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Introduction to Rural Savings Bank


(Former name- “Amar Bari Amar Khamar” Project [“Ekti Bari Akathi Khamar” Project])


1. Introduction: In order to improve the socio-economic conditions of the poor people in remote areas of Bangladesh, the “Akti Bari Akathi Khamar” project was piloted in Sreepur Upazila of Gazipur from 1996 to 2001 to make each family self-reliant. The project was approved in the ECNEC meeting in 2001. Later, the name of the project was changed and the project activities were stopped.


2) By taking the initiative to launch the project in 2009, how can the common poor people be brought into the mainstream of production. How can the living standards of the common people be improved at the grassroots level, how can every inch of land be used for production, how can the socio-economic conditions of the poor people be improved by investing village savings in the village, how can women be involved in the production process and increase their income and ensure women's empowerment. With this in mind, he launched the “One House, One Farm” project for the second time. This time, to make the poor people of the villages savings-oriented/develop the habit of saving, the issue of mandatory savings was added to the project.


3. Later, the name of the “One House, One Farm” project was changed to “My House, My Farm” project. The “One House, One Farm” project was taken up from July, 2009 to June, 2014 at a cost of 1197.00 crore taka. The project was implemented in several phases which are as follows:


a) 1st Phase:-

The project was taken up on the special initiative of the Honorable Prime Minister with the aim of developing every house in the rural areas of the country as an agriculturally-oriented production unit and making every village association as the center of overall village development. Steps were taken to implement the project activities in 85,000 villages of the country. In a meeting held on 04.08.2011 in the Agriculture, Water Resources and Rural Institutions Division of the Planning Commission, a decision was taken to implement the project in phases based on the assurance of funding. In this context, the project was gradually expanded across the country by amending it 4 times and increasing the project period and amount in the first phase. In the original project, the implementation started by providing some resource assistance to the association members to set up farms in their homes. However, due to serious inequality in resource distribution, the project implementation strategy was changed in the first phase. Instead of distributing resources, welfare grants were provided against savings (200 taka against savings of 200 taka) to the poor members to channelize savings and a revolving fund of 3.00 lakh taka per year was provided to the association to create a permanent fund for each association and the scope of the project was gradually increased in order to increase income and alleviate poverty through revolving investment in setting up small family agricultural farms in the homes of the association members. The reasons for the amendments are briefly explained below:


3.1) 1st Amendment (July, 2009 to June, 2013):


The approved estimated cost allocation of the original project was 119700.00 lakh taka. The project period was from July, 2009 to June, 2014. The project was targeted by selecting 5,78,400 families belonging to 9640 villages in 1928 unions of 482 upazilas as project beneficiaries. The distribution of cows, corrugated iron and poultry, tree seedlings and vegetable seeds among some members of the association caused adverse reactions due to inequality in receipt among the members. Therefore, in the 1st amendment, instead of distributing resources, each member received an equal amount (200/- taka monthly for up to 24 months) welfare grant against his own savings and a revolving loan fund of 1.50 lakh taka annually (for up to 2 years) to the association. At the same time, the project activities were expanded and a target of creating 17,388 village development organizations in 17,388 wards of 1932 unions in 483 upazilas and including 10,43,280 members was set. The project period was reduced by 1 year from July, 2009 to June, 2013 and the estimated cost was estimated at 149,292.12 lakh taka. An initiative was taken to alleviate poverty by creating a permanent fund based on the association with government assistance by encouraging members to save and investing it among the members. At the beginning of the project, Bangladesh Rural Development Board (BRDB) cooperated in the work of the “One House, One Farm” project as a partner organization. Later, the manpower of the project was recruited.


3.2) 2nd Amendment (July, 2009 to June, 2016):


The 2nd Amendment was approved by 'ECNEC' on 30/07/2013. In this amendment, the project activities were expanded widely across the country. No new components have been added. The project activities have been expanded to 1 village each in 40,527 wards of 4,503 unions of 485 upazilas of the country, and 24,31,620 beneficiaries have been identified. The approved estimated expenditure allocation has been increased to Tk 316,296.38 lakh.


3.3) Rural Savings Bank Act-2014: During the implementation of the project, the Amar Bari Amar Khamar project, which is being implemented following the philosophy of small savings, has greatly encouraged personal savings among the poor to create permanent funds. In the context of creating expectations to institutionalize the extensive financial activities that have been carried out across the country and financial inclusion has been ensured through the project, ‘Rural Savings Bank’ was established in 2014 under the Rural Savings Bank Act, 2014 (Act No. 7 of 2014).


3.4) 3rd Amendment (July, 2009 to June, 2020):


The 3rd amendment of the project was approved by 'ECNEC' on 25/10/2016. In this amendment, the project activities were expanded more widely across the country. It was decided to expand the project activities to 1,01,042 villages in 41050 wards of 4550 unions of 490 upazilas of the country, including Samiti Gath and 60,62,520 families. The approved estimated cost allocation was increased to 801027.05 lakh taka. As per the decision of the ECNEC meeting dated 08-12-2015, the two projects titled 'Improvement of the quality of life and livelihood of the people of Lalmai-Mainamati hilly area of Comilla district through integrated agricultural activities' of Bangladesh Rural Development Academy (Comilla) and 'Improvement of the quality of life of small anthropological communities through cooperatives' of the Department of Cooperatives were included in the RDPP as separate components for implementation under the project under the discussed 'Amar Bari Amar Khamar' model. In addition, the rehabilitation of 1.00 lakh beggar families by providing alternative income and the micro-enterprise loan program was included to further improve and sustain the socio-economic condition of all the beneficiaries of the project who have been able to come out of extreme poverty.

