Chapter One Introduction

1.1 Introduction The govt. of Bangladesh has long implemented policies to reduce the urban bias of the financial system and expanded financial services into rural areas. Much of the effort during the past couple of decades was focused on expanding agricultural lending. Although we saw the no. of rural bank branches have gone down drastically and the rural advance to deposit ratio also shows trend of decline in recent times. This paper will review the trend in rural banking in the last twenty one years with an emphasis on deposit mobilization. Data on rural income, expansion of the rural banking network and cost of the alternative funds are presented as key determinants of rural deposits. The growth of deposits is an important determinant for the economic development of the country. However, this deposit is the outcome of increased amount of saving by the houshold.
The overall savings performance of Bangladesh is promising compared to the developed and most of the developing countries. In the year 2001, the gross domestic savings of Bangladesh in percentage of GDP was 26.8%, compared to Malaysias 35.9%, Thailands 31.5%, Indonesias 25%, Japans 26.8%, Indias 25% and Sri Lankas 17.5%. In 2008 the gross domestic savings of Bangladesh in percentage of GDP was reached to 35.9% when it was 37.8% for Malaysia, 34.1% for Thailand, 18.4% for Indonesia, 25.7% for Japan, 37.9% for India and 16.9% for Sri Lanka (source: www.tradingeconomics.com ). Bangladesh has improved in this period in terms of savings compared to the other countries. This increase in savings can be highly attributable to the increase awareness created by the Micro Finance Institutions (MFIs), commercial banks, co-operative societies and other specialized financing institutes. Although income is one of the major factors influencing the propensity to save, it is not the only factor influencing savings. Moreover, it is widely believed that all income groups can save from higher to lower. A study found that the poor with only Tk. 1500-1999 income per month saved 14% of their monthly income, even those with less than Tk. 500 monthly income saved 20%. In this regard, the quality of savings facilities for the common people may be considered as a very important factor for raising the rate of savings in a less developed country (LDC) like Bangladesh, where most of the people live under poverty (according to World Bank report in 2007, 40% of Bangladeshs population was poor (per capita consumption below the upper poverty line) as compared to 49 percent in 2000 where the extreme poor constitutes 25%. Along with the low GDP, GNP and low per capita income, we are lacking the savings habit, which to a significant extent depends upon the availability of the attractive and appropriate savings services for the different income groups.

In fact, banks, financial institutions, nonbanking financial institutions, non-government organizations & MFIs should be responsible to provide suitable and attractive savings services to the different income groups, including rural poor households. Greater savings mobilization can be the best way for the poor to improve their income level and standard of living. With the increased amount of savings the financial institutions will have more loanable fund available that will be channelized to the rural economy to create growth and development. Though, availability of resources for micro credit always remains a serious constraint, this is a fact that savings mobilization has not been considered a priority by the banking system and even to the significant extent by the semi-formal (NGOs etc.) and informal (money lenders etc.) sectors. A number of studies have pointed out that the poor people of Bangladesh have limited access to appropriate savings services. Most mic ro financial institutions (MFIs) offer only compulsory savings schemes in-group system, which are usually fixed deposit type savings services. To date, large MFIs of Bangladesh have not provided saver-friendly facilities and their massive branches have been mobilized by compulsory taxes and levies. Though, MFIs have slowly expanded the range of credit facilities, they are yet to provide savings services that the poor want and need while they are finding a good sources for capital for their credit operations.

1.2 Rationale of the Study There has been an increased importance among policymakers, academicians and international agencies towards mobilization of rural savings to improve the rural financial market and to strengthen the rural economy. Traditionally, efforts to mobilize savings were limited to urban areas because of the assumption that poor rural people cannot save. However, due to the success of the MFIs it is quite apparent that the propensity to save is high among the poors and their repayment rate is higher comparing with other kinds of borrowers. So with this increased importance for rural deposit mobilization an issue that is considerably argued is the factors that determine the rural & urban deposit mobilization and any significant similarities among the variables. There is quite a good no. of published research indicating that rural areas have savings that can be mobilized through financial intermediaries (e.g., Adams, 1978 ; Meyer, 1986; Von Pischke, 1978). There is even some evidence that the marginal propensity to save in rural areas is higher than in urban areas (Alamgir, 1974; Williamson, 1968). Although financial institutions in Bangladesh were induced to expand rural operations in the 1970s to supply agricultural credit, the recent emphasis on savings mobilization has resulted in a large volume of rural deposits (Khalily, Meyer, and Hushak; Mridha). In the joint research of Khalily & Meyer(June 1989) we found no. of factors that determine the demand for rural deposits in Bangladesh and their functional form. Little research has been conducted, however, to follow up the relative importance of those variables over times and their functional

relationships. Moreover, there is an increasing importance to identify the factors influencing the urban deposit mobilization and their functional relationship. These issues are very extensively articulated in this pape. A few recent studies provide some information and suggest areas for further research (Burkett and Vogel, 1987a; Srinivasan and Meyer; Vasquez). Most studies of demand for rural deposits in developing countries use a log-linear functional form (Burkett and Vogel, 1987a; Guerrero; Srinivasan and Meyer). This form is usually chosen, not because it is superior to non-linear forms, but because of statistical convenience and easier estimation of elasticities. If the incorrect functional form is chosen, however, the empirical results may be biased and inconsistent, and may lead to misspecification error (Kmenta; Murty and Murty; Zarembka). This paper shows that because of a lack of one-to-one correspondence between income, bank branches and deposits, the linear and log-linear forms are likely to be inappropriate. Studies of rural deposits often do not treat interest rates and bank branches very satisfactorily. First, many studies use cross-sectional data because time series data are unavailable to test for the impact of changes in interest rates and bank branches. Second, interest rates are frequently inflexible at least in nominal terms. Third, bank branches cannot be continuously expanded since deposit potential is limited in any given area, but some simulation technique must be used to determine how increased branches may stimulate deposits by lowering transaction costs. 1.3 Objectives of the Study Objectives of this research are To determine factors the affecting deposit mobilization To review composition of banking sector. To identify the trend in different factors affecting deposit mobilization To recommend necessary measures that should be adopted for effective mobilization of deposits. 1.4 Scope The financial system of Bangladesh includes an organized or institutionalized financial sector and an unorganized credit market. A significant fraction of credit transactions in Bangladesh still takes place in the informal sector where loan contracts are rarely explicitly recorded and enforced by formal legal institutions. Moreover, a large part of the savings is not coming into the financial sector due to the factors that influence the demand for rural deposits. However, the government of Bangladesh has taken a lot of steps to improve the growth in savings and deposit. The area is large enough and there are many scopes of studies in this field.

