Cultivate a habit of saving

Finances play a significant role throughout a person's life. But money management skills are rarely taught at schools and colleges. As a result, most people struggle in making informed financial decisions.

You may feel that you have lost out because you never learned how to earn, save, and spend while you were a kid. But you have the opportunity to arm your children with basic personal finance knowledge, thanks to school banking.

In 2010, Bangladesh Bank initiated the programme to help students understand the importance of savings and develop a habit of savings to make them financially literate from an early age.

Currently, there are 60 banks in the country, and most of them are running school banking programmes. Although they didn't get much success in the first year, the adoption picked up in the following year.

Only 29,080 student accounts were opened in 2011. The number rose to 1.33 lakh in 2012. It now stands at 27.86 lakh, according to the latest data of the central bank.

A student aged six to 17 is eligible to open the account. One requires to submit the attested copies of the birth certificate, school identification card or testimonial from the head of educational institutions, and the latest fee payment slip.

The account-opening form will also carry the signature of the legal guardian of students. Students can open various saving schemes under the programme as well.

Educational institutions can collect tuition fees straight from the accounts.

Soumya Jabin Ahmed, a ninth-grader at Little Flower School in the capital's Pallabi, has an account with Islami Bank Bangladesh Ltd (IBBL).

She deposits funds whenever she gets any money in gifts from her father, mother, grandparents, and other relatives. She is learning to deal with banks.

"I deposit money to bear my educational expenses in the future. I don't want to take any money from my parents when I grow up," said Ahmed.

Her father, Darul Huda, said: "We want her to learn how to deal with banks because I can't give much time to my family. Her mother is not highly educated. So, we have opened the account such that she can help herself."

The head of the mechanical store at Standard Group said her daughter could easily maintain the account.

"We give money to her for tiffin and other expenses. If she can make any saving, that's good for all of us," he added.

Banks have come up with various offers, waiver of fees and charges, free internet banking facility, lower minimum balance requirement, and debit card availability at lower costs to bring more students under the school banking scheme.

Banks can also provide education insurance under the account such that they can get pecuniary assistance in need of time.

Dutch-Bangla Bank Ltd (DBBL) is one of the top lenders in school banking. Other banks with a significant presence in the segment include Islami Bank Bangladesh Ltd (IBBL), Bank Asia, Eastern Bank, United Commercial Bank, Trust Bank, Dhaka Bank, and Agrani Bank.

"We do not charge students any fee. But if they remain connected with DBBL from an early age, they may continue maintaining it when they enter the job market or become entrepreneurs after the completion of formal education," said Abul Kashem Mohammad Shirin, managing director of DBBL.

IBBL has been actively involved in school banking from the very beginning, said Mohammed Monirul Moula, managing director of the bank.

"We are exploring several avenues to reach the doorsteps of students to motivate them to open bank accounts and develop savings habits."

He said IBBL carries out financial literacy activities among the students in an area at least once a year.

The rate of opening accounts among urban students is higher compared to their peers in rural areas.

Moula said students in rural areas are lagging in availing the school banking service due to the non-availability of bank branches in the hinterland.

"This gap will narrow soon on the back of agent banking outlets."

About the prospect of school banking, Moula said there are about 3 crore students. Of them, 5 per cent are covered by school banking activities.

"Bringing a large part of them under the banking system will accelerate financial inclusion. Moreover, ensuring sound planning, up-to-date product development and improved services will open up new horizons for banks."

The central bank used to organise programmes, including campaigns, fairs and seminars at schools at the district level to raise awareness among students and guardians about the importance of school banking before the pandemic.

Educational institutions have been closed since March 2020 so the central bank has suspended all school banking activities, said Md Ruhul Amin, general manager of the financial inclusion department of the BB.

The central bank has put in place strict measures to prevent students from misusing the fund.

The monthly withdrawal limit has been fixed at Tk 2,000. The ceiling can be raised to Tk 5,000 upon the request of the guardian.