3.5) 4th Amendment (July, 2009 to June, 2021):


During the implementation of the project, due to the ADP allocation not being at the desired level, it was not possible to provide welfare grants and adequate revolving funds to the associations against the savings of the members. Since the project activities were implemented only in rural areas, a demand was raised to bring the poor people under the project in the Upazila/District level municipalities where the facilities of the rural areas are available. Apart from this, in many places, 60 members could not be found to be included in one association for various reasons. Implementation was not possible due to insufficient allocation of some components. Considering these issues, initiatives were taken to amend the project for the 4th time. No new components were added. Some components were dropped and the cost was reduced.


The 4th amendment of the project was approved by the ECNEC on July 28, 2020. In the amendment, the project activities were extended to 40,950 wards of 4,550 unions of 492 upazilas of the country and 327 upazila/district level municipalities. The estimated cost was reduced from 801,027.05 lakh taka to 788,527.05 lakh taka and the implementation period was re-determined from July, 2009 to June, 2021. The name of the project was changed from Eka Bari Eka Kharm to Amar Bari Amar Kharm as per the instructions of the Hon'ble Prime Minister. The number of association members was increased from 30 to 60, keeping the ratio of women to men (2:1). The number of associations was increased from 1,01,042 to 120,000 and the number of beneficiaries was reduced from 6,062,520 to 54.60 lakh.


4. Rationale of the project in respect of Concept, Design, Location and Timing:


Bangladesh was listed as a least developed country. At the time of project adoption in 2009, the national poverty rate was 37.5%. The poverty rate in rural areas is even higher. Poor people live in rural areas all over the country. According to the Poverty Map published by Bangladesh Bureau of Statistics (BBS), no rural area is poverty-free. Therefore, the directive of the Honorable Prime Minister to expand the project activities to 85,000 villages across the country was groundbreaking and timely. On the other hand, the decision to adopt the project in phases based on the assurance of funding instead of implementing the project at the same time in 85,000 villages in the PEC meeting held on 04.08.2011 in the Agriculture, Water Resources and Rural Institutions Division of the Planning Commission was correct. As the project activities were gradually included in all the villages of all the unions of all the upazilas of the country and 327 municipalities at the upazila level, 56.77 lakh poor families have benefited from this project and now they own 49% shares of Palli Sanchay Bank. They are getting financial services from the bank on a permanent basis with very easy installment facilities to alleviate poverty. Therefore, the concept, design, location and timing of the project appear to be very logical.


5. Conversion from “One House, One Farm” Project to “My House, My Farm” Project: As per the instructions issued on February 10, 2019, the name of the “One House, One Farm” Project (3rd Amendment) being implemented by the Rural Development and Cooperatives Department was changed to “My House, My Farm Project (3rd Amendment)” in view of the instructions.


6. Recognition of the “One House, One Farm” project in the international arena (South Asia and Asia Pacific Manthan Award, 2013): The “One House, One Farm” project has been praised in the national and international arena for its significant role in poverty alleviation by involving the poor in information technology. The project was awarded the South Asia and Asia Pacific Manthan Award, 2013 at the Information Technology Fair held in New Delhi, India on December 6, 2013. A total of 167 organizations from 36 countries of the region participated in this two-day competition. One House, One Farm received this award for its significant contribution in poverty alleviation by involving the poor and backward sections of the society in online banking through e-financial inclusion. Former External Affairs Minister of India, Mr. Salman Khurshid, was present as the chief guest at the award distribution ceremony.

7. Microfinance System of Rural Savings Bank (One House One Farm Project):


7.1) Under the One House One Farm Project, a Village Development Association has been formed in each village with one member from each of the 60 poor families. Out of which 40 are women members. The government has given them a bonus of 200 taka against saving 50 taka per week, i.e. 200 taka per month. Moreover, a revolving fund of 1 lakh 50 thousand taka per year has been provided to each association. In this way, the government has created a total permanent fund of 9 lakh taka in the Village Development Associations in two years. Due to the ongoing activities, the fund of the association is increasing day by day.


7.2) Under the project, the formation of the association, admission of members, deposit of savings of members, distribution of welfare grants from the project against savings, distribution of revolving fund to each association, loan distribution and collection, etc. have been controlled through the online MIS software of the project. The "Improvement of the living standards of small ethnic groups through cooperative system" project of the Department of Cooperatives and the "Improvement of the living standards of people in Lalmai-Mainamati hilly areas of Comilla district through integrated agricultural system" project of Bangladesh Rural Development Academy, Comilla have been implemented as separate components of the Amar Bari Amar Khamar project. Which is currently under the Palli Sanchay Bank. Palli Sanchay Bank has been conducting all banking activities through online-based software since its inception and has provided services to the marginalized groups.