At present, different research is done on determinants or factors influencing the demand for rural deposits in Bangladesh. The present study covers not only the factors influencing the demand for rural deposits but also the factors influencing the demand for urban deposit. It also covers the trend in different variables that shows the current situation regarding deposit mobilization in Bangladesh. The study primarily outlines the important factors influencing the demand for rural & urban deposits in Bangladesh. The variables that will be used to conduct the study are: individuals personal income, rate of interest, individuals time preferences, fiscal policy, number of bank branches, rate of inflation, confidence in deposit instruments, accessibility in financial institutions, transaction cost. The study will cover the impact of these variables on deposit mobilization in the period 1991-2010. 1.5 Methodology Data mainly has collected from secondary sources. Annual report of Bangladesh Bank from 1990-91 to 2009-10 was used to make necessary analysis. Inflation rate, number of branches as a proxy of transaction cost, GDP as a proxy for income level, deposit rate-these variable have been used as most important factor that can affect the demand for deposit. Multiple regression analysis has been conducted to infer the determinant of deposit. Trend analysis also have been presented to see the over the year performance. 1.6 Limitation The limitations of this study are the following The period of study covered in this paper is not adequate for making an extensive analysis on deposit mobilization. There can be some other variables other than those mentioned in this study that can have impact on deposit mobilization. The time required to conduct such an extensive research was limited. Lack of experience.

Chapter Two Literature Review

2.1 Literature Review We have reviewed some literatures concerning the factors influencing the demand for deposits in Bangladesh. Not all the reviews are highly cited in this study because they are not explicitly related to demand for deposits in Bangladesh. The study of Khalily & Meyer (June, 1989) outlined the factors influencing the demand for rural deposits in Bangladesh. The objective of this study was to analyze the factors influencing demand for rural deposits in Bangladesh; to present and evaluate the effects of simulated interest rates and bank branches on rural deposits; to test for functional forms of demand for rural deposit using Box-Cox parametric transformation. Similar to other demand functions, the household demand for rural deposits function can be expressed as a function of income, price of deposits and price of other substitutes and complementary goods, respectively. The demand function for rural deposit can be redefined as a function of no. of rural bank branches and weighted interest rates, respectively, index of roads and vehicles and permanent and transitory income. The significant co-efficient for bank branches and the roads and vehicle index imply that an increase in branches and roads and vehicles increases demand for interest bearing deposits by reducing depositor transaction costs and by provide depositors with a secure place for savings. A significant interest rate coefficient suggests that rural depositors demand more deposits with an increase in interest rate. This implies that an increase in interest rates, all other things being equal, has an income effect. The permanent income hypothesis is supported since the transitory income coefficient is larger than the permanent income coefficient. This implies that rural households use deposits to offset income fluctuations and/ or to meet unexpected contingencies. The regression results obtained with the model satisfactorily explain the expected relationship between rural bank deposits and the several independent variables tested. From the study of Brarai & Hussain (Bangladesh Journal of Political Economy, Vol 17, No 2) we found the role that can be played by the selected banks and NGOs in poverty alleviation through savings mobilization. They suggested reduction of poverty has remained the most important national goal since the independence of Bangladesh. Though it was initially the sole responsibility of the government;

banks, FIs and NGOs got themselves involved in the effort beginning from the late 1970s. Now their role has emerged as to be vital in the entire pursuit of poverty alleviation. In the study the researchers pointed out that available statistics suggest a gradual reduction of poverty in Bangladesh over the years. Evidently, the participation of NGOs in health care, education, micro finance and other welfare activities has generated a kind of dynamism particularly in rural Bangladesh. But we follow a pattern of rise in inequality in the society in the 1980s and in the first part of 1990s. During the period, growth in urban inequality is more prominent than that of the rural area. Two factors might have played an important role in this regard. Along with the poverty alleviation activities of these institutions, an increasing use of modern farming methods may have led to an overall improvement of poverty position in the rural sector. On the other hand, negative fallouts of the globalisation measures might have affected the urban poverty. In the study of Narayan et. al (2006) has articulated important facts regarding the trend and pattern of poverty and the inequality that exists in the urban and rural sector of our country. They mentioned in the findings of their report, Bangladesh has experienced substantial poverty reduction during the last 15 years (between 1991-92 and 2005). The pace of poverty reduction has been especially rapid during 2000-2005 for both rural and urban areas of the country, by all indicators of poverty proportion of the population under the poverty line and the extreme poverty line, and the level and distribution of consumption among the poor. Rapid growth in consumption has been the primary underlying factor behind poverty reduction, and growth has occurred at similar rates for the poor and non-poor alike, which has also meant that relative inequality has remained almost unchanged for the country as a whole. Another major finding that came out in this paper is poverty reduction in Bangladesh in 200005 compares well with other South Asian countries in recent years, with an annual average rate of reduction second to only that for India due to strong growth, and in part due to no appreciable increase in inequality, with the result that GDP growth had a higher impact on poverty in Bangladesh than for all countries in the region with the exception of Nepal. In the working paper of Blanco & Meyer (October 1988) the researchers analyzed the important variables related to the rural deposit mobilization in the Philippines. The study reveals that the govt. of Philippines has long implemented policies to reduce the urban bias of the financial system and expanded financial services into the rural areas. Much of the effort was focused on expanding agricultural lending. The performance of the Banking system in mobilizing rural deposits, however, is a better indication of the extent to which viable banking services have penetrated rural areas. The Paper reviews trends in rural banking during the period of 1977-1986 with an emphasis on deposit mobilization. Data on rural income,

