26.64 percent of rural population has no savings: InM survey

Institute for Inclusive Finance and Development (InM) has found in a survey that a large portion of the rural population of the country is unable to save as people’s income could not keep pace with the pressure of long-term inflation. According to the information of a survey, 26.64 percent of the people in rural areas have no formal or informal savings of any kind. That is, after meeting the necessary expenses they do not have the ability to save money for the future in their hands.

The private research organisation Institute for Inclusive Finance and Development (InM) has been conducting a survey for almost three years on the financial inclusion of the rural people of the country. The survey has been conducted by taking interviews of more than seven thousand people of 38 districts of the country under the ‘Comprehensive Rural Finance Study’ project of Bangladesh Bank. A picture of the savings situation of the rural population has emerged in this.

77 percent of the people who took part in the survey informed that they do not have extra money like savings in their hands after meeting the cost of living. Besides, 32 percent people have mentioned irregular income, 22 percent insufficient income and 15 percent repayment of liabilities as the main obstacles on the path of savings.

In the division-based calculation Rangpur is in the weakest position in terms of savings. 45.94 percent of the rural people of this division have no savings. In the type of savings also the dependence on microcredit providing institutions and private development organizations is more there than the formal financial system. Only 8.75 percent people in Rangpur deposit money in banks or financial institutions. In contrast 41.56 percent people save in these institutions or NGOs.

After Rangpur the rate of having no savings is the highest in Sylhet, 39.38 percent. This rate is 30.63 percent in Chattogram, 26.92 percent in Dhaka, 21.56 percent in Khulna, 19.4 percent in Rajshahi, 13.33 percent in Mymensingh and 10.63 percent in Barishal.

The increase in the cost of living has emerged as the biggest reason behind not being able to save. Although income has increased the surplus money is not remaining in the hands of the family as the prices of commodities and other necessary expenses have increased rapidly.

According to the information of Bangladesh Bureau of Statistics, the rate of wage growth was less than the average inflation for five consecutive financial years from 2021-22 to 2025-26. In the latest 2025-26 financial year wages have increased by 8.11 percent. In the same period the average inflation was 8.68 percent. That is, inflation was 0.57 percentage points higher than the wage growth.

As a result although income has increased a little the real purchasing power is not increasing. Rather many families are having to run the household by reducing necessary expenses or breaking previous savings.

According to the opinion of Executive Director of Centre for Policy Dialogue Dr Fahmida Khatun, inflation and the limited diversity of the rural economy have further intensified this crisis. The economy has gone through various types of pressure in the last few years. On one hand inflation has increased, on the other hand wages have not increased in that proportion. At the same time the pace of creating new employment was also not at the expected level.

She thinks many families are also having to break previous savings to meet the household expenses. Due to this the future financial security is becoming weaker further.

The impact of having no savings is not limited only to the current expenses. Dependence on loans increases if the family does not have its own money in situations like sudden illness, loss of work, stoppage of income or natural disasters. The interest and instalments of loans can create even bigger financial pressure on the family later.

For the same reason long-term plans like education of children, construction of house or preparation for retirement are also hindered.

Member of the survey conducting team and research fellow Dr Farhana Nargis said although the rural families know about the importance of savings they are facing various obstacles in joining the formal savings system. Geographical isolation, shortage of financial awareness, irregular income and dependence on the conventional informal savings system are making this problem complicated.

According to her, village-based financial awareness programmes can be run by involving local public representatives and private development organizations. At the same time it is necessary to increase the branches and sub-branches of banks in the marginal and backward areas.

Experts are saying that this problem will not be solved only by creating the habit of savings. It is difficult to save regularly if people’s income is not stable and adequate. Therefore new fields of employment have to be created along with creating opportunities to increase the income of rural people.

Dr Fahmida Khatun has emphasized the expansion of agro-product processing, small and cottage industries and other non-agricultural sectors along with agriculture. If the opportunity of new work can be created by training the youth in technical and digital skills the source of income in the rural economy will also increase.

The pressure of food expenses is also playing a big role in the decrease of savings of rural families. More than 60 percent families in Bangladesh spend at least half of their total income on food. According to an analysis of Bangladesh Bureau of Statistics of last year, 31.6 percent families in rural areas spend 65 percent or more of their income to buy food.

As a result the opportunity of savings is becoming limited as a large part of the income is going to meet the basic needs including food.

Altogether the picture of 26.64 percent of the rural population having no savings is not only a shortage of participation in the banking system, rather a reflection of the deep crisis of income, inflation, employment and cost of living. If people’s income does not increase keeping pace with inflation and a large part of the family’s income goes to basic expenses, it will be difficult to increase savings.

Therefore to increase the savings of rural people importance has to be given in a coordinated manner on increasing income, creating employment, controlling commodity prices, financial awareness and ensuring easily available financial services as well as increasing the diversity of the rural economy.