Financial interoperability necessary for dynamic economy: Atiur Rahman

Former Governor of the central bank Dr Atiur Rahman said that financial interoperability is necessary for maximizing the benefits of financial inclusion.

“This will infuse dynamism in the economy and growth will be further strengthened,” he said.

Dr Atiur also noted that due to the rolling out of services like Mobile Financial Service (MFS) and agent banking, financial inclusion has been simplified in the country, said a press release.

The former Bangladesh Bank Governor made the remark while addressing the inaugural session of a training programme titled “Financial Interoperability in Bangladesh: Challenges and Way Forward” as the chief guest.

The programme was organised jointly by the Policy Research Institute (PRI) and the Economic Reporters’ Forum (ERF) held at the ERF auditorium in the capital on Wednesday.

Presided over by ERF vice president and AFP Bureau Chief Shafiqul Alam, ERF general secretary SM Rashidul Islam gave the welcome address.

PRI Research Director Dr Abdur Razzaque, Dhaka University Economics Department Prof Dr Bazlul H Khondker and Bangladesh Bank executive director Debdulal Roy made deliberations in the technical sessions of the programme.

Financial interoperability is such a scope that could be utilized later on after exchanging information from one system to another system or making transactions.

It is like the scope for holding direct transaction between the clients of two separate MFS companies as well as the scope for transferring amount between the clients of two separate banks.

Currently, such kind of transaction is being called interconnectivity. Although the Bangladesh Bank launched interoperability among the MFS companies in October 2020, it was halted within hours of its launching. Since then, the service is yet to be restored.

Dr Atiur said financial interoperability is necessary to adapt to the evolving changes adding that measures should be taken so that the common people can make transactions in normal shops by scanning QR codes.

“There is also a demand for this, but the government will have to develop necessary infrastructures in this regard, which also requires investment. The Indian government has invested a lot in introducing such a system. Bangladesh also needs to do the same,” he added.

Dr Atiur opined that if the private companies make the investment instead of the government, then they would charge the clients against their will. “It will create doubt about the sustainability of the system. For this, there is a need to make proper allocations in the budget,”

He mentioned that interoperability infrastructures in the banking sector are also there in the country, but now there is a requirement for cross-border infrastructures so that the country’s people can withdraw the necessary amount from foreign banks through their cards while going abroad.

Dr Atiur said stimulus can be of two types -– one is cash and another one is to devise a simple mechanism so that people can be included in the new system for their convenience.

research director Dr MA Razzaque said that financial transactions in the country would be simple, competitive and innovative once financial interoperability is introduced.

“The more the innovative capacity of a country is, the higher it will gain economic growth,” he added.

Prof Bazlul H Khondker opined that digital financial services have made a positive impact on poverty alleviation and on personal savings.

Bangladesh Bank executive director Debdulal Roy said whatever transaction and exchange of information are taking place in the country’s financial sector is not interoperability, rather it is interconnection. “Now, the time has come for going towards interoperability. It will make transactions multidimensional and thus will boost the strength of the economy.”