expansion of rural banking network and costs of alternative funds are presented as key determinants of rural deposits. The results show a steady increase in rural deposits throughout the period, but the proportion of rural to urban deposits reveals only a small increase. Rural loans exceeded rural deposits through 1983 but, due to a decline in rural lending, beginning in 1984 deposits exceeded loans indicating that the urban to rural flow of funds has been reversed. The urban deposit to GDP ratio at that time in the Philippines was found to be ten times then the rural ratio suggesting a substantial scope for rural deposit mobilization. Surprisingly during the post 1981 decline in GDP per capita, the urban deposit to GDP ratio fell while the rural ratio remained constant and even rose in 1986. This suggests that rural depositors in the Philippines held a larger share of assets in a financial form during the recessionary period of the 1980s than during the growth period of 1970s. A rigorous analytical framework had been presented in the study conducted by Elser et. al (1999) suggests the neglect of saving in microfinance and endeavored to establish a conceptual framework for the mobilization of micro savings. According to the study a lack of savings facilities created problems at three levels: (i) the level of the individual; (ii) the level of the financial institution; and (iii) the level of the national economy. From a saver's point of view, the key motives to use deposit facilities are the safety and security of their savings, easy and immediate access, and a positive real return. It is commonly agreed that poor people have a significant capacity to save, proven by the existence of various informal savings mechanisms found throughout the world and by a few recent empirical studies. It is further understood that many people, particularly in rural households, are obliged to save during certain times of the year, such as harvest, in order to compensate for periods when their income is drastically reduced, such as the dry season. Finally, it is widely accepted that though only a certain number of people will need credit at any given time, virtually all people will need to save at any given time. We can therefore conclude that poor people will deposit their savings in a financial institution if an appropriate institutional structure and appropriate savings products exist to the depositor's mix of savings needs.

From the study of Meyer & Esquerra (October, 1984) about determinants of deposit mobilization experiences and issues in selected Asian countries. The purpose of this paper is to present some information about rural deposit mobilization experience and issues in selected Asian countries. Bangladesh, Indonesia, the Philippines and Thailand have a mixed pattern of private deposit mobilization in their banking systems. Banks obtain funds in variety of ways from governments, households and domestic and foreign firms. The major financial institutions in Bangladesh, Indonesia, the Philippines and Thailand have not been very successful in mobilizing rural deposits. Fragmentary data suggest, however, that a large

untapped deposit potential exists. Institutions heavily engaged in agricultural lending have few incentives to mobilize rural deposits but the recent expansion in rural banking in all four countries is also helpful by making deposit facilities more accessible. The challenge now is to identify how institutions can efficiently mobilize large numbers of small deposits so the effective return is high for savers and bank administrative costs are reduced to manageable levels. The study of Khalily et.al (1987) about deposit mobilization in Bangladesh where showed that saving mobilization efforts in LDCs have often been confined in urban areas, primarily because of neo-classical assumption that rural people have low income and cannot save. Recent literature amply documents that rural areas have savings that can be mobilized through rural financial markets. The marginal propensities in rural areas are higher than in urban areas. During the past decade, Bangladesh followed a supply-leading approach to rural finance. Rural loans increased about 87 times from 1975 to 1985 while rural deposits increased about 20 times. Publications of the Bangladesh Bank (Central Bank) suggest there has been no specific rural deposit mobilization policy nor any analysis into the causes of the relatively slow growth of rural deposits compared to loans. Since the introduction of the McKinnon and Shaw theoretical models, researchers have largely concentrated on two variables interest rates and banking facilities -in the analysis of financial development. Five major factors are found in the literature of deposit determination functions--income, interest rate, access to banking facilities, transaction costs and yields on alternate investments. In addition to these factors some important variables such as quality of services provided to depositors, the awareness of banking services by public and perceptions of the safety of deposits are largely ignored in empirical research. Income is expected to have a positive effect on deposits.

In the working paper of Gonzalez and Meyer (June, 2009) about microfinance and small deposit mobilization where found that two primary arguments can be made for voluntary deposit mobilization among microfinance institutions (MFIs). First, deposit mobilization is an alternative source of funds that was neglected by most MFIs until a few years ago. From this perspective, voluntary deposit mobilization helps MFIs achieve independence from donors and investors, which is particularly important in periods of liquidity constraints. Second, poor households benefit greatly from having access to deposit mechanisms, and the benefits can be even greater than those derived from access to credit. On the funding side, the industry has demonstrated great progress, with savings mobilization now representing more than half of the assets reported by deposit mobilizing MFIs, even though this share seems to have decreased a bit during the last three years. The main question explored by this paper is whether
deposit mobilizing MFIs are really mobilizing small or large deposits. The analysis is based on the

comparison of the ratio of average deposits per depositor to average loans per borrowers for different countries. The main question explored in this paper is whether deposit mobilizing MFIs serve small or large depositors. The low ratio found for Average Deposits per Depositor to Average Loans per Borrower suggests that most deposit mobilizing MFIs are reaching small depositors, perhaps even smaller than their borrowers. This means that they have been able to design and mobilize voluntary deposits with instruments that match the needs of individuals as poor or even poorer than their borrowers. However, the presence of many large outliers also suggests that not all MFIs have succeeded at micro deposit mobilization.

From the study of Khalily (August, 1987) about the determinants in rural deposit in Bangladesh where focused on a simultaneous relationship between interest-bearing deposits and rural bank branch density exists in Bangladesh. Permanent income directly affects bank density and indirectly affects deposits. Bank density availability of roads and vehicles affects depositor behavior through their effect on transaction costs. Transitory income and literacy also positively affect deposits. The higher the income of rural household, the greater will be their ability to demand interest-bearing deposits because of the variability of rural household income. The "permanent income" hypothesis is expected to better explain the influence of income on interest-bearing deposits than does the "absolute Income" hypothesis. The empirical validity of the "permanent income hypothesis has been established in the literature on savings. The study supported other research which has concluded that transaction costs are important in explaining rural depositor behavior. The factors that affect the number and location of rural bank branches can be expected to have a significant Impact on rural deposit mobilization in Bangladesh. Bank density and geographic distribution in turn affects transaction costs.

Chapter Three Research Design

3.1 Data This study is based on secondary data. The data were collected from Bangladesh Bank. Information was collected from annual report of Bangladesh Bank from 1990-91 to 2009-10. This database contains macroeconomic view of Bangladesh. Here we have included data of 21 years interest rate, inflation rate, GDP, deposit etc. So, here total number of observations is 21. Here, 21 years of data have been chosen based on the data availability. 3.2 Model Specification The output of the data runs through Multiple Regression Model. The reason behind using this model is that there are multiple variable that can affect our dependent variable. The P>|t| value determines which explanatory variables are significant at 5% significance level. It provides a good number of significant variables to be related to the deposit. 3.3 Dependent Variables Deposit How much depositor will deposit or whether depositors deposit or not depend on many factors. So, we used deposit amount as dependent variable because depending on some attributes such as income level, interest rate, inflation, transaction cost etc depositors decide to deposit. So, whether depositors will deposit or not depends on some factors. Hypothesis Studies related deposit mobilization is limited and most of the studies are based on developed country. The firm-specific hypotheses examined in this paper are presented in appendix. 3.4 Independent Variables Income Level-GDP (Hypothesis 1) H1: Deposit is positively related to the income level. We have taken GDP as proxy for the income level of individual. According to economic theory, the sign of income (or GDP) is expected to positive i.e. when there value expected to positive, bank deposits are supposed to increase.

