Access points, over the years, have numbered and enhanced financial access to the Bhutanese populace, facilitating and easing transaction costs
An ‘access point’ is any physical entity where an individual can perform cash-in and cash-out transactions with a regulated financial institution, such as a bank branch, any type of banking office, Automatic Teller Machine (ATM), agent or Point of Sales (POS) device that performs cash-in and cash-out transactions (physical and electronic).
The overall number of access points in the country has increased since 2019 onwards. Among all the access points, the branches and extension has not increased much. The alternative delivery channels such as ATMs, POS and agents increased both in terms of number of access point and per 10,000 adults. Moreover, there was a significant increase in terms of mobile banking and e-wallet users. The number of total branches which includes banks, insurance and Microfinance Institutions (MFI) branches has remained same but the number per 10,000 adults has slightly decreased. Over all, there is an increase in the access point per 10,000 adults in Bhutan since 2019.
Access points plays a pivotal role in enhancing access to finance as it facilities and eases transactions cost considering the distance to be traveled in order to avail the closest access points for the clients.
A number of international organizations have defined a set of quantitative indicators that capture the state of financial inclusion in a country. While most focus on access per 10,000 adults, some have defined in terms of access point per km2. For Bhutan, the indicator per 10,000 adults is used as less than three percent of the total land area of Bhutan is reported to be under cultivation. Therefore, indicator expressed in km2 may be misleading because of the low population density.
Of the 524,315 adult Bhutanese population above the age of eighteen, 76.08% has a bank account in one of the formal financial institutions including micro finance. 21.79% of the adult Bhutanese population has availed credit facility from one of the financial institutions in Bhutan and 25.29% has an insurance policy with one of the insurance company in Bhutan. A despondent 20.50% of the clients had access to e-money.
There are 2.88 branches per 10,000 adults, 299 ATMs (5.70 ATMs per 10,000 adults), 1.53 extensions per 10,000 adults, and a combined 347,054 bank app users within the clientele list of all FIs in the country.
According to reports from the Royal Monetary Authority (RMA) of Bhutan, “financial Inclusion efforts have been prioritized at the national level with the joint support from the key government agencies and financial service providers. The RMA has taken several measures to diversify and enhance financial inclusion towards strategic economic development. The NFIS provides a road map for Bhutan to collectively plan and strategize financial inclusion initiatives to enable regulatory interventions, enhance appropriate financial products and services through digitally defined solutions to the unreached and underserved population in the country”.
However, like in many countries around the world, Bhutan also has the gender difference in account ownership of various financial products and services. Although the gender gap is not high in terms of savings and credit account ownership, the gap is higher in terms of the non-life insurance.
In terms of gender-based access to financial services, there are no significant gender gaps in terms of savings account holding. However, the gender gap is higher for credit (3.81% higher for men) and ownership of insurance (6.85% higher for men) signifying more property and business ownership for men are higher than women in Bhutan.
The number of branches and extension offices are higher for Dzongkhags like Thimphu, Samtse, Chukha and Sarpang. The number of branches and extension offices are higher in higher number of population and gewogs. Thimphu has the highest with 15 branches and 10 extension offices while Gasa has the least with three branches and one extension office.
Meanwhile, Bhutan’s NFIS is a tool to ensure that the poor, vulnerable and unbanked segments of the population can increase their financial literacy and capability, gain access to financial services tailored to their needs, improve their livelihoods, raise their income levels, reduce vulnerability and enter the mainstream of the economy and society as economically productive citizens. Financial inclusion has been recognized as one of the pillars for achieving Bhutan’s national goal of sustainable and inclusive socio-economic growth. This will require promoting and expanding appropriate financial products and services across the country. Studies have shown that access to basic financial products and services, such as savings, payments, credit and investments, make a substantial positive difference in people’s lives. Financial inclusion, therefore, has the potential to improve the financial well-being of the un-served and underserved segments of the population.
Application-based channels such as MBoB and MPay, which have 71,763 and 11,2686 users respectively, are not considered access points because they cannot perform physical cash-in and cashout transactions. However, in the context of the National Financial Inclusion Strategy (NFIS), digital financial services will be an important enabler of financial inclusion.
Tashi Namgyal from Thimphu