and vulnerable to choose a convenient mode for receiving cash transfers viz. Bank, Mobile Financial Service (MFS); location of their choice such as Union / Village kiosks that are completely portable; timings and quantum of money to be seamlessly withdrawn and / or transferred at a low cost. Millions of poor beneficiaries of programme such maternity allowance, old age allowance, widow allowances, students receiving scholarships etc. now have a greater predictability of receiving their moneys. They do not have to travel long distances, spend money on travel or even waste time or lose wages for the day. Instead they can now pick up their cash at a nearby outlet of an MFS (Mobile Financial Services) or at any of the bank branch of their choice.
Besides empowering the poor and vulnerable to take informed decisions about picking up their cash allowances from the Government, it allows the Finance Ministry to plan and time their cash flows for the safety net programmes. The Treasury-compliant G2P system benefits the exchequer as the money is withdrawn from the Treasury only when it is due to be paid and not left idle for even one day. The system not only verifies each beneficiary through their NIDs eliminating ghost beneficiaries but also validates the beneficiaries to check double dipping so that they could not take benefits from more than one different scheme or department.
Number of Beneficiaries in 16 SSN Programmes Covered Under G2P: 35 Million
Number of Beneficiaries Covered Under G2P till March 2021: 10.5 Million
Finally, the G2P payment system fosters financial inclusivity in the country as millions of poor and vulnerable receive their cash transfers through a regulated payment outlet of Bank or MFS.However, in order to do so; they need to be fully knowledgeable about the operations of mobile financial services or banking operations. In other words, while financial inclusion may have been achieved to certain extent, it may have little meaning unless it is accompanied by financial literacy.
The term ‘Financial Literacy’ refers to a variety of important financial skills and concepts so as to effectively use various financial skills, including personal financial management, budgeting, and investing. However, the reference here is focused on the skills that poor and vulnerable must adapt and acclimatize with tools such as account opening, KYC compliance for digital payments, operational literacy for mobile wallets that can protect individuals from becoming victims of financial frauds, a type of crime that is becoming more common place—especially during the COVID-19 epidemic.
The Big Question is “Who would do it”? Lets analyze the concerned players in the game.
The Government: Both, the Line Ministries and the Finance Division are the major players in the G2P system and facilitate the payments through an electronic platform and MIS. While the Line Ministries are focused on beneficiary selection, verification and digitization of data, Finance Division has no bandwidth and mandate to do so.
The Payment Service Providers: Usually the Banks and mobile financial service providers are busy building their base and expanding their sales in terms of opening accounts and capturing the captive customers. While they officially claim that they do perform financial literacy, but they are always focused on marketing their products and services and not the ‘use’ factor for operating the accounts.
The Central Bank: Bangladesh Bank has a mandate to undertake financial literacy activities to disseminate information on financial services, products and other activities of the Central Bank and various banks to different sections of the society emphasizing on school-going students, women, poor people of rural and urban areas and senior citizens. However, there is no concrete plan or evidence if the same has penetrated at the grassroots level targeting the poor and vulnerable SSN beneficiaries.
Concerted and integrated efforts of all three players mentioned above are necessary to impart training to develop the capacities of these identified groups on simple but various aspects of opening and operating different financial accounts at the grassroots level. It may range from operational literacy for ‘end to end’ opening and operating accounts (Banks and MFS), knowledge on prevention of frauds such as through PIN, Cellular frauds, and other SMS, Voice, Clone phishing attempts etc. on one hand and to redress the grievances of the customers and to lodge the complaints received against Banks/FIs or its any official on the other hand. Since the Bangladesh Bank has the mandate to perform financial literacy and protect customer interests it should also start looking at the options of offering interoperability that may force the operators to improve upon customer services and focus on ease of operations instead of running for customer acquisition. The regulator must also ensure an inclusive involvement of all the players and may include the Civil Societies, NGOs and various Workers and Trade Unions spread across formal and informal sector as engines of learning. Local bodies such as Union Parishads and the kiosks of Union Service and Information Centers (USIC) of the a2i too can play a predominant role in creating awareness and capacity development.