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Transaction Cost-BB (Hypothesis 2) H2: Transaction cost is negatively related to the deposit. We measure transaction cost as number of bank branches. The more number of bank branches will be there the lower will be the cost so the availability of bank branches is positively related with deposit. Interest Rate- iD (Hypothesis 3) H3: Interest rate is positively related with deposit. The higher will be the interest rate the greater is probability that higher amount will be deposited by the depositor. So, we expect interest rate is positively related with deposit. Inflation- in (Hypothesis 4) H4: Inflation is negatively related to deposit. The higher will be the inflation the lower will be the deposit amount because it encourages people to consume more now. So we expect inflation in negatively related with deposit. So,
+ + + .. (1) Where, = Total deposits mobilized by banks = Gross Domestic Product (GDP) at constant prices = Number of bank branches = Average rate of interest in scheduled banks = Rate on Inflation as measured CPI . (2) . (3)

We have divided the equation into two parts to show the impact of both rural and urban.

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Chapter Four Composition of Banking Sector of Bangladesh

The commercial banking system dominates Bangladesh's financial sector. Bangladesh Bank is the Central Bank of Bangladesh and the chief regulatory authority in the sector. The banking system is composed of: Types of Bank State-owned commercial Banks Specialized development Banks Private commercial Banks Foreign commercial Banks Number 04 05 30 09

The Nobel-prize winning Grameen Bank is a specialized micro-finance institution, which revolutionized the concept of micro-credit and contributed greatly towards poverty reduction and the empowerment of women in Bangladesh. 4.1 Central Bank: Bangladesh Bank

Pursuant to Bangladesh Bank Order, 1972 the Government of Bangladesh reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of the country, and named it Bangladesh Bank with retrospective effect from 16 December 1971. 4.2 State-owned Commercial Banks The banking system of Bangladesh is dominated by the 4 Nationalized Commercial Banks In which 3 are totally controlled by government and 1 (Rupali Bank) bank is controlled by both government and private sector. , which together controlled more than 54% of deposits and operated 3388 branches (54% of the total) as of December 31, 2004. The nationalized commercial banks are: Nationalized Commercial Bank of Bangladesh:

Sonali Bank Agrani Bank Rupali Bank Janata Bank

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4.3 Private Commercial Banks Private Banks are the highest growth sector due to the dismal performances of government banks (above). They tend to offer better service and products. United Commercial Bank Limited Mutual Trust Bank Limited BRAC Bank Limited Eastern Bank Limited Dutch Bangla Bank Limited Dhaka Bank Limited Islami Bank Bangladesh Ltd Uttara Bank Limited Pubali Bank Limited IFIC Bank Limited NCC Bank Limited Prime Bank Limited Southeast Bank Limited Al-Arafah Islami Bank Limited Social Islami Bank Limited Standard Bank Limited One Bank Limited Exim Bank Limited Bangladesh Commerce Bank Limited First Security Islami Bank Limited The Premier Bank Limited Bank Asia Limited Trust Bank Limited Shahjalal Islami Bank Limited Jamuna Bank Limited ICB Islami Bank

National Bank Limited The City Bank Limited

AB Bank Marcantile Bank Limited

4.4 Foreign Commercial Banks

Citibank HSBC Standard Chartered Bank Commercial Bank of Ceylon State Bank of India Habib Bank Limited National Bank of Pakistan Woori Bank Bank Alfalah

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4.5 Specialized Development Banks Out of the specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit needs of the agricultural sector while the other two ( Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangtha (BSRS) are for extending term loans to the industrial sector. The Specialized banks are:

Bangladesh Krishi Bank Karmashangsthan Bank Rajshahi Krishi Unnayan Bank Progoti Co-operative Landmortgage Bank Limited (Progoti BanK) Grameen Bank The Dhaka Mercantile Co-operative Bank Limited (DMCBL) Bangladesh Development Bank Ltd Bangladesh Somobay Bank Limited(Cooperative Bank) Ansar VDP Unnyan Bank BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited)

4.6 Rural Banking: A vast majority of the Bangladeshis live in the rural areas and their main source of income is agriculture and agro-business. Janata Bank Limited has opened branches in rural areas to cater to the banking needs of rural people. Apart from accepting deposits from the rich and moderately well-off villagers, Janata Bank Limited encourages the poor people to make small savings through different mechanisms. So far lending in rural areas is concerned; Janata Bank Limited has been financing agricultural production and poverty alleviation programs since 1977. It also lends to the poor landless so that they can make a living. The average loan size is about Taka 20,000.00 (around US$ 285). The rural banking sector of Bangladesh had originated from the former East Pakistan. At that time, the Agricultural Development Bank and Cooperative Banks provided mainly some agricultural credit facilities. Some commercial banks established their branches in the important rural trade centers. After the emergence of independent Bangladesh, government had taken up some agricultural projects to finance. To this end and to establish socialistic pattern of economy in the country, nationalization of commercial banks was one of the bold steps.

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Even after the change of ownership the banks did not change their attitude and most of them were still hesitating to extent their services to the farmers and other producers in the rural areas. To overcome this situation a decision was taken by the Bangladesh Bank to induce the NCBs to participate in agricultural credit towards the end of 1973. Major rural credit program:

1. 2. 3. (a)

Special Agricultural Credit program/ short term crop production loan Horticulture development (cultivation of banana, betel leaf, pineapple etc.) Fish/ Shrimp production:Fishery loan program (b) Credit program for fish cultivator selected by Directorate of Fisheries (c) Shrimp culture credit program Irrigation and agricultural equipment

4.

Objectives: To increase agricultural production and improvement its quality. To gear up socio-economic activities among rural people. To create employment opportunities among rural people through providing economic support. Creating confidence among the beneficiaries on institutional credit and their access to improved production practices / activities. To build up asset by creating saving habit among the rural population. Poverty reduction.

