FID Circular No. 03: Receipt of tuition and other fees/charges from students and providing financial services to the educational institutions/students under financial inclusion initiatives

Bangladesh Bank Chief Executive Dhaka. FID Circular No. 03 Date: 12 Ashwin 1422 27 September 2015 Managing Director/Chief Executive Officer All Scheduled Banks operating in Bangladesh Dear Sir, Regarding the receipt of tuition fees and other fees/charges from students and providing financial services to educational institutions/students under the Financial Inclusion Program.

Commercial banks are involved in various ways in the Financial Inclusion Program of Bangladesh Bank to ensure inclusive development. Banks are providing various services according to their demand to bring the population of different strata of society who expect banking services under the ambit of financial services. However, there is still a gap between demand and supply in providing necessary and demand-based financial services to different communities of society. To bridge this gap, banks need to formulate plans and implement them accordingly. To make the future generation aware of financial services from childhood, Bangladesh Bank has already launched school banking. Under the school banking policy, efforts have been made to open bank accounts for students and include them in financial services. Now, to increase the scope, usage, and quality of these services, advice is being given to banks to take various measures.

Commercial banks often collect tuition fees and other fees from students of various educational institutions and manage various financial transactions of educational institutions. To make the Financial Inclusion Program dynamic and expand its scope, and to make various financial services related to schools/colleges/universities hassle-free and easy for students/parents, instructions are being given to banks to take initiatives to provide technology-based and demand-based services to students and parents. In this regard, banks are advised to follow the following instructions:

1. General Guidelines a. Banks will change the existing process of collecting fees/charges from students of specific educational institutions through specific branches using manual methods prevalent in various banks and will launch one or more methods from online banking, mobile financial services, card-based payment systems, and standing instructions. In this regard, Memorandums of Understanding (MoUs)/Agreements will be signed with the concerned educational institutions if necessary; b. When banks provide this type of service to a new educational institution, they will launch one or more methods from online banking, mobile financial services, card-based payment systems, and standing instructions for collecting tuition and all other types of fees through signing MoUs/Agreements; c. If the student's age is between 06 and 18 years, 'School Banking Accounts' will be opened, and if over 18 years, general bank accounts (Savings/Current, etc.) will be opened, and the aforementioned arrangements will be implemented. This arrangement can also be implemented by opening bank accounts in the name of parents. However, except for opening 'Wallet Accounts' for using mobile financial services, opening bank accounts will not be mandatory in any other case; d. No service charges/fees other than government fees will be charged from 'School Banking' accounts.

2. Various Methods for Collecting Tuition Fees and Other Types of Fees from Students To provide services to students and educational institutions for collecting tuition fees and all other types of fees/charges, banks will implement one or more of the following services: a. Online Banking: Under the online banking facility, one or more of the following methods will be available: • Transactions at any bank/branch: Arrangements to deposit tuition fees and all other fees/charges at any branch of the bank where the educational institution's account is maintained/other banks; • Internet Banking: Arrangements for students/parents to deposit tuition fees and all other fees/charges into the specific bank account of the educational institution via the internet without visiting the bank/ATM/Merchant; and • E-commerce Payment Gateway: Arrangements to deposit tuition fees and all other fees/charges using e-commerce payment gateways/gateway networks.

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-2- b. Mobile Financial Services • Arrangements to pay tuition fees and all other fees/charges from the student's/parent's account to the educational institution's account using mobile phones by opening 'Wallet Accounts'; and • In this regard, the instructions mentioned in the 'Guidelines for Mobile Financial Services' issued by Bangladesh Bank must be followed properly. c. Card-based Payment Systems • Arrangements to pay all types of fees/charges including tuition fees through debit/credit cards issued by banks. Such transactions can be made through ATMs or Merchants (POS machines). d. Standing Instructions • Transferring funds from the student's/parent's 'School Banking Account' or any other account (Savings/Current, etc.) maintained in their own bank or another bank to the educational institution's bank account.

3. Disbursement of Scholarships/Fellowships in School Banking Accounts Banks will take initiatives to innovate and implement necessary methods to collect money for government/private/board/any scholarship and fellowship through MoUs with the concerned authorities/educational institutions providing scholarships and deposit it into the student's 'School Banking Account'. If the student does not have an account, it can be deposited into the parent's account.

4. Miscellaneous a. Banks will make arrangements to provide monthly and head-wise reports of tuition fees and all other fees collection to students as per the demand of educational institutions. Banks will also provide information/services such as automatically informing parents via SMS about the deposit of tuition and other fees; b. If necessary, banks can provide this service by establishing booths on the premises of educational institutions or nearby locations, or by employing agents under the ambit of agent banking, following due processes and instructions; c. Bank accounts for foreign students can be opened following existing rules where necessary for collecting tuition fees and all other fees/charges of educational institutions. However, such bank accounts will not be considered as 'School Banking Accounts'; d. Along with collecting tuition and other fees, banks can launch financial products for managing the finances of various educational institutions; e. Along with providing this type of service to educational institutions, banks will take special initiatives to create incentives for opening 'School Banking Accounts' among students; and f. Quarterly reports regarding this must be sent to the Financial Inclusion Department in accordance with the instructions of FID Circular No. 1 dated 3 August 2015 and GBSCRD Circular No. 03 dated April 09, 2015.

5. Implementation Scope: Initially, these services can be launched targeting educational institutions located in district cities. Gradually, they must be expanded to upazila and union levels.

The aforementioned instructions will be implemented immediately.

Yours faithfully, (Nurunnahar) General Manager Phone-9530343 E-mail: n.nurunnahar@bb.org.bd