Abstract
Erstwhile Bengal was divided in 1905 into East Bengal and West Bengal, revoked in 1911 to again be reinforced in 1947. The two Bengals henceforth belonged to two different nations, viz. West Bengal as a state in India and East Bengal as East Pakistan (later independent Bangladesh). As the two Bengals parted ways, their trajectories in the context of financial sector development and financial inclusion are characterized by similarities as well as differences. This chapter tries to collate some important observations in the process of financial liberalization and financial development of the two Bengals. The analysis pertains to the role of the banking sector in both Bengals, the performance of microfinance institutions and Islamic banks in Bangladesh, and that of microfinance institutions, self-help groups, and regional rural banks in West Bengal. In both Bengals, the banking sector is the dominant sector, but loan disbursements are much higher in Bangladesh compared to West Bengal. However, West Bengal has progressed quite well in insurance penetration and retail participation in capital markets through mutual funds, while Bangladesh still lags behind. Regarding financial inclusion, the progress in West Bengal so far has been higher than in Bangladesh in achieving access to financial services and moving towards digital financial services for all.
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Notes
- 1.
FSAP is a joint programme of the International Monetary Fund and the World Bank launched in 1999 in the wake of the Asian financial crisis. It helps countries reduce the likelihood and severity of financial sector crises.
- 2.
This consists of Islamic banks and conventional banks.
- 3.
The Hindu (2021). Bank NPAs set to rise, deposit growth outpacing credit flow; Available at https://www.thehindu.com/business/Industry/bank-npas-set-to-rise-deposit-growth-outpacing-credit-flow/article34740975.ece, accessed on March 20, 2022.
- 4.
India Today (2018). Note ban effect? Bank deposit growth lowest in 55 years; Available at https://www.indiatoday.in/india/story/note-ban-effect-bank-deposit-growth-lowest-in-55-years-1226357-2018-05-04.
- 5.
The ratio for India has also seen a rising trend over the years 2004–2007 increasing from 58 per cent to 75 per cent and then on average being 74 per cent during 2008–2011.
- 6.
Firstpost (2018). NPA crisis: More financial scams in the offing, says West Bengal finance minister Amit Mitra, Available at https://www.firstpost.com/business/npa-crisis-more-financial-scams-in-the-offing-says-west-bengal-finance-minister-amit-mitra-5038881.html, accessed on April 27, 2022.
- 7.
Mehta, A. (2021). Financial Inclusion in Bangladesh: Initiatives, Achievements and the Way Forward amidst the COVID-19 Pandemic, IMPR event reports, Available at https://www.impriindia.com/event-report/financial-inclusion-in-bangladesh/, accessed on April 20, 2022.
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CRISIL Inclusix (2018), Available at https://www.crisil.com/content/dam/crisil/our-analysis/reports/Research/documents/2018/march/crisil-inclusix-financial-inclusion-surges-driven-by-Jan-Dhan-yojana.pdf, accessed on April 20, 2022.
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Indiastat.
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Mukherjee, P., Chatterjee, R. (2023). Financial Sectors in Bengals: Towards Development and Inclusion. In: Banik, A., Barai, M.K. (eds) Two Bengals. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-99-2185-0_5
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