Rural Banking Development by the Government: To improve the rural banking services in the country the Bangladesh Bank had made provision for commercial banks operating in the rural Bangladesh to advance rural loans to a fixed percentage of their total advances. These banks provide both agricultural and non-agricultural credits. Moreover Grameen Bank -formally established in October, 1983 -provides banking facilities to the rural landless poor people with a view to help rural poor to carry on entrepreneurial activities for maintaining their livelihood. Furthermore, to finance rural small and cottage industries Bank of Small Industries and Commerce or (BASIC) was created in August 2, 1989. However, the present rural banking structure includes:

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Bangladesh Samabaya Bank Limited including Cooperative Societies under the Ministry of LGRD; Bangladesh Krishi Bank under the ministry Of Finance; Rajshahi Krishi Unnayan Bank (RAKUB) under the ministry of Finance; Public sector commercial banks under the Ministry of Finance and Private sector commercial banks; Grameen Bank under the ministry of Finance; Bank of Small Industries and Commerce under private sectors.

All the above-mentioned banks operating in rural Bangladesh are subject to follow certain principles and guidelines as framed by Bangladesh Bank. These guidelines include: Special reference to finance particular types of projects Opening of a Separate Cell in the head office of each commercial bank for the purpose of financing small and cottage industries, as far as possible Maintaining a separate Desk in the district level of each commercial ban Formation of a coordination committee in each district with the concerned bank, BSCIC and National Association for Small Industries of Bangladesh under the leadership of D.C. for effective loans recovery Giving special preferences to women entrepreneurs Relaxing the terms of collateral security for skilled and trained entrepreneurs, etc.

Various empirical evidences observe that the above mentioned objectives of the banks operating in rural areas could not be achieved due to a number of problems.

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Chapter Five Factors Affecting the Deposit Mobilization

For the economic development of a country like Bangladesh, the most important task is to collect all sorts of deposits or savings from surplus units and distribute them to deficit units effectively and efficiently to ensure greater money circulation. The task is easier in urban areas as bank branches are available and people are more familiar to bank arrangements. But having more than 90% rural area in relation to urban area, the most important function of banking sector should be collecting the savings from the rural people which is of vital importance to make funds adequate for the purpose. But historical data showed that the amount of rural savings is lower in relation to urban savings. The main causes of less deposits in rural areas rural people are poor and living below subsistence level, they are illiterate and not familiar with complex and sophisticated banking systems, rural people are reluctant to save in banks as the psychology of the rural people is that banks may not return their deposits, the rural people are more interested in purchasing land, gold and giving loans at high interest rate, lower interest rate on deposit but comparatively higher rate of interest on loan also contribute to lower savings, the communication of rural area is not developed for which the people become less interested in going to bank branches for depositing their surplus money etc There are several factors affecting the growth of bank deposits in any country. The amount of bank deposit is determined by the interaction of the supply of and the demand for deposit by the public. The supply of deposits by the banking system is generally determined by the components of reserve money. The demand for bank deposits is determined by factors like income, rate of interest, price of substitute goods, and sometimes by some variables like network of bank branches etc. and improvement in banking services. In addition to these traditional factors, some structural factors like financial innovation, literacy rate etc. also affect the demand for bank deposit. The demand for bank deposits is positively related to the return on itself and negatively to the return on assets considered to be its substitutes. Degree of this influence depends on the portfolio choice of deposit holders. Households and others may prefer to hold bank deposit if other financial assets are not available or not considered to be appropriate substitutes. On the other hand, if preference of the households for liquid and secured financial assets is strong, their holdings of bank deposits may not be much influenced by changes in the interest rates offered on alternative financial assets.

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Individuals Personal Income: The higher the income of the people, the greater will be the ability to acquire temporary surpluses which can be deposited with the banks. Again, the higher the income levels, the greater will be the need to hold financial assets as a means of payments. Though rich people usually have more to save, yet there is growing evidence that poor peoples capacity to save is much more than was commonly recognized. This is because that poor peoples savings has prompted several micro and small enterprise programs, to incorporate savings mobilization as an essential component into program design. Income is also related to a variety of factors such as urbanization and education which exert their influence on the growth of deposits. Rate of Interest: Interest rates have two impacts. In one hand, high interest rate encourages higher savings to earn more on saved amount. On the other hand higher interest rate discourages investors to take loan, as a result their income decrease so as to savings. To the extent that household savings is a function of the investment intentions of households, higher rates of interest might, by discouraging investments discourage savings. Most of the savings found that the rate of interest significantly and positively influenced the per capita level of savings. Thus, higher rate of interest generated higher real savings. Individuals Time Preferences: A person will forego present consumption only if he is paid a premium equal to or greater than his marginal rate of time preference. A higher rate of interest will encourage an individual to forego some of his present consumption. In other words, the higher the rate of interest, the tendency might be towards higher savings. When the rate of interest changes, there is always a possibility of substitution between one type of deposit with another. For example, when the rates of interest on fixed deposits increase, there is some probability of a shift from current/savings deposits to fixed deposits and vice-versa. This means that any type of deposit should respond positively to a rise on its rate and negatively to interest rate on alternative assets. Fiscal Policy: Fiscal policy in general not only affects the individuals capacity to save, but also exerts a direct influence on his decisions to save and in what form to save. For example, the imposition of tax/surcharge on the amount of deposits exceeding a certain amount or at a certain rate on the income earned on deposits might hamper the growth of overall deposits in the system.

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Number of Bank Branches: The availability of banking services in a country can be measured by the total number of bank branches. The growth of deposits will be larger if there are more bank branches in the country. Conveniently located bank branches can reduce transaction costs significantly and thereby increases the net return earned on deposits. The expansion of bank branches in the country was quite fast during July, 1974 to June 1981 with the number of bank branches increasing from 1521 to 4376 over the period, Thereafter, attention was paid more to consolidating branches already opened than to opening new branches. The total number of bank branches in the country stood at 5539 at the end of June, 1990 and 7246 at the end of June, 2010. In an effort towards mobilizing financial savings in the rural areas more attention was paid to opening branches in the rural areas than to opening branches in the urban areas. The scheduled commercial banks were required to open two rural branches for every urban branch. As a result expansion of bank branches in the rural areas was much faster than the overall expansion in bank branches. The number of bank branches in the rural areas increased from 694 (or 46% of total bank branches) at the end of June, 1974 to 2457 (or 64%) at the end of June, 1980 and further to 3626 at the end of December, 1999. In 2008 approximately 58% of total bank branches were located in rural areas and most of them were branches of stateowned commercial banks and specialized banks. Rate of Inflation: The rate of inflation and the inflation expectations might have some influence on the growth of overall deposits with the banking system. It is generally assumed that the growth of total deposits is to be negatively related with inflationary expectation. As the rate of inflation increases, people will be tempted to divert their savings from bank deposits to any other kind of tangible assets because these assets will cost more in future to buy. Confidence in Deposit Instruments: People are normally very cautious in investing or depositing their money. Unless and until people are assured of the reliability about the services offered by the financial institutions, increase in aggregate savings and its mobilization through financial intermediaries can never be easy. Banking system can play very important role in this regard as banks usually can gain peoples confidence easily than other financial institutions.

