No alternative to practicing ethics in banking sector

As an economist, I have always strived to move beyond theoretical studies and actively engage in implementing development ideas at the grassroots level. Inclusive development has always been at the center of my research. The opportunity to make economic practice relevant for the welfare of the common people is rare. Nonetheless, I have always been eager to apply my research experiences if given a chance in policy-making. In the late 1990s, an opportunity arose when I served as the Chairman of Janata Bank. I had nearly two years to realize the slogan "Janata Bank for the People" and to open up financial transactions for farmers and small entrepreneurs under the initiative "Janata Bank in Every Home." I also focused on bringing banking services closer to the masses by introducing digital technology and internship programs to engage the youth. The way the CEO and all bankers at that time came forward to establish participatory and humane banking was unparalleled. As a result, the bank became the number one bank in Bangladesh by all indicators.

This experience somewhat encouraged me to be self-assured. I was waiting for a new opportunity to transform the financial sector. In 2009, unexpectedly, the opportunity came when I was appointed as the Governor of Bangladesh Bank. The immense power to change society and the economy that resides within the central bank is hard to understand from the outside. Once inside, I realized that not only financial policy-making, implementation, and supervision but also the ethical power of the central bank, if used properly, could truly bring about change. The best aspect of this institution is its relatively young and talented workforce. I quickly understood that if they were properly inspired, they could achieve the impossible. Hence, I swiftly moved to harness their boundless energy.

When I took over the responsibility of the central bank, the global economic crisis was ongoing. There was considerable concern about how to tackle this crisis. I felt strongly that our country's real economy—agriculture, industry, and small enterprises—needed special policy attention. I also thought that the success of the new government's vision of a "Digital Bangladesh" would largely depend on how we could channel money to the lower tiers of society. Digital technology could play a crucial role in this financial flow. By that time, mobile phones had reached every individual. Perhaps not everyone was using smartphones, but I learned that it was possible to use low-cost basic mobile phones for financial transactions by providing special codes. From this understanding, I launched the guidelines for mobile financial services in 2011. This led to the establishment of mobile financial service operators like Rocket and bKash. Later, several other operators emerged. Through these services, financial transactions became accessible to the remote population of the country.

Now, even a beggar or rickshaw puller who never dreamed of entering a bank can experience mobile banking. They can engage in financial transactions during emergencies. Small traders constantly benefit from this new stream of inclusive financial services. The central bank has unveiled new horizons of cashless digital financial services by introducing the Bangla QR (Quick Response) system for them. By partnering with banks, bKash has created new opportunities for inclusive finance, such as nano credit, remittance transactions, and providing savings facilities to millions of women. The role that this digital financial service played during the COVID-19 crisis in sustaining people's livelihoods is astonishing. The continuous availability of this financing has also provided millions of small women entrepreneurs with unprecedented opportunities to conduct business from home. The central bank and the banking sector undoubtedly deserve credit for this. Their efforts to open up financial transaction opportunities to the people at the base of society's pyramid should be applauded.

However, this does not mean that there are no irregularities and malpractices in the banking sector. Issues such as loan defaults, over-invoicing, under-invoicing, and money laundering have existed in the banking sector before and still do. To free the banking sector from these negative influences, a change in the sector's mindset was essential. This is why I took various initiatives from the central bank to change the mindset of the sector's human resources. The banking sector is not outside society and culture, particularly the part of culture that involves the enhancement of human qualities. Thus, I found it very relevant to focus on providing central bankers with opportunities to engage in intellectual and literary pursuits, theatrical activities, and sports. I took various initiatives to instill in them the spirit of the country and the Liberation War.

I focused on literary and cultural efforts to familiarize them with the positive qualities of Rabindranath Tagore and Bangabandhu Sheikh Mujibur Rahman. On the occasion of Rabindranath's 150th birth anniversary, Bangladesh Bank published an exquisite commemorative book titled "Rabindranath, the Eternal Companion of Bengalis." Commemorative coins and notes were also issued. Numerous initiatives were taken, such as increasing the collection of quality artwork for the central bank, building a currency museum, and incorporating images of Bangabandhu and the history and heritage of Bangladesh on currency notes. As a result, central bankers' attraction towards the finer arts gradually increased, and their empathy towards the deprived population of the country grew. They often began to engage with collective efforts in rural areas. I frequently toured rural areas with them. Noticeable changes in their collective behavior became evident.

Simultaneously, the central bankers' positive influence began to inspire other bankers. They started organizing various activities, including roadshows, to take banking services to rural areas for the benefit of ordinary people. Through this, they initiated the concept of humane banking. They began undertaking various social responsibility activities, such as providing banking facilities to school students, street children, sanitation workers, farmers, laborers, and women. By offering the opportunity to open bank accounts with just ten taka for farmers and the underprivileged, the central bank encouraged a new journey of humane banking.

in such a context, with the aim of establishing a corruption-free society and state system, Prime Minister Sheikh Hasina directed all offices in the country to practice integrity. The Bangladesh Bank was instructed to promote and implement integrity practices in the banking sector alongside other government offices. As the Governor of Bangladesh Bank, I took this matter very seriously and initiated campaigns and regulations to promote integrity within Bangladesh Bank and the banking sector as a whole. We had already expressed our commitment to creating humane banking. The call for integrity seemed very relevant to me because the sustainability and growth of the entire financial service sector, including banking, largely depend on how much trust customers place in the service providers.

I believed that a very effective way to strengthen customers' trust could be to formally introduce the practice of integrity in banks and financial service-providing institutions and gradually cultivate a culture of integrity there. We were determined to extend banking services to the grassroots level customers. However, there was a lot of fear, hesitation, and doubts about formal banking services among the people at the bottom of the social pyramid. I felt that by establishing a culture of integrity in the banking sector and expanding the scope of ethics, we could effectively convey the message to them and significantly reduce their fear and hesitation.

The author is an eminent economist, former Governor of Bangladesh Bank and Emeritus Professor at Dhaka University.