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Sarathi – Progress through Financial Inclusion

The Ready-Made Garments (RMG) industry of Bangladesh is among the largest sectors within the country’s economy, employing around 4.5 million workers and with a predominantly female workforce. There are 3,500 production facilities registered as exporters and another estimated 7,000 RMG factories that supply the exporters operating in the country. Enormous growth in the sector has continued to generate employment opportunities for workers with low level of skills. Most belonging to this demographic have no land and few, if any, financial skills. As a result, they are unable to manage their own finances. In addition, only about 5% of the RMG workers are able to access financial services. These services are provided, in part, through private cooperatives which often have questionable legal status. Formal financial services, such as opening bank accounts, are seldom provided.

The Project

Building on the success of the Pilot Phase (2016 – 2017), Sarathi will ensure that at least 60,000 RMG factory workers have access to formal financial services through their bank accounts over a period of 30 months. As a result of owning bank accounts, these 60,000 RMG factory workers will receive their salaries in their respective bank accounts and be able to access and use other financial products, i.e. loan, savings, term deposit and credits to meet their financial needs.

These 60,000 bank accounts will enable 30 RMG factories to transition from cash-based wage system to digitised wage system, which will significantly reduce:

  • factories’ person-hours allocated to operate cash-based wage system, and
  • cost of financial operations.


By working with at least three partner commercial banks and the 30 RMG factories, the project will help to set up multiple access points (e.g. agents, ATM booths, etc.) for RMG workers to conduct financial transactions. Additionally, these RMG factories will prove to be more compliant with their respective buyers in Europe, North America, etc. by ensuring transparency in the wage system. Consequently, RMG buyers will have significantly contributed to the financial inclusion of RMG factory workers by making digitised wage system a pre-requisite amongst all their sourcing factories.

Project activities


Sarathi has two essential components:

  • Development of financial services and supply channels for banking services to reach previously underserved market segments
  • Improvement in the level of financial skills and knowledge of RMG workers so that they can conduct formal bank transactions


Prospective interventions:

Engagement with RMG factories in developing a digital wage payment system for RMG workers will be conducted through:

  • Training and deploying female agents and bank staff to cater to the predominantly female demographic
  • Supporting commercial banks in deploying an integrated service delivery model
  • Conducting financial counselling sessions, awareness campaigns and practical usage of banking products and services
  • Introducing digitised wage payment system through Alternate Delivery Channels (e.g. ATM, Biometric POS terminal, Agent banking outlets, Digital Kiosks, etc.)
  • Supporting commercial banks in developing and introducing salary accounts and savings and loan products for RMG workers
  • Supporting Bangladesh Bank in institutionalising an efficient agent banking outlet approval process

Results

Expected Results:

  • 200,000 RMG workers participated in financial literacy sessions at factory and community levels
  • At least 60,000 RMG workers have salary accounts with commercial banks
  • 10,000 loans disbursed and 20,000 other value propositions offered to RMG workers
  • 30 RMG factories disbursed salaries of RMG workers through salary accounts
  • 40 Alternate Delivery Channels established
  • Partnership with three commercial banks established

Swisscontact
Swiss Foundation for Technical Cooperation
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Tel. +41 44 454 17 17
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