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Accessibility in Financial Institutions: The accessibility of financial institutions is a very important in mobilizing savings. When bank branches are located near market places whether urban or rural areas and operate at convenient hours, savings will be attracted because it saves peoples money, time and reduce risks of handling cash currency. The higher the bank density and extensive branch network, the greater will be the potential for mobilizing savings. Transaction Cost: Transaction cost of holding deposits is important because high transaction cost reduce the net return received by depositors. Transaction cost evolves from the distance of bank branches, data processing time and cost, etc. Transaction cost of people decrease with the increase of bank branches where it increases for banks. But banks can make-up the cost from greater earnings with more branches. Other Factors Influencing the Rate of Deposits: There are a number of factors other than the above have direct and indirect influences on the rate of savings of an individual. Main of these is the age of a person. The older people tend to save more than the younger ones who loves to take risks. Other factors include the family background, religion, demographic background, etc. GOVERNMENTS POLICIES : In a country like ours the central bank (Bangladesh Bank) has the total control over the financial operations of the nationalized banks. This governmental intervention affects the banks performance and capability. The Bangladesh Bank formulates monetary and banking policies under the guidance and direction. The policies that affect the mobilization of deposits are: Interest rate policy:

Before 1989, deposit and lending rates were fixed by Bangladesh Bank. Interest rates were revised 3 times in 1974, 1976 and 1980. The revision of interest rate structure in 1980 is more significant than the previous revisions. The range of increase is between 2.5% to 5.75%. However, changes in interest rate structure did not keep pace with inflation. The real weighted interest rate paid on interest bearing deposits was negative every year from 1976 through 1984 with the exception of 1976, 1982 and 1983. In those times, depositors were penalized for savings with banks because the purchasing power of deposits plus interest was less than the purchasing power if they did not save.

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Refinancing Policy:

Several studies proved that the availability of cheap rediscount funds limits the efforts of the banks to mobilize savings. In Bangladesh, prior to 1989, the central bank had a set of preferential refinancing rates to direct credit to "priority sectors". The rationale behind refinancing policy was to provide the commercial banks with flexibility in absorption of losses. On the 24th of December, 1989 the Bangladesh Bank notified all the banks about the cancellation of the refinancing policy. The banking system of Bangladesh was the main beneficiary of the abundant rediscount funds. Prior to 1983, refinancing facilities to banks varied 30% and 100% of loans made at an interest rate of 6% which was half of the normal lending rate of 12% and 2% point below the bank rate. This policy was later revised to reduce bank dependency on refinancing. In the subsequent years the rates of refinancing were from 2% to 5.5% below the bank rate. The refinancing was provided in three sectors namely agriculture, small cottage industry and export. As a natural consequence of cancellation of refinancing policy is the commercial banks now have to mobilize saving to ensure regular supply of loanable funds and ensures financial sustainability. Rural Branching Policy:

Initially the Bangladesh Bank considered two major factors in granting licenses; deposit potential and degree of competitiveness. Later, in 1977-78, to reduce the disparity between the number of rural and urban branches of the same banks so a two - for - one was introduced. According to this policy, a bank had to open two rural branches for each new urban branch. However, in 1981 this two for one policy was suspended. Currently, bank has to maintain paid up capital of 20 crore and authorized capital of 40 crore to open a new branch.

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Chapter Six Trend Analysis

Deposits Mobilized by Bank Branches: Deposits are largely mobilized by the NCBs because of their wide network and their predominance in the total banking sector. Total deposit mobilized by 5539 bank branches of all sorts of banks in 1990 was 22780 core taka and the amount increased in to 278250 core taka in 2010 by 7246 bank branches countrywide. The average deposit mobilization in this period was 96464.9 core.

Deposit Mobilization
300000 250000 200000 150000 100000 50000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Amount core in tk.

Deposit Deposit (Urban) Deposit (Rural)

Deposit mobilized by 1918 urban bank branches in 1990 was 18132.88 core taka which rose to 234036.08 core taka in 2010 by 3016 bank branches in urban area. The average deposit mobilized in this period was 80353.10 core taka. The rural deposit in 1990 was only 4738.24 core taka and it increased to 42377.48 core taka in 2010. The average deposit was 15962.38 core taka. Gross Domestic Production: Gross Domestic Production (GDP) is used here as a proxy of peoples income as income data is not available. GDP of Bangladesh has increased constantly for last couple of years. The graph given below admits this. In 1990 the GDP was 51888.2 core taka and the amount is 360047 core taka for the year 2010. The average GDP for this period was 179314.9 core taka.

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GDP
400,000.0 350,000.0 Amount core in tk. 300,000.0 250,000.0 200,000.0 150,000.0 100,000.0 50,000.0 GDP

2002

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2003

2004

2005

2006

2007

2008

2009

Comparison of growth rate between GDP & Deposit: The growth rate of GDP & deposit is an important factors. The growth rate that is given below shown from 1990 to 2010. In 1991 the growth rate of deposit was 8.21% and the rate is 23.16% for the year 2010. The average growth rate of deposit for this period was 13.46%. In 1991 the growth rate of GDP was 3.34% and the rate is 5.83% for the year 2010. The average growth rate of GDP for this period was 5.42% .

Growth rate of GDP & Deposit

25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Deposit growth rate GDP Growth rate

1991

1998

1992

1993

1994

1995

1996

1997

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

-5.00%

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2010

2010

Bank Branches: Number of bank branches is a very important variable for deposit mobilization. The number of bank branches in Bangladesh has been increasing indicating the economic opportunity and development. The total number of bank branches of all sorts was 5539 in 1990 and it increased into 7246 in 2010. The average growth of last 21 years was 1.36%.
8000 7000 In absolute number 6000 5000 4000 3000 2000 1000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Bank Branches Bank Branches (Urban) Bank Branches (Rural)

The number or urban and rural bank branches also increased. Most of the rural bank branches were set by nationalized commercial banks and specialized banks. Private commercial banks have few rural branches and foreign commercial banks have no rural bank branches. The amount of urban bank branches in 1990 was 1918 and in 2010 it rose to 3016. The growth rate was almost 2.32%. On the other hand the number of rural bank branches in total in 1990 was 3621 and it increased to 4230 in 2010. The growth rate was almost .79%. Interest Rate: Interest rate influences the amount of savings directly as it represent the amount of income to the investors. It is assumed and proved by several studies that if interest rate on deposit increases, the amount of savings also increases as people sacrifice some of their consumption now to enjoy in future. But this is not in case of Bangladesh. Here we see that for the last 21 years starting form 1990 and ended in 2010, The average growth rate of deposit interest rate was only .25%. But the most surprising thing is that the amount of deposit increased. It implies that the amount of deposit is not only influenced by interest, but also by some other quantitative and qualitative factors.

