Subsidies to no-frills bank accounts fall by 43.81pc in Jan

Though low-income people are grappling with high inflation and rising cost of living, government subsidy allocations to their bank accounts dropped substantially in January compared to December last year.

The subsidies to the no-frills bank accounts -- typically maintained by marginalised people with an initial deposit of Tk 10, Tk 50 or Tk 100 -- dropped by over 43.81 per cent to Tk 1.38 billion in January from Tk 2.47 billion in December, according to Bangladesh Bank data.

Besides, the central bank data showed that the number of social safety net accounts marked a 0.01 per cent decline to reach 10.29 million in January compared to the previous month. In November last year, the government disbursed Tk 3.67 billion through such accounts.

However, deposits in no-frills accounts grew by 0.06 per cent to over Tk 71.45 billion in January whereas it was Tk 71.41 billion in December, the BB data said.

Dr. M. Masrur Reaz, chairman of Policy Exchange Bangladesh, explained that the reduction in subsidies could primarily be due to two reasons: the government's tight fiscal position and a review of the list of recipients.

Given the persistent inflation and the rising living cost, Dr. Reaz warned that such a reduction is particularly disadvantageous for low-income groups.

Underprivileged individuals receive government allowances through Special Accounts (Farmers Tk 10 Account, Hardcore Poor Account, Social Safety Net Account). This initiative plays a significant role in including people in financial activities.

The central bank data revealed that the number of special accounts belonging to rural people is more than that of people living in urban areas.

Subsidy distribution to the accounts of rural people saw a massive decline marking 61.77 per cent in January compared to the previous month, the BB data showed. The government's allocation to rural accounts stood at Tk 339.30 million in January whereas it reached Tk 886.50 million in December last year. On the other hand, the government allocated over Tk 1.46 billion to rural people's accounts in November last year.

The government's allocation to urban people's accounts stood at Tk 1.05 billion in January this year whereas it reached Tk 1.58 billion in December and over Tk 2.20 billion in November last year.

Dr Reaz said the government is likely prioritizing and reviewing the lists to identify the truly disadvantaged. He emphasised that any ineligible or improper recipients should be removed from the list.

He also stated that if the subsidy reduction is due to fiscal constraints, the government should consider reallocating its resources to ease the suffering of the poor.

sajibur@gmail.com