7.3) The transaction activities with the members of the "Ekti Bari Aka Khara" project (Amar Bari Amar Khamar) association were online-based. The online banking activities of the 'Ekti Bari Aka Khara' project (presently Palli Sanchay Bank) were inaugurated on October 9, 2013.


8. It is now recognized that by implementing the small savings philosophy through the Amar Bari Amar Khamar project, it has been possible to create a large amount of permanent funds for the poor in the last 10 years and has been able to make a significant contribution to the poverty alleviation of the country. Financial inclusion of a large number of poor people has been ensured. Who were previously excluded from any institutional financial services. In 2017, the Implementation, Monitoring and Evaluation Department (IMED) of the government conducted an in-depth monitoring study on the Amar Bari Amar Khamar project. The evaluation showed that after joining the project association, land ownership has increased in 31.4% of families, food security has been ensured in 65.3% of families, income of 74.2% of families has increased significantly. The socio-economic condition of a significant number of families has improved.


9. The authorized capital of Palli Sanchay Bank is 1 thousand crore taka and paid-up capital is 313 crore taka, each share is worth 100 taka. According to the law, 51% of the shares of the bank are owned by the government and 49% by the associations. The Board of Directors of the bank has 19 members, out of which 10 are elected by the government and 08 are elected by the association from each administrative division and 01 is the Managing Director of the bank. The main objective of the bank is to form an association with the poor and disadvantaged people of the country, to form an association fund, to increase the saving tendency of the members, to alleviate poverty of the poor people, to make women financially self-reliant by engaging them in income-generating activities, to increase economic and social development and women's empowerment, to increase the skills of the members by providing training, to carry out transactions and maintenance of the savings and acquired assets of the association and members, to provide loans and advances, etc. To alleviate poverty in the country by performing such functions. In order to empower women and make them financially self-reliant, there are 40 female members in each association.

10. On June 22, 2016, 100 branches of the bank were officially inaugurated. The members, funds, liabilities and debts of the associations formed till June 30, 2016 under the project (2nd amendment) were transferred to the bank. Then, the project (3rd amendment) was passed to include more poor people under the project. From 13/07/2017, Palli Sanchay Bank and Amar Bari Amar Khamar project (3rd and 4th amendment) are being operated side by side as per the MoU with the bank and the project till June 2021. From June 30, 2021, the ‘Amar Bari Amar Khamar’ project has been abolished and Palli Sanchay Bank is being operated alone.


11. Achievements of Amar Bari Amar Khamar Project (up to June 30, 2021): Associations formed under the project - 01 lakh 20 thousand 325, beneficiary member families - 56 lakh 77 thousand, member savings - 2086 crore taka, bonus given by the government - 2000 crore taka, revolving fund - 3200 crore taka, total number of beneficiaries taking loans - 45 lakh 93 thousand, total loan disbursement - 11041 crore taka, small entrepreneur development loan disbursement - 490 crore taka, number of actual small income-generating farms - 33 lakh 73 thousand, total fund - 7609 crore taka.


12. As per the Rural Savings Bank Act, the liabilities and assets of 40,216 associations formed under the project before 30/06/2016 have already been transferred to the bank and among the associations formed later, the funds have been transferred to the bank in phases after the formation of funds. After the transfer of all the associations from the project, the total number of associations was 1.20 lakh and the number of members was about 53.78 lakh. These associations are being operated in remote areas of the country.


13. Regarding Rural Savings Bank:


13.1) The number of branches of the bank is 490 through which financial services are provided to the members of the associations. The branches have been established in the bank's own building in the upazila headquarters and the district offices have been established on the 1st/2nd/3rd floor of most of the own buildings in the district headquarters branches. The district offices supervise the branches. In addition, 22 audit offices have been established to carry out internal audit activities of the branches. At present, the establishment of divisional offices of the bank in each division of the country is under process. The authorized manpower of the bank is 12,243. There is a field assistant of the bank working in each union.


13.2) Skill development training is provided to the officers and employees by the bank. The bank is providing financial services to the members through its own online banking software. In other banks, customers go to the bank to receive services, but the field assistants of this bank themselves go to the customers to provide services. As a result, labor and expenses of the members are being saved. The bank's customers do not have to go to high-interest lending institutions for loans. By becoming members of the Gram Samiti, marginalized and poor men and women are getting the opportunity to become self-reliant by using the funds created. As their income increases, their food security is increasing, as well as their empowerment. The bank has various loan products, the service cost of which is only 4%-8% and the profit rate of 3 types of monthly savings schemes is 4%-10%. The members of the Gram Samiti, as well as the customers of the bank, are from the very poor class. All these members are trying to alleviate poverty by setting up income-generating agricultural farms in their homes and increasing their income. The financial transactions of all the associations under the bank are being conducted online. It has made a significant contribution to achieving Vision 2021 and Palli Sanchay Bank is committed to making a significant contribution to building a developed and smart Bangladesh by 2041.