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Interest Rate
9 8 7 6 In % 5 4 3 2 1 0 Interest Rate

1996

1997

1990

1991

1992

1993

1994

1995

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

The interest rate was 6.5% in 1990. In 2010 it was 6.01%. In the mean time interest rate increased and decreased in different years. The average interest rate in this time period was 6.56%. Comparison between deposit & lending rate: Banks are too much concern about the difference between deposit rat and lending rate which is called spread. The lending rate was 7% in 1990. In 2010 it was 11.2%. In the mean time lending rate increased and decreased in different years. The average lending rate in this time period was 9.56%. During this period the growth rate of lending rate was 3.30%.
14 12 10 In % 8 6 4 2 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Deposit Rate Lending rate

The deposit rate was 6.5% in 1990. In 2010 it was 6.01%. In the mean time interest rate increased and decreased in different years. The average interest rate in this time period was 6.56%. During this period the growth rate of deposit rate was .25%.

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2010

Inflation Rate: If inflation rate is more than the rate of interest, than the effective rate of interest will be negative. In 1990 the inflation rate measured by Consumer Price Index (CPI) was only 8% but within 21 years it increased to 7.31% in 2010. The average inflation was 5.94% and the average growth rate was 11%.
12% 10% 8% In % 6% 4% 2% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Inflation Rate Inflation Rate (Urban) Inflation Rate (Rural)

The rate of inflation in urban areas in 1990 was 7.2% and in 2010 it was 7.7%. The average rate was 5.50% and the average growth rate was 18%. For the same time, the rate of inflation in rural areas was 7% in 1990 and in 2010 it was 7.16%. The average rate of inflation was 5.69% in rural areas and the average growth rate was 12%. Comparison between agricultural & industrial loan: Agricultural loan is basically provided to the rural economy. On the other hand industrial loan is basically provided to the commercial area.
30000 Amount core in tk. 25000 20000 15000 10000 5000 0 2001200220032004200520062007200820092010 Actual disbursement of industrialloan Recovery of industrial loan Actual disbursement of agriculturalloan Recovery of agricultural loan

The actual disbursement of industrial loan was 3057 core in 2001 and it was 25870 core in 2010. The average disbursement during this period was 11393.4 core. The recovery of agricultural loan was 2795 core in 2001 and it was 18980 core in 2010. The average recovery during this period was 8805.3 core. The percentage of agricultural loan collection during this period was 77.28%.

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Chapter Seven Analysis of Outcome

Analysis of Outcome To find out the extent of influence of independent factors (GDP, Bank Branches, interest, inflation) in determining the amount of dependent variable( Amount of deposit), regression analysis has been done. Three regression analyses have been done. First one deals with overall deposit condition in relation to independent factors where the later two deals with the amount of urban and rural deposit. Regression Analysis: Country
Coefficients Intercept GDP BB -722041 0.089932 137.9414 1011 Standard Error 74628.58 0.055287 13.8059 273489.5 t Stat -9.67513 1.626633 9.991487 -3.69807 P-value 4.34E-08 0.056335 2.78E-08 0.00195

iD
in

-134.9

96420.55

3.784826

0.001624

Interpretation: The regression equation is

+ + + -

Deposit = - 722041 + 0.089932 GDP + 137.9414 Bank Branches +1011 Interest Rate 134.9 Inflation Rate Here the p value for GDP, bank branches, interest rate of deposit, inflation rate are significant because they are less than 0.05. So, our null hypotheses are rejected and the relation matched with our expectation. So, GDP, number of bank branches, deposit rate all positively influences

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the deposit and inflation negatively influences the demand for deposit and the result are statistically significant. The equation states that the amount of country deposit will increase by 0.0899 crore taka with increase of GDP by 1 crore taka. If bank branches increase by 1 unit, deposit mobilization will increase by 137 crore taka. It states that if interest rate increase by 1%, deposit increase by 1011 crore taka. On the other hand, if inflation increases by 1%, amount of deposit decrease by 134.9 crore taka. Regression Analysis: Urban

Coefficients Intercept GDP BB -151876 0.269102 89.03002 8855

Standard Error 96642.23 0.14796 52.48899 601261.8

t Stat -1.57152 1.818751 1.696165 -1.4728

P-value 0.135624 0.047716 0.109221 0.035987

iD

in

-99.4

208109.3

2.250016

0.038872

Interpretation: The regression equation is Deposit (Urban) = - 151876 + 0.269102 GDP + 89.03002 Bank Branches (Urban) -+8855 Interest Rate 99.4Inflation Rate (Urban) p value for GDP, inflation, interest rate are less than 0.05 so they are statistically significant and the relation matched with our expectation so they are positively related with demand for deposit. But for bank branch p value is greater than 0.05 so null hypothesis is accepted that means deposit amount does not positively related with number of bank branches. The equation states that with increase of GDP by 1 crore taka, the amount of deposit in urban areas will increase by 0.269102 crore taka. If urban bank branches increase by 1 unit, deposit mobilization will increase by 89.03002 crore taka. It states that if interest rate increase by 1%,

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deposit increases by 8855 crore taka. On the other hand, if inflation increases by 1%, amount of deposit decrease by 99.4 crore taka.

Regression Analysis: Rural

Coefficients Intercept GDP BB -90908 0.053184 25.85018 2231.61

Standard Error 17455.2 0.007166 4.796237 70639.3

t Stat -5.20808 7.422233 5.38968 0.315867

P-value 8.62E-05 1.45E-06 6.02E-05 0.046187

iD

in

-48.78

32031.19

-0.03274

0.974285

Interpretation: The regression equation is Deposit (Rural) = - 90908+ 0.053184 GDP + 25.85018 Bank Branches (Rural) +2231.61 Interest Rate 48.78 Inflation Rate (Rural) Here the p value for GDP, bank branches, deposit rate are less than 0.05 so they are statistically significant and the relation matched with our expectation. But for inflation rate it is greater than 0.05 and it is not statistically significant so demand for deposit is not negatively related with inflation rate. The equation states that the amount of deposit in rural areas will increase by 0.053184 crore taka with increase of GDP by 1 crore taka. If rural bank branches increase by 1 unit, deposit mobilization will increase by 25.85 crore taka. Deposit interest rate states that if interest rate increase by 1%, deposit increases by 2231.61 crore taka. On the other hand, if inflation increases by 1%, amount of deposit decrease by 48.78 crore taka.

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Chapter Eight Recommendation

Source of funding Commercial and Specialized Banks can provide a sustainable source of funding for financial institutions and offer clients a safe and liquid means in which to save. Flexible Banking Hours There should not be a fixed banking hour in all the areas. Rather the time schedule of bank branches should be made according to the need of people of a certain area. The branches that operate close to the market places - where traders and business organization operate and where the farmers converge for other transactions, should have flexible banking hours. Provisions of savings Increase the provision of savings services in rural areas which allows people to save for life events. Poor people especially need savings services because of emergencies, unexpected opportunities, and major life events such as marriage or death and to smooth payments of their consumption needs. Savings provide an important safety net for poorer households. It also has to play a critical role in financing productive activities and can foster farm and nonfarm rural enterprises. Unfortunately, due to a dearth in the availability of formal financial services, many people in rural area are forced to resort to the informal sector in order to save. Mobile Banking System The banks did not find it feasible to expand their branches in the rural areas even in case of branching policy adopted by the government because of high transaction cost in their part. In this situation Mobile Banking System (MBS) has emerged. This MBS reduces the transaction cost for both the depositors and the banks. A mobile banking system will be helpful in extracting savings of the rural people in a structured way where bank branches are not feasible. Formal Savings Program Formal savings mobilization programs need to be exercised which offer many advantages to the rural population. Saving in a financial institution can provide three important factors crucial in the decision to select a particular institution: security, liquidity and return. Rural poor want to invest in a secure location and seek confidence to know that their funds will be protected. Also, these clients are interested in having convenient access to their funds,

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should the need arise. Lastly, many financial institutions offer higher rates of return on savings than clients would gain through the informal sector. Refinance Policy In the past the spread between the refinance rates and interest rates on deposits was quite wide. These rates were revised in 1983. There is a negative relationship between deposits and cheap refinance of loans. The relationship between refinance rates and interest rates on deposits must be accessed regularly because of its impact on savings mobilization. Savings Program and Service For financial institutions, offering savings products and services is an important step away from dependence on donor funds toward becoming a true financial intermediary. Our report has shown that deposit mobilization represents a major source of funds for most self-sustaining financial institutions. Additional products such as savings need also to allow financial institutions to broaden and deepen its outreach, thereby expanding its client base. Improving the Transportation facilities The transportation facilities of an area have direct influence on deposits mobilization. The real interest earned on then deposits is reduced by transaction costs. To earn the maximum benefit possible from the deposit interests the transaction costs associated with the deposits needed to be reduced. This can be done via improving the transportation facilities and developing the roads of that area. These outcomes can be achieved by Strong governance and professional management Strength and reliability, with solid internal control and financial systems Ensuring that a financial institution never uses deposits and savings to cover operating expenses Strong loan portfolio quality management

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Conclusion
We have found that over the year both rural branches and urban branches have increased but the growth rate of increasing deposit by the increasing branch is more on urban sector compare to rural sector. Moreover the spread between lending and borrowing rate has increased over the year. Bank deposits are positively influenced by such factors as the growth in income (GDP), bank branches, rate of interest on deposits and negatively to the expected rate of inflation. Of these factors, income and interest rate seemed to be the major factors which appeared significant in all the three equations estimated. This is in conformity with economic literature, because if income (measured by GDP) and interest rate of deposit increase, people will encourage to save more in banks. Inflation has also negative relationship with deposit relationship in urban sector but the coefficient of inflation found in case of rural sector is not significant but in case of urban sector transaction cost appeared to be insignificant. So from this study, it seems that emphasis should be given personal income and number of bank branches and interest rate to increase the amount of deposit mobilization by banks.

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Chapter Nine Bibliography

Khalily, M. A. Baqui and R. L. Meyer, 1989, Factors influencing the demand for rural deposits in Bangladesh: A test for functional form; Department of Agricultural Economics and Rural Sociology, The Ohio State University. Narayan, Ambar; Nobuo Yoshida and Hassan Zaman, 2007, Trends and Patterns of Poverty in Bangladesh in Recent Years, A background paper for Bangladesh Poverty Assessment, World Bank Meyer, Richard L. and Rheene Blanco, 1988, Rural Deposit mobilization in the Philippines 1977-1986, Working Paper Series no. 8815, Agricultural Credit Policy Council (ACPC), Philippines Institute of Development Studies (PIDS) Elser, Laura; Alfred Hannig and Sylvia Wisniwski, 1999, Comparative analysis of savings mobilization strategies, Consultative Group to Assist the Poorest (CGAP), Eschborn Salahuddin Ahmed Khan, Nazrul Islam and Khaleda Khatun (March-16, 20100). A study on Resource Mobilization by MFIs. Department of Microcredit Regulatory Authority. Richard L.Meyer and Emmanuel F.Esquerra (October 3-5, 1984), Rural Deposit Mobilization Experiences and issues in selected Asian countries. Department of Agricultural Economics and Rural Sociology. M.A.Baqui Khalily, Richard L.Meyer and Leroy J.Hushak (April 27-28, 1987), Deposit Mobilization in Bangladesh.Department of Agricultural Economics and Rural Sociology. Adrian Gonzalez and Richard Meyer (June, 2009), Microfinance and Small Deposit Mobilization. M.A.Baqui Khalily, Richard L.Meyer and Leroy J.Hushak (August, 1987), The Determinants of rural deposit in Bangladesh.Department of Agricultural Economics and Rural Sociology.

Web Reference: (1) Barai, Munim Kumar and Md. Liakat Hossain Moral Poverty Alleviation Effort in Bangladesh: Involvement of Selected Banks and NGOs (2) Annual reports of Bangladesh Bank from year 1990-91 to 2009-2010 (3) Economic indicators (Statistical Table) provided in Bangladesh Bank website: www.bangladesh-bank.org

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